The new mix of healthcare facilities –Meeting demand through specialized ambulatory clinics Fried Oelschlegel – Healthcare Development Holding Co. ; Jeddah01. December 09.40 am

Healthcare landscape in transition

■ From Primary Care to Clinics & Group practices for Specialized Ambulatory Care - a new player in the market

■ The business case for building specialty and sub-specialty facilities for ambulatory care

■ Taking specialty care to previously neglected rural areas or bringing patients from rural areas to Centre for Specialized care in urban areas

■ Providing more cost effective services and easing the burden on larger hospitals

■ The future of Centre for specialized ambulatory care

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Ambulatory Care

Primary CarePhysician Office

for Specialty Care

“first contact”

continuity of care

comprehensive care

individualized care

health promotion,

disease prevention,

early detection

Particular organ system or disease type

health promotion and prevention

specialized training

one point in time

Group Practice/ Centre for

Specialty Care

Multiple specified organ systems or chronic disease types specified diagnosis , therapy & rehabilitation & follow up’s & recurrence management comprehensive services – incl. interventional diagnostic & therapy / Day Surgery

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A core tendency Better care is starting with better diagnostic & therapy –

“better” means treatment by physicians who are highly specialized in a certain medical field

Better care means also to enable these specialized physicians to handle the complete cycle of the required specialized care: Diagnostic – Ambulatory Care – Stationary Care – Medical Rehabilitation – Follow up’s & recurrence management

Such experts should not be misused with clinical day by day routine tasks but being focused on patients only who need such specialized skills and experiences.

To attract and retain such experts required an intellectual working environment which is stamped by interdisciplinary collaboration with other experts who are also sub-specialized in the same or similar medical specialty for their own continuously education and training to enhance better medical care for patients.

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Experts – a wide spectrum of responsibilities

Ambulatory Care

Ambulatory physician

interventional procedures

Day Surgeries

Stationary Care

Medical Rehabilitation

Follow Up & Recurrence

Management

Research

Academic Activities

CME

Staff Education

Family ???

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Drivers for specialized & sub-specialized care

■ Prevalent chronic non-communicable diseases

■ Important incidence & morbidity ; growing market demand

■ Complex diagnostic & therapeutic technologies with accelerating life & innovation cycles

■ Cross border etiology to other medical specialties

■ Various treatment options ( invasive/non-invasive )

■ Requirement of participation in clinical trials & research

■ Striving for international recognition & Branding

Beeson, Ann Int Med, 1980

Cardiovascular Diseases

Musculoskeletal Diseases

Autoimmune Diseases

Cancer

Endocrinology Disorders

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Technological innovations in healthcare over the past 20 years are generally characterized as:

Traditional Invasive Less Invasive Non-Invasive

Technological Impacts

Open heart surgery 25-30 yearsAngioplasty 10-15 years

Cardiac Balloon Catheter ($500) Stent ($2,300) Treated Stent ($5,000)X-ray machine ($175,000) CT Scanner ($1MM) CT Functional Imaging w/ PET

($2.3MM)Open Surgery Instruments ($10,000) Laparoscopic Surgery Set ($15,000) Robotic Surgery ($1MM)

Less Invasive

Having a Shorter Life Cycle

Increasingly Costly

Open CholecystectomyOne 10-18 cm

incision

Laparoscopic Cholecystectomy

Three to four 1 cm incisions

Single Incision Laparoscopic

CholecystectomyOne 1.5 – 2cm

incision

Bare metal stent 7-10 yearsDrug-eluting stent 3-6 months

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Process & Outcome Measures - Example

Diabetes Mellitus Congestive Heart Failure Coronary Artery DiseaseHypertension & Cancer

Screening

HbA1c Management LVEF Assessment Antiplatelet TherapyBlood Pressure

Screening

HbA1c Control LVEF TestingDrug Therapy for

Lowering LDL Cholesterol

Blood Pressure Control

Blood Pressure Management

Weight Measurement Blood PressureBlood Pressure Plan of

Care

Lipid MeasurementBlood Pressure

ScreeningLipid Profile

Breast Cancer Screening

LDL Cholesterol Level Patient Education LDL Cholesterol LevelColorectal Cancer

Screening

Urine Protein Testing Beta-Blocker Therapy Ace Inhibitor Therapy

Eye Exam Ace Inhibitor Therapy

Foot Exam Warfarin Therapy

Influenza Vaccination Influenza Vaccination

Pneumonia Vaccination Pneumonia Vaccination

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Traditional definitions are not obsolete

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In medicine, tertiary healthcare is specialized consultative care, usually on referral from primary or secondary medical care personnel, by specialists working in a center that has personnel and facilities for special investigation and treatment.

Primary CareCentre

Tertiary CareHospital

Secondary Care –General Hospital

Physician Office

Centre for specialized care fulfill the classical definitions for provision of tertiary care

Patient Safety & Quality

In a recent NBR broadcast, Dr. Toby Cosgrove, CEO of the Cleveland Clinic was asked “…What do you think is the most important issue facing other hospitals as they adapt to the new health care law?”

