Creating a Revolution of Healthcare: Interview with Bruno Porto – Partner and Brazil Health Industries Leader, PwC, Brazil

Meeting highlights:

• The need of fresh perspective and new minds in healthcare to drive increased efficiency and democratization.

• The work of PwC to drive change and challenge clients’ assumptions to create a revolution of healthcare.

• Brazil’s strategic importance to foreign players; Fragmented nature of healthcare points towards room to expand in terms of geography, access, and GDP per capita.

• PwC Differentiators: Full-service line of business model reinvention from strategy to execution.

• PwC’s efforts in the tech space: Cybersecurity, risk management and fraud protection.

• PwC’s work with hospitals to help retain professionals and create new lines of business via expanded education.

• Low hanging fruit: Importance of automating and integrating processes for increased efficiency.

• Mr. Porto’s philosophy: bring people together and get them to cooperate. PwC’s value proposition is not building from a greenfield but uniting the right professionals and alliance partners to achieve a given goal under the concept of “community of solvers.”

‍

EF: What is your day-to-day role at PwC, your main priorities, and how does your experience in tax give you the tools to help you as a healthcare leader? 

BP: I have spent nearly 24 years with PwC, with some early experience at another leading firm, giving me a strong foundation. Over the years, I've worked with hundreds of clients on various projects, mostly in taxes, across numerous industries. For the past 3.5 years, PwC Brazil has created dedicated industry-level teams focusing on five key sectors, including healthcare. My work has always been broad. I led the Brazilian business desk in New York and have experience in M&A, advisory, and general consulting. This diverse experience is why I'm in my current role. I learn quickly, adapt easily, and offer various perspectives from different countries and industries.  

We recently published our Revolution of Healthcare Delivery report, which compares the productivity, industrialization, and democratization trends in retail, financial services, and agriculture with those in healthcare. Healthcare today needs fresh perspectives and new ideas to improve efficiency - this is the real challenge now. For the last three and a half years as the health industry leader, I have focused on providing fresh perspectives and challenging views which drive meaningful change. We've been questioning assumptions and delivering strong strategy and management consulting to innovate healthcare. My role involves acting as the quarterback of our teams, managing relationships, and translating sector needs into solutions.  

I know our firm well across all service lines and jurisdictions. I've worked on projects in China, Saudi Arabia, LATAM, the US, and Europe, and traveled to get a firsthand look at health systems all over the world to understand their operations. Additionally, I aim to be a beacon of thought leadership and stay academically connected. I was invited to be a professor at Albert Einstein University, where I teach management and digital transformation courses. Like your work, engaging with the entire industry lets us learn a lot and easily connect the dots. At PwC we gain the trust and confidence of our clients via a methodology that emphasizes confidence and privacy. This helps us connect with various players and understand their interests and challenges. Sometimes there are conflicts, but there are also synergies to leverage. This has been my approach over the past years. 

Learning is crucial, as highlighted by Adam Grant in his book, Think Again. We need to be broad in our thinking because narrow expertise alone isn’t enough. While expertise is essential, making unexpected and non-obvious connections is often where solutions arise. It's about challenging the status quo to find the best answers. Bringing analogies from other industries is crucial. The Revolution of Healthcare piece has been very successful, and I've been invited to present it in various places when clients asked me to share it with their teams. There is a lot of low-hanging fruit, “quick wins”, we can achieve with today's technology that won't affect physicians’ decision-making but are vital for financial sustainability in the sector. Despite this, some remain reluctant to challenge the status quo, and to solve this, must address our projects' cultural aspects, and workforce mindset, and analyze the source of their resistance to change. 

EF: What is Brazil's strategic importance to PwC? What does it represent in a business sense? 

BP: Brazil has great potential. While countries like the US, UK, China, and some in Europe are ahead in business, Brazil holds significant strategic relevance. Foreign players have always been eager to do business here. Spanish companies have made substantial investments in banking and telecom, and the US and China are showing huge interest, too. With a population of over 200 million and room to grow in GDP per capita, there exists immense potential in the country. Brazil already has a strong agricultural market and great potential in the healthcare sector. Pharma companies are keen to tap into our vast market, which includes an aging population. Thanks to our diverse population, there is also considerable opportunity to expand clinical trials here. Some foreign pharma companies are already present, either importing to sell or manufacturing locally. The key is to make the right connections and fully realize Brazil's potential in this area. 

