Health companies’ share prices rise as nursing wage floor is suspended

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Shares of Brazil’s leading publicly-traded healthcare companies soared on Monday after Supreme Court Justice Luiz Roberto Barroso granted an injunction suspending the newly-approved nationwide salary floor for nurses.

At 3:15 pm, Hapvida’s shares were up by 2.16 percent; those of Rede D’Or, 3.79 percent; Mater Dei’s, 4.08 percent; and Dasa’s by 2.88 percent.

Justice Barroso asked federal and health entities to provide data on the measure’s impact. Several joined the constitutional challenge filed initially by CNSaúde as interested parties, representing service providers such as hospitals and clinics throughout the country.

They need to do this within 60 days. After that, the Court’s 11 justices will vote on the matter.

The new law, which plans for a minimum wage around 30 percent higher than that paid today to all professionals in the nursing category, was sanctioned on August 4 by President Jair Bolsonaro and was due to enter into force today.

Health providers and local governments are trying to adjust rules and budgets to bear the new law’s costs, but they don’t have enough resources to do so.

In the project, the estimated overall impact of the new law was BRL 16 billion per year, with BRL 5.7 billion falling on municipalities, states, and public entities; BRL 5.4 billion on the private sector; and another BRL 5 billion on philanthropic service providers that serve patients primarily under the SUS public health system.

A survey of more than 2,000 providers commissioned by health sector entities two weeks ago estimates 83,000 layoffs and the possible closure of 20,000 beds with the adoption of the nursing wage floor without any compensation in return.

Initially proposed by a senator from the Workers’ Party, the party of former President Luiz Inácio Lula da Silva, the new law was approved in Congress without indicating the funding source.

Mr. Bolsonaro could have vetoed the salary floor, but he did not do so for fear of negative repercussions ahead of his re-election attempt.

While the Lula campaign blames the government for not having foreseen a way to pay for the new measure, the government’s economic team fears that the Supreme Court will force the federal government to bear the new costs to relieve states and municipalities.

Fabiane Ziolla Menezes

Former editor-in-chief of LABS (Latin America Business Stories), Fabiane has more than 15 years of experience reporting on business, finance, innovation, and cities in Brazil. The latter recently took her back to the classroom and made her a Master in Urban Management from PUCPR. At TBR, she keeps an eye on economic policy, game-changing businesses, and people driving innovation in Latin America.