Read the Conversation
EF: How is the transition into your new role as CEO, and how did your priorities change accepting this new position?
JS: The transition is going well. We decided to make this transition a couple of years ago to revamp our board. We needed the second generation, like my father, to focus more on the strategic aspects of the business and bring different types of discussions to the board. For this to be effective, they also needed us to take on more active executive roles within the company. I've been with Mater Dei since 2006 and I also had the opportunity to work outside the company and pursue my MBA in the US. When I returned from my MBA in 2015, I joined the commercial side of the business, working as the Commercial Director for a year.
Since 2016, I have been involved in operations. My current role involves looking towards the future—not just maintaining the current business but exploring opportunities to make Mater Dei more efficient and more digital. We are focusing on how healthcare is evolving and how we can diversify our offerings. We aim to enhance our position in healthcare by integrating more technology, improving treatment options, and exploring new business branches. This includes expanding our role in education and digital businesses and fostering closer relationships with people to promote healthier lifestyles and prevention rather than just treating illnesses. This shift represents a significant change in our company's direction.
We are looking at ways to have a broader impact on healthcare by being more than just hospitals, and the third generation stepping into these roles is accelerating these changes. My grandfather, who founded Mater Dei in 1980, is still with us at 93 years old. He transitioned the business to the second generation in 2011, and now we are in the process of transitioning to the third generation. We have the joy of having three generations working together and this is something that I am quite proud of.
EF: What is Mater Dei doing to balance short and long-term goals and differentiate itself in a very active market of mergers and acquisitions?
JS: We have a history of growing organically, particularly through Greenfield projects. Most of our hospitals were built from the ground up. However, in 2021, when we recognized this significant transition in the healthcare sector in Brazil, we began pursuing opportunities to acquire hospitals in various regions. Our goal was to become a national chain, with all hospitals operating under the Mater Dei name, and leverage the synergies that come with such a presence. Before 2021, we operated three hospitals, and since then, we have acquired five hospitals in different regions across Brazil. We also constructed a new hospital in Salvador, another crucial location.
Our strategy includes expanding Mater Dei into regions where we lack significant consolidation, ensuring our units are top-notch in terms of efficiency and image. In the hospital sector, some synergies are national, while others need to be activated locally. We aim to be the best hospital in each region we operate. This local excellence helps us negotiate better with suppliers and insurance companies and attract the best doctors. While national synergies provide better negotiation positions and contracts, the relationships with doctors and patients are inherently created locally. Therefore, we focus on regions that are not yet consolidated and work to establish Mater Dei as the leading healthcare provider in those areas.
To make this possible, we have to be cost-efficient. This is an important trend happening in Brazil. Until recently, before COVID, the system in Brazil largely operated on a fee-for-service model. Hospitals did not necessarily need to be cost-efficient because they could pass on the cost of inefficiencies to the insurance companies. However, this has changed significantly due to the trend of verticalization. Now, insurance companies have more transparency regarding the prices at which we buy things and the cost to produce some of the services we provide in the hospitals. They have more information about the hospital industry overall.
This shift necessitates a greater focus on efficiency. Our strategy involves bringing the quality we have here in Mater Dei to other regions, especially those that do not have the same level of reimbursement as Rio, São Paulo, or Brasília. Our platform is designed to accommodate this, as we originate from Belo Horizonte, a region with lower reimbursement levels, meaning that cost-efficiency is ingrained in our DNA. This foundation makes us confident in our ability to expand effectively and efficiently to other regions outside São Paulo.
EF: Are there any specific KPIs that you are using to track efficiency and what areas are you focusing on the most?
JS: One of our priorities is managing the number of staff in our hospitals to ensure the right care for our patients. Since the beginning, we have aimed to build hospitals with efficient processes and advanced technology, reducing the need for excessive staffing while maintaining high-quality care. Approximately 40% of a hospital’s costs are related to personnel, including nurses and technical staff. If not managed properly, this can significantly impact our financial performance. It is important to note that the number of staff is not directly linked to the quality of care; instead, it is about having the right people in the right place.