EF: If you had to describe the Brazilian healthcare system in one word, what would it be? 

BP: The word I would choose to describe it is fragmented. Both private and public sectors lack interaction. If someone starts with private primary care and needs surgery in the public system, all their previous private treatments are ignored, forcing them to start over. This lack of data synergy within the private-public and private sectors stems from distrust, as each entity sees data as its own asset. Unlike the financial services system in Brazil, which has achieved industrialization and democratization with fewer players and self-regulation, healthcare remains fragmented.  

There needs to be a clearer understanding of who the customer is. Providers often see the HMO or health plan payer as their customer, not the individual patient. This individual patient has no transparency regarding the costs paid by their employer and the payer, leading to further confusion and inefficiency. 

There is fragmentation even within the private sector, which isn't clear to everyone involved. From the outside, it doesn't make sense. People with private insurance, about 25% of the population, don't know the costs, lack transparency, and can't make informed choices. They rely on names or referrals, which isn't ideal. Companies that pay for these benefits often need to better manage their employees' healthcare. While this is slowly changing, many still view it from a financial perspective, switching HMOs annually for the best price. This approach could be more effective. HMOs are trying to make changes to retain customers, but the system still needs to be fixed. The four main stakeholders; providers, HMOs, corporations, and employees aren't working well together. Vertical integration is being explored to reduce friction and improve the system. In some cases, vertical integration has been successful in the short to medium term. Some vertically integrated businesses are more flexible, efficient, and have a better outlook. However, achieving the ideal system which is full integration, defragmentation, transparency, customer empowerment, and a clear understanding of the customer, the patient, and their data is challenging.  

The transitional period is difficult because current systems must be navigated while making necessary changes. Currently, there's no way to measure performance or compare hospitals effectively, and there's no review system like in retail. This lack of transparency and customer empowerment slows down productivity and democratization. We're moving in the opposite direction, away from these goals. We need to establish clear principles to aim for this ideal. Looking outside Brazil, most healthcare projects PwC undertakes involve government-provided healthcare. In countries like China, and European countries, where 95% of healthcare is government-provided, the government plays a major role. The US is an outlier with 90-95% private healthcare, which has its issues with Medicare and Medicaid. Brazil is a mix of NHS-like public healthcare with less productivity and access and a private system like the US, with increasing costs and conflicts between providers and payers. 

EF: As a Big Four member, what differentiates PwC from the competition? What services are the most in demand by your clients? 

BP: In the health, pharma, and life sciences sector, there are two main pillars: healthcare delivery services and the pharma and industrial life sciences sector. Both are significant and profitable worldwide, including in Brazil. What sets us apart is our strong strategy area. We help companies thrive from strategy to execution. Strategy is our starting point, followed by management consulting services to drive transformation and implement strategic pillars. This includes technology integration, workforce development, tax considerations, and risk analysis, all the way to execution, which we excel at. Our strategy team, reinforced by the acquisition of Booz, now Strategy&, is particularly strong. 

In the technology sector, we are well-known for our cybersecurity expertise. We’ve assisted with numerous ransomware attacks in the Brazilian healthcare sector, providing emergency support and ongoing security monitoring. Our cybersecurity center in São Paulo monitors the dark web and potential attacks, making a significant difference. We hold contracts in service and pharma in the healthcare sector, which faces increasing cyber threats globally. Our cyber excellence has also enabled us to expand into other technology and risk services areas. When we talk about risk, fraud is a major issue. Like cybersecurity, fraudsters exploit healthcare systems, taking money and constantly reinventing their methods. The sector lacks maturity in fraud prevention, so we've been working to catch up, using technology and our risk assessment expertise to create effective structures. 

