sgs_healthcare_case_studies_hospital_due.ppt

© 2011 Sutherland Global Services Inc., All rights reserved. Privileged and confidential information of Sutherland Global Services Inc. www.sutherlandglobal.comApril 23, 2023 1

Target due-diligenceHospital Feasibility

Target due-diligence


Target due-diligence: Hospital Feasibility in the UK market

• The client, a ‘Big 4’ consulting firm, was advising the end-user, an investor interested in funding a new private hospital in London

Client

• SGS was engaged to conduct a feasibility study and due diligence covering the following aspects:• Determine the potential for demand in the three identified acute service categories, namely, Cancer, Cardiology and

Neurology, and benchmark proposed tariffs with prevailing rates for major service categories such as CABG, Angiography, etc.• Assess the current occupancy levels in London for in-patients and gauge the possible demand for out-patient consultations to

determine possible revenues for the proposed hospital• Trends and outlook related segments such as international patient segment, namely, medical tourism and UK private medical

insurance

Client Ask

• SGS conducted an extensive secondary research and reviewed the financial assumptions of the model provided, to design a discussion guide for validation of model inputs. SGS held in-depth, consultative and probing interviews with 9 Cardiac Surgeons, 12 General Practitioners, 5 Neurosurgeons, 4 Neurologists, 3 Equipment Vendors and 5 insurance companies to assess the demand environment for a private hospital in West London

• Using a bottom-up approach based on demographic data of the region, SGS made a preliminary estimate of the market-size which was validated from competitive intelligence data gathered on-ground. Market segmentation was performed and key drivers of demand were analyzed in great depth

Sutherland’s Solution

• Provided an independent third-party assessment of the expected demand for services in the region of the hospital• Helped validate assumptions w.r.t pricing of surgeries and diagnostic services and provided necessary justification to tone down the

volume expectations in key categories, namely, cardiology CABG, oncology therapies and acute neuro-surgeries • Helped assess support the project would receive from primary sponsors (i.e. surgeons) and made a recommendation accordingly

•Benefits to the Client


Addressable market for private hospital segment is quite small, estimated at around 10,000 patients

Addressable Market ~9,600

Addressable Market from HNWI~2,500

Addressable Market from Domestic PMI~3,400

Addressable Market from International Patients~1,200

# of HNWIAvg. household size5

Incidence rate of Angina1

% of patients opting for private hospital2

750,000 2.5 XX% XX%

X X X

# of private medical insurers3

Incidence rate of Angina1


1,787,000 XX% xx%

X X

1 UK’s incidence rate of Angina has been considered 2 Only a particular share of the total patients has been assumed to opt for private hospital treatment3 Excludes HNWI having private medical insurance

# of medical tourists

Ratio of patient to relatives

Prevalence rate of CHD4


98,000 XX% 10.3% XX%

X X X

Addressable Market from General~2,500

# of patients in waiting list in England

England’s population as % of UK population


123,000 XX% X%

X X

5 An Assumption4 Global prevalence rate of CHD is considered

Source: SGS estimates, XXX reports

Note: Data has been randomized


Volumes are dominated by PCI surgeries; valve operations and arrhythmia interventions have registered the fastest growth

Cardiac Surgery 2006 2007 2008 2009 CAGR

PCI – Angioplasty 73,698 77,373 80,331 83,130 4.1%

CABG 24,566 24,959 25,913 25,657 1.5%

Valve Surgery 13,080 14,754 16,489 17,840 10.9%

Heart Transplant 156 129 122 98 -14.4%

Arrhythmia Interventions (Includes Pacemaker, ICT & CRT Implants)

31,440 33,834 38,253 40,091 8.4%

• Advancement in technology (such as cardiac CT Scanners) is leading to an early detection of ischemic heart diseases and resolution through simpler procedures such as angioplasty

• Valve surgeries and ablation surgeries have registered an above-average growth over the years

Key Observations

Source: SGS research, National statistics Note: Data has been randomized


Major drivers and inhibitors of demand for cardiac treatment in the private sector

• Owing to the Coronary Heart Disease National Service Framework (CHD NSF) launched in 2000, today no patient is required to wait more than three months for heart bypass surgery

• This is a significant improvement from 2000, when more than 1,000 patients waited over a year for surgery, and from 1996 when some patients waited over two years

