Forecast of Corporate Failures in the Health Insurance Providers: An Analysis of the Supplementary Brazilian Health Sector

The supplementary health sector in Brazil plays an essential role, offering access to private health services for more than a quarter of the population. However, a continuous decrease in the number of Health Insurance Providers (HIPs) indicates a market concentration process, posing socioeconomic risks. To address the impacts of these closures, this study develops a predictive model to identify the key factors leading to corporate failure. A major limitation of existing research is its reliance on ambiguous insolvency proxies, such as negative net equity. This study fills a critical gap by adopting a more robust definition of failure: the compulsory termination of a provider's activities by the national regulatory agency (ANS). Applying logistic regression to a sample of 677 providers from 2014 to 2020, the model identified the EBITDA margin, net equity on total assets, working capital on total revenues, and financial assets on current liability as significant predictors. Notably, the model revealed that high volumes of short-term receivables relative to current liabilities are positively correlated with the probability of failure, suggesting this metric can mask underlying financial distress. Among categorical variables, being a self-insurer or a health cooperative was found to reduce the chances of failure. The model demonstrated high discriminative capacity (92%) and achieved 77.8% accuracy in forecasting failures in the sample test. The findings provide a crucial early warning tool for regulators, HIP managers, and stakeholders to enhance financial risk management and prevent service disruptions in the supplementary health sector.