quality. compassion. care. - capio group · quality. compassion. care. 1 9% 37% 54% ... germany:...
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Quality drives productivity and growthIntroduction to Capio
January, 2016
Quality. Compassion. Care.
1
9%
54%37%
Footprint (2014)
Sales: SEK 13.2 billions
Capio today
• About 12,400 employees and 4.6 million
patient visits in Sweden, Norway, France
and Germany
• Offers a broad range of medical, surgical
and psychiatric care of high quality in our
hospitals, specialist clinics and primary care
units
• Strong well established brand, recognized
for high quality and Modern Medicine – one
of the sector’s strongest brands in Europe
• Founded in 1994 in Gothenburg. De-listed
in 2006 and listed on Nasdaq OMX
Stockholm in 2015 (June). In the past nine
years Capio has:
– Developed a medical strategy
– Driven by an empowered organization
– Invested in facilities and equipment to
build for the future
A leader in European healthcare
2
Capio footprint
University
hospital
Emergency
hospital
Local
hospital
Specialist
clinic
Primary care
unit
France
• 8 emergency hospitals
• 11 local hospitals
• 3 specialist clinics
Germany
• 5 general hospitals
• 4 specialist clinics
• 1 hospital with rehabilitation and
care facilities
• 7 outpatient clinics (Medical Care
Centers, MCC)
Norway
• 8 medical centers
• 2 specialist clinics
Sweden
• 1 emergency hospital
• 2 local hospitals
• 30 locations for specialist care
• 18 locations for psychiatric care
• 76 locations for primary care
Nordic
Capio footprint 2015
Experience across all care levels
3
12,96013,395
7,301
8,459
10,1289,7309,855
10,417
12,420
13,20013,426
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
2007 2008 2009 2010 2011 2012 2013 2014& PF
2015RTMSep
Historical financial performance
Source: 2012-2014 based on audited FS for Capio Holding AB Group – no adjustments made. 2007-2011 based on audited FS for Ygeia TopHolding AB Group – adjusted for divested
business in 2010, 2009 and 2008 (Spain, Unilabs and Diagnostics)
1 EBITDA defined as EBITA adjusted for depreciations and impairments related to operating fixed assets; 2 CAGR and average based on 2007-2014; 3 Adj. related to the handover of a
contract business in Capio Nordic to another healthcare provider (MSEK -160) and for the divestment of UK (MSEK -80); 4 Adj. related to the handover of a contract business in Capio
Nordic to another healthcare provider (MSEK -25), the French SLB transaction (MSEK -92) and for the divestment of UK (MSEK -13); 5 Adj. related to the handover of a contract business
in Capio Nordic to another healthcare provider (MSEK -24), the French SLB transaction (MSEK -66) and for the divestment of UK (MSEK -11)
3.4 4.1 9.0 3.8 4.5 2.5 2.3 3.6 4.3 5.0 5.8 5.4 5.2 4.9
Average organic sales growth2 4.2%
EBITDA margin (in % of Net Sales) EBITA margin (in % of Net Sales)Organic growth (in %)
4.0 4.9
4.1
Net Sales (MSEK)
8.8% CAGR 9.6% CAGR 13.5% CAGR
EBITDA1 (MSEK) EBITA (MSEK)
2 2 2
EBITDA margin
(in % of Net Sales)EBITA margin
(in % of Net Sales)
Pro forma margin, % Pro forma margin, %
4.5%
4.4
% 3.0
3
% 7.9 8.5 8.9 9.7 9.3 9.5 8.7 8.3 7.6
7.4 7.5
9721,009
580
722
906940 919
988
1,0841,102
1,015
0%
4%
8%
12%
16%
20%
24%
28%
0
200
400
600
800
1,000
1,200
1,400
2007 2008 2009 2010 2011 2012 2013 2014& PF
2015RTMSep
4
544
594
266
367
511565
532 545608
645 599
0%
4%
8%
12%
16%
20%
24%
28%
0
200
400
600
800
1,000
1,200
1,400
2007 2008 2009 2010 2011 2012 2013 2014& PF
2015RTMSep
5
4
GERMANY
Private hospitals
(shares by general hospitals)
FRANCE
MSO private hospital care1
(shares incl. all private hospitals)
Capio-relevant markets and segments
Private healthcare provision in Capio markets
Summary of market outlook, 2013-18E, EUR billions
16
+~2% p.a.
