UNIMED Maceio : Brazil -- final evaluation report, June 1993-May 1997

In 6/93, PROFIT and UNIMED Maceio jointly purchased the CSSS. By owning a hospital, UNIMED Maceio hoped to better control costs and reduce payments to third-party providers. The savings were to be used to support MCH/FP activities. If successful, the project would be a model for the other 195 chapters of the UNIMED HMO throughout Brazil. An 11/93 baseline survey of female members of the UNIMED HMO revealed a high contraceptive prevalence. To have an impact, PROFIT recommended that the MCH/FP clinic be promoted to low-income women. The clinic's opening was delayed for almost 2 years due to: UNIMED Maceio's resistance to include low-income women in the clinic's target market; the lowered priority of the clinic in the face of economic pressures; UNIMED Maceio physicians' fear of competition from the new clinic; and a lack of interest in FP on the part of newly elected UNIMED Maceio management. Since its opening in 9/95, the clinic has offered obstetrical and gynecological (OB/GYN) consultations, diagnostic services, FP services, and vaccinations. As of 4/96, 216 clients had received OB/GYN consultations, and 148 clients had received FP services. Compared with the general population in northeastern Brazil, the clinic's clients have fewer children and higher contraceptive use. Due to the subproject's implementation problems and the partner's unwillingness to operate the MCH/FP clinic in a way that would allow for any FP impact, PROFIT and USAID decided that PROFIT should divest its 49% share of CSSS. On 2/7/97, UNIMED agreed to buy PROFIT out for $1.5 million, to be paid over 36 months. Several lessons were learned. (1) Baseline market research should be done before any investment is made in order to determine the potential FP impact and feasibility of reaching the target market. (2) A thorough understanding of the partner's power structure and the incentives and motivations of stakeholders will help identify barriers and obstacles to the achievement of the subproject's goals. (3) A cooperative has some characteristics that can make it a riskier subproject partner, specifically: regular changes in leadership through elections; the need for a majority vote for major decisions; and the fact that cooperative members, being owners, have more power than employees to influence top management. (4) FP activities do not require large capital expenditures. (5) Holding a minority equity position generally puts the investor at a disadvantage, and PROFIT has avoided joint ventures as a result of this experience. (6) Negotiated contracts should include a shareholder agreement specifically delineating the project's goals and a detailed divestment process through which the investor can withdraw from the venture if the partner does not comply with the shareholder agreement. (7) A stable economy -- in particular, a favorable legal and regulatory environment, monetary stability, and an established business environment -- is decisive in ensuring the viability of commercial FP subprojects. (Author abstract, modified)