• Today, over 70% of people with heart attack symptoms are treated with thrombolytics (‘clot-busting’ drugs) within 60 minutes of calling for help, compared with approximately 24% before the launch of CHD NSF

• Better primary emergency response systems can reduce the risk of heart damage and complications and can thus reduce the need for complex surgeries

Explanation

• Considerable investment made by private clinics in latest technology CT scanners and other equipment have increased their clientele from the NHS network

• Lack of advanced cardiac scanning equipment at NHS facilities leads to cardiac patients being referred to private hospitals for scanning and other diagnostic services

• The European Scanning Centre, which invested £1.5m for a 3-D CT scanner, has been receiving considerably high number of patients from Harley Street for the 3-D CT scans since it purchased the scanner

Reduction in Waiting Time for CABG

Quick Response to Heart Attack Symptoms

Lack of advanced equipment at NHS facilities

Source: SGS primary research, company filings Note: Data has been randomized


Supply of cardiothoracic surgeons remains a concern as a majority are busy with on–call and elective commitments

160

350

275

220

150

250

1502000-01 2004-05 2009-10 2014-15

Estimated Requirement* Actual Availability*Note: NHS Executive projected requirements for additional cardiothoracic consultants in England, November 2001

12.1%

21.0%

24.1%

42.8%Cardiac

Cardiothoracic

Thoracic

Paediatrics

Number of Cardiothoracic Surgeons Cardiothoracic Surgeons by Specialty (2010)

Note: Figures show areas of special interest as specified by respondents. Surgeons may have more than one area of special interest, therefore the above figures may total more than the number of surgeons

• Although UK currently has adequate number of cardiothoracic surgeons, majority of them remain busy with on–call and elective duties. According to a survey

conducted by Royal College of Surgeons of England (April 2010), only 6% of total cardiothoracic surgeons generally get free from elective duties while covering

on–call responsibilities

• While 36% of surgeons surveyed expressed the desire to work part-time in the future only 38% of surgeons dismissed the need to work part-time and the

remaining 26% were not sure

• Surgeons prefer NHS over private hospitals as (i) they are hired on a salary basis, (ii) incentives for putting extra hours & (iii) they can make big name only through

NHS hospitals

Cardiothoracic Surgeons

Note: Data has been randomizedSource: SGS primary research, Industry statistics


Many facilities undertook development of dedicated floors to cardiothoracic activity and critical care

Plymouth Hospitals 58.9

Two new theatres, a state of the art critical care and coronary care unit Four co-located 26-bedded wards An administration suite where all clinical specialists and support staff are located A shell for a new general critical care unit and a new expanded library

Hospital Capex (£ Mn) Major Improvement DetailsFacility

Nottingham University Hospitals

45.2

Includes specialist medical, surgical, nursing and critical care all under one roof New facilities with two cardiology catheter laboratories An overnight-stay ward and technical cardiology on the ground floor Inpatient Morris Ward containing 36 beds on the first floor Two cardiac surgery theatres and a 16-bed critical care unit on the second floor

Oxford Radcliffe Hospitals 32.6

Four catheter laboratories with an additional shell for a fifth catheter laboratory A new cardiology floor adjacent to the catheter laboratories A floor dedicated to cardiothoracic activity Separate ambulance and patient entrances from the hospital road

South Manchester UniversityHospitals

27.8 20 consulting examination rooms, stress test area including a five-room echo suite, tilt test,

exercise and ECG rooms plus support rooms 26 critical care bed spaces (including 6 isolation standard spaces) and support rooms A 250m2 area earmarked for the provision of a cardiac MRI suite

Basildon & Thurrock UniversityHospitals

75.2 3 cardiac catheter laboratories for tertiary activity and a shell for a fourth laboratory Cardiology inpatient and day stay beds 3 operating theatres and a shell for a fourth A 22-bed critical care facility; cardiothoracic surgery beds

Source: SGS primary research, company filings Note: Data has been randomized


The UK private cardiology market is fragmented with leading London providers controlling over a third of the market

The market share is based on cardiac surgeries conducted by the hospitals and is for 2008-09

Total The WellingtonHospital

London BridgeHospital

RoyalBrompton*

The HarleyStreet Clinic

Others

100% 12.0%10%

8%5%

65.0%

Source: SGS primary research

Share of the leading London providers in the overall UK private cardiology market

Note: Private patients unit is considered

sgs_healthcare_case_studies_hospital_due.ppt

Documents