16-17
2013 2018E
1520
+6-7% p.a. 2
2013 2018E
23% ~16%
Private provider market share
Percent
SWEDEN
Private primary
and specialist care
2.7
+5-8% p.a.
3.4-3.9
2013 2018E
13%
NORWAY
Private specialist healthcare
(shares also incl. primary care)
1.1-1.20.9
+3-5% p.a
2013 2018E
6%
Source: Capio market assessments
1 Private and public MSO Hospital care market in France is estimated at EUR 65 billions in 2013
2 Refers to forecast 2012-2018E
+1-2% p.a.+0-1% p.a.
%Additional market growth from Capio market mix
Percent
20131998 20132004 20132000 1995 2013
7% 7% 23% 5%
+0-1% p.a. n/a
Private providers are an important part of the solution
5
The European healthcare market is
evolving
6
The European challenge is not going to ease –
demographic squeeze is driving need and costs
Source: OECD Health data 2013, World bank
The population structure develops towards a larger share being elderly
Population pyramid of EU 1960 to 2050
Required healthcare expenditures expected
to continue increasingTotal expenditure on health, GDP (%)
NorwayUnited KingdomGermanyFranceSweden
0
5
10
15
2030E2020E201020001990198019701960
Future development
projected in line with
historic OECD
average CAGR from
2002 to 2012
Medicine and technology increase life
expectancy for an evermore care seeking
population – boosting care consumption
Innovation drives demand
Advances in medicine, technology
and treatment methods that increase
life expectancy and care
consumption
Consumerism drives demand
A more informed and care-seeking
consumer seeking “sickness prevention”
Pressure to provide “quality healthcare with higher productivity” as fewer people have to
pay for an increasingly large share of the population
7
Large gaps and slow implementation create
opportunities
Historic implementation of modern
medicine is a slow process…
17 YEARS1
Best-practice
proven
Best-practice
implemented
Source:
AVLOS – Sweden: Socialstyrelsen; Norway: Helsedirektoratet; France: ATIH; Germany: Federal Statistical Office's DRG browser; Finland: Eurostat ; UK: Health and Social Care Information Centre; Spain: Eurostat; Best-
practice - knee prosthesis: North Wales knee clinic; Best-practice - AMI: US Healthcare costs and utilization project
Ambulatory surgery – All countries excluding Germany: Eurostat; Germany: German association of ambulatory surgery; Best-practice - Inguinal hernia: NHS; Best-practice - Tonsillectomy: US agency for healthcare
research and quality
1 Goodman et al. 1997; 2 For Norway 2011 data and only reported as aggregated data for knee and hip prosthesis
Knee
prosthesis
Acute
myocardial
infarction
2 >15
2 >15
6.62 8.64.0 5.3 9.82.4 4.0 11.3
6.8 7.64.1 6.7 8.0~3 4.0 8.4
AVLOS
Days
Inguinal
hernia (open
surgery)
Tonsillect
-omy
0 80
0 90
64 6643 46 6814 75
38 5721 30 514 85
Share of
ambulatory
surgery
%
Best-practice…with large performance gaps between countries
Use Capio’s know-how to transfer knowledge and speed up change
88
What happened in Sweden?
2000 20101990 2020
Year
Total expenditure on health1, GDPPercentage
198019701960 2030
Source: OECD Health data 2014
1 Healthcare, long term nursing care, dental services and pharmaceuticals
2 Future development projected in line with historic OECD average CAGR from 2002 to 2012
OECD
Norway
Germany
United Kingdom
France
Sweden
Actual data until 2012
Prognosis from 20132
“12% track”
“10% track”
0
5
10
15
20
Sweden was an early adopter of performance based reimbursement
9
Rapid recovery
after surgery
Multi-modal
intervention
Conventional
treatment
Surgery
WeeksDays
Functional
capacity
Meeting discharge criteria
Earlier discharge
AVLOS
No complication
Pain under control
Managing activity of daily living
Cannot reduce AVLOS without improving quality
Rapid recovery – the result of better quality
10
14%15%16%
21%
15%
12%14%
17%
12%10%
The Swedish healthcare system has its
challenges
Source: SKL (vantetider.se)
Specialist care – surgeries and proceduresSpecialist care - visits
Nation-wide Stockholm
Sweden has not yet met its target thresholds for waiting times, in particular outside of the Stockholm region
Long waiting times and an experienced lack of resources drive need for
increased productivity in the Swedish healthcare system
Performance on target levels for waiting times (‘vårdgarantiuppfyllelse’); Share of patients who have waited > 90 days
2011 20132012 2014 2011 20132012 2014
11%11%12%
17%
14%
5%6%
15%
8%8%
11
Estimated annual consultations per doctor
Source: OECD
A doctor treating more patients becomes a more skilled doctor
Source: SCB
Swedish development of population, patients and resources
Partly explained by low staff productivity
• Inpatient growth in line with
population growth
• Outpatient growing faster
• Doctor growth in line with
population growth
• Help nurses and especially
nurses outgrowing population
• Annual consultations per
doctor lower than in similar
countries
• Clinical staff burdened by
non-clinical tasks and old
fashioned administration –
too little time spent with
patients!