In strategy, we've assisted companies with cost reductions, workforce management, and business model reinvention. We help HMOs explore low-cost products, depending on regulatory allowances, and find alternative revenue sources. Hospitals, heavily reliant on HMO revenues, face challenges when HMOs extend payment terms and increase write-offs. We've been guiding hospitals on expanding their offerings, such as entering education to retain professionals and remain competitive in talent acquisition. Retention is crucial and linked to education and innovation. There's intense competition for top physicians, similar to football clubs vying for star players. Hospitals should focus on becoming more attractive to professionals and exploring new revenue opportunities in healthcare education and innovation investments to address this. 

EF: If you had to recommend one area that you think your clients need to pay more attention to, what would it be? What area needs the most assistance? 

BP: In our Revolution of Healthcare piece, we see great potential in automating processes. We've been developing and running pilots, especially in hospital administration and finance. These areas are time-consuming and, if manual, require up to 400 people. Automating the back office can make it more efficient, making it a low-hanging fruit. However, there's often resistance because hospital back offices aren't like factory settings. Financial and administrative functions are intermingled with operational teams, creating a complex environment. The challenge lies in consistently implementing and maintaining these processes, ensuring people adhere to new technologies. 

Another area of opportunity is surgical center efficiency. Surgery is the most valuable service for 50% of a hospital's revenue. We have worked on improving surgical center efficiency through smart scheduling to avoid bottlenecks and ensure surgeries are spread throughout the day. This involves risk-based scheduling and connecting the surgical center with IT and finance. Health plans' coverage parameters must align with surgical operations. However, we've found that most hospitals lack this integration. Process integration, involving technology and a change management approach, can significantly improve operational efficiency. These two areas, back office automation, and surgical center efficiency, represent substantial opportunities for improvement in healthcare delivery.  

In our annual CEO survey, a crucial data point emerged: lack of support from internal stakeholders is a significant inhibitor to corporate reinvention. While 40% of CEOs across all sectors in Brazil cite this issue, the figure rises to 55% in healthcare. This indicates a notable barrier within the healthcare sector, which hampers efforts to drive change and implement new strategies. I can personally attest to this challenge. During a recent presentation to 120 hospital staff, including physicians and operational teams, it became evident that many perceive these changes as threats to their decision-making authority. Healthcare is unique in its stakes, unlike in a factory setting, errors can have life-or-death consequences. Therefore, there's understandable resistance to process changes that might undermine professional autonomy or increase liability. 

However, advancing healthcare requires lowering costs, standardizing processes, and incorporating intelligent systems. This entails overcoming the inefficiencies behind the scenes, such as time wastage and surgery scheduling gaps. Although these inefficiencies might not be visible to patients, they are significant from an operational standpoint. Our approach focuses on creating and implementing intelligent systems to address these inefficiencies, and some companies are already making strides in this area. This transformation is essential for achieving digitalization and democratization in healthcare. By fostering internal support and leveraging intelligent systems, we can help the healthcare sector evolve to meet future demands effectively. 

Some hospitals in Brazil, the true outliers, have taken a unique approach by offering consulting services to other hospitals across Brazil and LATAM. These hospitals have achieved excellence in their processes to the extent that they can guide others in replicating their success. This is reminiscent of practices in the US, like those of the Mayo Clinic. However, while these hospitals excel in their processes, they often lack the consulting expertise to market and deliver these services effectively. We've heard directly from such hospitals that while they know how to manage processes excellently, they need help with the business and pricing aspects of consulting. This is where we leverage our change management and strategy expertise. Our role is not to reinvent the wheel from scratch but to complement and enhance existing capabilities through strategic alliances. We bring technology partners and startups that excel in specific operational aspects, such as surgical center efficiency. Combining these strengths creates seamless, comprehensive solutions that provide substantial value. 

The future of consulting in healthcare lies in this intelligent orchestration of solutions. We aim to act as an alliance leader, integrating various expertise into a cohesive offering that addresses the healthcare sector's multifaceted challenges. This approach ensures that the value is maximized for all stakeholders, ultimately driving the sector's evolution and improvement.