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“…Clearly we're going to see more patients and so I think one of the important things for the country …we need to become more efficient. And in order to do that, we need to measure quality, as well as measuring costs, so we get maximum value for our health care spending. We also have got to be very concerned about our efficiency and driving down costs and we need to have hospitals collaborate with hospitals, so you come together as a system, so you don't repeat technology and back office sorts of things. We need to have doctors coordinate with hospitals to drive the efficiency of the hospitals…”

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The Business Case

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HDH has rich experience in developing and operating of such specialized centre. Our Centre – and further similar projects we have in the pipeline of development – are based on some core assumptions. E. g

Centre for Orthopedics & Musculoskeletal Disorders :All orthopedic Sub-Specialties

●Adult Joint Reconstruction (Hip and Knee)● Foot and Ankle ●Spine/Scoliosis Services ●Shoulder & Elbow ●Sports Medicine (including Shoulder & Knee) ●Hand & Microsurgery ●Pediatric Orthopedics ●Trauma ●Sarcoma/Musculoskeletal Oncology ●Rheumatism, Arthritis, Osteoporosis●Podiatry, Neurology, Pain Clinic, Rehabilitation with Physiotherapy & Ergotherapy,

Medical Imaging, Medical Laboratory,●Day Surgery

10 Clinics ; 14 Physicians, app. 64,800 out-patient visits; 3,456 day surgeries; 518 In-Patient Surgeries in cooperation with a local hospital

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Financial Indicators & sustainable success Orthopedic Centre – 10 years forecast approach EBITDA 40 %

NET-Profit Rate NPR 47 %

Internal Rate of Return on investments

IRROI 20,7 %

Internal Rate of return in equity

IRROE

29,6 %

Return on Investments ROI 30,8 %

Payback period in years

PBP 3,6

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1. Professional management 2. Group practice model with

Physician Partnership 3. Operation manual &

policies in regards of

● Service provision● Case management● Quality assurance &

improvement● Staffing● Purchase & supply

management● Performance control ● Financial results & audit● Dividends● Profit , Losses & Risk sharing

● Strategic business plan● Brand Development

Standardized financial model – replicable for similar projects; Funding through PROPCO – OPCO structure which is very attractive for private equity

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a core issue for driving the business

Partnership is the term of future

■Developing corporate governance – team spirit & culture

■Attracting “ high caliber “ of physicians

■Success participation – not limited on physicians but also other key medical & management staff

■Brand building & recognition

■ Fully transparency in all clinical & financial processes & outcomes■ Patient centered quality control & improvement■ Patient Experience – Clinical Quality – financial performance are

understood as indivisibly core unit■ Participation in academic affairs and research is opening the

doors for international recognition & affiliations

It will open a new chapter in healthcare provision but need the will, courage and patience for change management.

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Taking the new model to the next level

3 Clinic Centre Functions Hospital

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a possible future scenario ….

Day Surgery & TR

Ancillary Service

Parking

OR-Units & ICU

In the past: Hospitals have operated clinicsIn the future: Clinics operating a hospital in accordance of the needs; a hospital will get a service function for specialized centre; the operation will be divided in OPCO = Business Management & Clinic Management through Physician Partnership models PROPCO = Real Estate Management

Rehabilitation

Parking

We need to have doctors coordinate with hospitals to drive the efficiency of the hospitals…”

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…which has start already

…. represented in different ways in hospital projects in Jordan, UAE, Egypt, Saudi Arabia and other countries as well.

HDH is developing such complex centre for specialized surgery in a Boutique style ( 100 beds; Centre for Orthopedics, Heart Centre, Centre for Esthetic & Reconstructive Surgery ) through participation of major healthcare stakeholders , physician partnerships and external healthcare provider as operator.

We believe that such projects will not be only “ add on “ complementary facilities to existing market structures – but they will become the major drivers for medical quality and financially efficiency in this market.

EBITDA, NETPROFIT MARGIN, IRR, PAYBACK PERIODE will be also in future the cornerstones and measurable hard facts for success – possible through patients & staff satisfaction - nothing else

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Specialized care in rural areasSpecialized care in rural areas

Easing the “ burden “ Easing the “ burden “ Will be a side effect only Will be a side effect only

Will not be sufficientWill not be sufficient

Two questions & two short answers

Taking specialty care to previously neglected rural areasTaking specialty care to previously neglected rural areas

Providing more cost effective services and easing the burden on larger hospitals

Providing more cost effective services and easing the burden on larger hospitals

This will be a side effect but can not be the primary goal.

It is a open discussion under healthcare experts that the “ traditional GENERAL HOSPITALS “ are in longer range “ running out models “ cuase lack of specialized care, medical quality, flexibility and financial efficiency .

This will be a side effect but can not be the primary goal.

It is a open discussion under healthcare experts that the “ traditional GENERAL HOSPITALS “ are in longer range “ running out models “ cuase lack of specialized care, medical quality, flexibility and financial efficiency .

To increase density of primary care centre in rural areas incl. the opportunities of seamless reference of patients to specialized centre in urban areas . Also E-Health will not bring the break through for better care in these areas

To increase density of primary care centre in rural areas incl. the opportunities of seamless reference of patients to specialized centre in urban areas . Also E-Health will not bring the break through for better care in these areas

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A WORD OF THOUGHT…

It is not the strongest of the species that survives, not the most intelligent, but the one most responsive to change

Charles Darwin ( 1809 – 1882 )

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