(2012)
12
Two keys to change (1/2): Recent healthcare
system reforms
Performance-based
remuneration
Mo
de
rn
Me
dic
ine
&
Ma
na
gem
en
t
Consolidation
AVLOS
In-to-out
Staff productivity
Focus on traditional
scale synergies
LEON / Specialization ?
Illustrative country overview
? Indicative relevant market trends
2003 2005 1997 1995
Different starting points and times, but all striving for the same direction
13
Two keys to change (2/2): Modernised
organisation
YES!
Taking
initiatives!
NO!
Waiting for
orders?
Group
Business area
Region
Main unit
Unit
Care
unit
Capio decentralized responsibilities
Communication Reputation
Efficiency Management
Resources
Overhead
Direct costs
KPI
KPIProduction
Productivity
Sales
Gross result
Operating
result
KPI
Improved operating result
= an effect of quality and
productivity
Capio’s model for linking quality to results
QPI
Empowered to do the best every day!
14
Capio’s strategy – Modern Medicine and Modern Management
15
Modern Medicine and Modern Management
The patient in focus
• Modern Medicine with new treatment
methods and techniques and a sound
treatment of patients, enables shorter
AVLOS and a continued shift from
inpatient to outpatient treatments
• Modern Management to free up more
patient time for doctors and clinical staff
and to improve productivity
HIGHER QUALITY OF HEALTHCARE
Focus on quality and productivity drives volume and profitability
16
2007: Importing of Capio
Model to France
Future: Integrated regional hubs
structured along a star networkToday: Strong
regional hubs
Increasing
productivity Closing beds Merging
Consolidation strategy
• A “star network” is a physical and virtual
network around main units
• Modern “main units” with a large set of
activities attracting both patients and doctors
• Several small specialized units (e.g., day
care center, rehabilitation and post-acute,
psychiatry)
• Individual medical practices, consultations
and homecare in areas surrounding Capio’s
clinics
Star network
• Regroup existing facilities into new
facilities
• Attract new doctors and patients
• Continue to reduce AVLOS and
improve productivity
Surgery
Daycare
Consultancies
Maternity
Medicine
Emergencies
Capio clinic
General
practitioners
Proximity care
centres
Day care
centres
Rehab
Specialists
Homecare
Health
Insurance/
Regional Health
Authority
Compli-mentary
Insurances
• Dedicate doctors to
local points of care
• Improve accessibility for
patients
• Attract new patients
FRANCE
Modern Medicine allows optimization of flows
and consolidation of units…
17
Hip and knee prosthesis surgery Capio France
4 066
4 911
5 296 5 529 5 949 6 207
27
11
19
33
43
0
10
20
30
40
50
60
70
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
2010 2011 2012 2013 2014 2015RTM
Number of procedures
Discharged, % <=4 days
Number of inpatients and outpatients %
Average change per year 2009-2014
Capio France Total France
3.0 1.8
*RTM Sep 2015
• A leader in Modern Medicine in France
• In outpatient care Capio is ahead of and
increasing more than the French market
• Transfer of inpatients to outpatients 3 pp,
from 64% to 67% in the last twelve months
(Sep 2015)
• Capio is currently creating the first pure
outpatient center ever in France for surgery,
including hip and knee replacements in day
surgery
Share of operations in outpatient surgery
in Capio France and total French market, %
Source: ATIH, Capio
Capio Clinique de
Domont, outside Paris
FRANCE
Provided in
daycare
Number0 1 8 26 160 405*Source: Capio
43% of all hip and knee replacements were done in less than four days
Modern Medicine driving shorter AVLOS and
shift from inpatient to outpatient care
*
18
6-8 patients per care team* = Other tasks include e.g. telephone, tutorial/introduction, meetings, other administration, coordination, business outside ward, waiting/searching, quiet time
!