We also focus on strategic relationships with suppliers. We aim to identify the right suppliers and leverage high volumes to negotiate better prices. For example, we engage in strategic discussions with major suppliers to reduce costs, benefiting our national consolidation efforts. We are also heavily investing in automation and artificial intelligence to streamline various processes within the hospitals. This includes using robots for routine tasks previously handled by staff, thereby increasing efficiency. In 2021, we acquired a majority stake in A3Data, a company that provides considerable value, not just by enhancing efficiency, but also by developing innovative healthcare products to aid in capillarization.
EF: Given the rapidly evolving nature of hospital equipment, what is the training protocol for your employees?
JS: Training our staff is paramount, especially given the rapid advancements in healthcare. We prioritize on-the-job training, where educational teams work alongside staff to provide immediate feedback and improvement tools. Additionally, we use digital tools to deliver offline training materials, helping staff learn and grow even when they are not physically present in the hospital. We have digital evaluation plans for each worker to track their progress and guide their development and use Oracle's platform to help our staff understand their current status and the paths they need to take for improvement. By focusing on these strategies, we aim to maintain our high standards of care while expanding our reach and ensuring cost efficiency.
EF: Why do you think one dollar invested in Brazilian healthcare is more valuable than anywhere else?
JS: Firstly, we have a vast market with significant opportunities. Currently, only 25% of our population has access to private insurance, which provides a world-class quality of healthcare. Investing in expanding access to insurance can boost productivity and positively change the country's outlook. By making healthcare more accessible and equitable, we can drive broader societal benefits.
Secondly, Brazil's diverse population presents unique opportunities for medical research. Our population's diverse genetic makeup allows us to study how different drugs function across a variety of races, providing invaluable data that can lead to more effective treatments globally. This diversity makes Brazil an ideal environment for investment in medical research, offering a rich 'laboratory' for clinical trials and innovation.
Thirdly, Brazilian people are known for their creativity and entrepreneurial spirit, often thriving despite limited resources. Providing more resources to this inherently innovative population can lead to new, efficient ways of solving problems and advancing healthcare. However, it is crucial to address regulatory challenges that can impede progress. Streamlining regulatory processes will not only attract more investment but also accelerate the development and implementation of healthcare innovations. Investing in Brazil's healthcare sector, therefore, presents a multifaceted opportunity: improving access to care, leveraging our diverse population for global health advancements, and fostering innovation through increased resources and better regulations. These steps can significantly enhance the overall health of the country.
EF: What is Mater Dei’s footprint for clinical research?
JS: We are launching a new business unit dedicated to clinical research, which has been in development for the last 6 months. While we have always had a clinical research department, its role was primarily supportive—assisting doctors by providing information to help conduct their studies. We have decided to transform this into a more focused business unit, targeting areas where Mater Dei has significant expertise. This transition marks a strategic shift towards making clinical research a core part of our business. Our aim is to leverage our strengths and create a robust platform for conducting high-quality clinical trials. To enhance our capabilities even further, we're integrating A3Data into our clinical research activities.
EF: Five years from now, what do you hope will be your biggest accomplishment?
JS: What will make me the proudest is extending the presence of Mater Dei hospitals. We are very excited about our expansion plans. Currently, we are preparing to open two new units. The first is set to open on August 23rd, and the second is scheduled for 2028 in São Paulo. This will be our inaugural unit in São Paulo. Over the next five years, I would love to see these new units and our ongoing projects flourishing and becoming as successful as our existing ones. Our goal is to not just have hospitals in different regions but to establish fully integrated Mater Dei hospitals in these areas, ensuring they embody our values and priorities. This integration is crucial for maintaining the high standards we are known for and passing the benefits this provides onto our patients.
I am also looking forward to the success of our digital platforms and products. In five years, I hope to see these innovations thriving and significantly enhancing our operations and patient care. Another key objective is to ensure that our employees and new leaders are taking on critical roles within the hospital. Promoting talent internally is essential for our growth and sustainability. It is important that not just the family executives, but also other key personnel, are aligned with our vision and ready to lead.