• Significant improvements in staff utilization
needed to manage waiting times to treatment
for patients and working environment for
clinical staff
• Observations from initial studies at some Capio
hospitals suggest;
• Only 12-14% of daily work performed by
nurses are allocated to direct patient time
• About 40% constitutes of documentation,
reporting, and pharmaceutical handling
• Large variations in the number of
patients per care team (4-9), doctor
consultations per day (7-22) and staff
hours per operation hour (6-22)
Illustrative example based on initial studies at some Capio wards
SWEDEN
Modern Management – more time for the
patient
Source: Capio
Modern Management leads to a more efficient use of resources
19
Quality
6-8 patients per care team
9.6 min per patient and day10-12 patients per care team
13.1 min per patient and day
1 = When the number of patients increases, the time for indirect care and rounds have increased proportionally
* = Other tasks include e.g. telephone, tutorial/introduction, meetings, other administration, coordination, business outside ward, waiting/searching, quiet time
36% more time spent with patients, but a significant reduction of total staff time
SWEDEN
From where we are to where we want to be
More time for direct and indirect care1
20
CStG CCB
11%
26%
A lesson learnt from France
SWEDEN
More time spent on rounds
Doctors and nurses work together
21
Knee
prosthesis
Acute
myocardial
infarction
2 >15
2 >15
6.6 8.84.4 5.3 9.82.4 4.0 12.5
6.8 7.64.1 6.7 8.0~3 4.0 8.4
AVLOS
Days
Inguinal
hernia (open
surgery)
Tonsillect
-omy
0 80
0 90
64 6643 46 6814 75
38 5721 30 514 85
Share of
ambulatory
surgery
%
Best-practice
Source:
AVLOS – Sweden: Socialstyrelsen; Norway: Helsedirektoratet; France: ATIH; Germany: Federal Statistical Office's DRG browser; Finland: Eurostat ; UK: Health and Social Care Information Centre; Spain: Eurostat; Best-practice - knee
prosthesis: North Wales knee clinic; Best-practice - AMI: US Healthcare costs and utilization project
Ambulatory surgery – All countries excluding Germany: Eurostat; Germany: German association of ambulatory surgery; Best-practice - Inguinal hernia: NHS; Best-practice - Tonsillectomy: US agency for healthcare research and quality
• Germany late in
implementing Modern
Medicine
• Performance based
remuneration introduced
in 2005, but
administrative restrictions
prevent development
• Political reform needed
and discussed
The biggest potential in Europe
GERMANY
A platform for Modern Medicine
2222
Linked together from the patients’ need to financial results
How we make this happen – The Capio Model
A sustainable way to drive quality and productivity
23
Benefit from recent large investment projects
made to support the Modern Medicine strategy
Acquire and integrate small add-ons in France
and Sweden to strengthen regional clusters and
centers of excellence• Small and medium scale acquisitions
– E.g. Clinique du Parisis in France
• Return requirements – Capio targets multiples of 5-7x
EBITDA (pre-synergies)
Structural acquisitions in existing countries and
over time in new countries
Capture scale benefits from completed
projects and integrate small add-ons
Acquisitions part of the strategy
24
Net sales growth
The target is to grow
organically at least in line
with the market and add
acquisition growth at least
at a similar rate over time
Operating result (EBITDA)
The target is to grow
operating result at a higher
rate than sales growth
through increased
productivity and operational
leverage
Net capital expenditure
The target with present
business mix is to keep net
capex around 3% of net
sales per year including
Modern Medicine and
expansion related capex
Net sales and organic sales growth (RTM) Operating result (EBITDA) and margin (RTM)1 Net capital expenditure and in % of sales (RTM)
0
1
2
3
4
5
6
7
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
Q3 Q4 Q1 Q2 Q3
2014 2015
Net sales, RTM
Organic sales growth, % RTM
MSEK %
0
2
4
6
8
10
12
14
0
200
400
600
800
1,000
1,200
1,400
Q3 Q4 Q1 Q2 Q3
2014 2015
Operating result (EBITDA) RTM
Op margin (EBITDA, % RTM
MSEK %
0
1
2
3
4
5
6
7
0
100
200
300
400
500
600
700
Q3 Q4 Q1 Q2 Q3
2014 2015
Net capital expenditure, RTM
In % of sales, RTM
MSEK %
Financial targets
25
Questions & Answers