Barriers and perspectives of the European nonpublic hospital healthcare development

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Barriers and perspectives of the European
non-public hospital healthcare development

• Dr Paul GARASSUS
• BAQIMEHP, 81 rue de Monceau. France - 75008 PARIS
• President of the Scientific Council - French
  Private Hospitals
• Vice President - French Health Economy Society
• Member of UEHP - Private Hospital European Union

2
Health cost by inhabitant (DNS / OECD 2003 - EU
15)
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Health cost by inhabitant per capita OECD
for EU 15, in US PPS 2005
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Acute care and rehabilitation OECD
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OECD average cost for inpatients
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Contribution to Social Welfare System in
Europe Dr GARASSUS and Pr DURU Lyon I
University
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UEHP Members

• Austria. Verband der Privatkrankenanstalten
  Österreichs. http//www.privatkrankenanstalten.at/
  
• Belgium. Fédération des Hôpitaux Privés de
  Belgique FHPB. http//www.cobeprive.be/
• Bulgaria. National Private Hospitals Association
  Bulgaria. npha.bg_at_abv.bg
• France. Fédération de l'Hospitalisation Privée.
  http//www.fhp.fr/
• Germany. Bundesverband Deutscher Privatkliniken
  e.V. info_at_bdpk.de
• Greece. Enassis Synkronon Genikon Klinikon
  Athenon
• Hungary. Hungarian Association Hongroise Private
  Hospitals. aamed_at_chello.hu
• Italy. AIOP. http//www.aiop.it
• Poland. OSSN Polish Association of Private
  Hospitals. http//www.szpitale.org
• Portugal. Associaçao Portuguesa de Hospitalizaçao
  Privada. http//www.aphp-pt.org/
• Principauté de Monaco. Syndicat Patronal
  Monégasque des Etablissements du Secteur
  Sanitaire et Social. info_at_ccm.mc
• Spain. Federacion National Clinicas Privadas.
  fncp_at_infonegocio.com
• Sweden. Swedish Private ClinicCAPIO AB.
  http//www.capio.se/
• Switzerland. Cliniques privées suisses (CPS) /
  Privatkliniken Schweiz. http//www.privatehospital
  s.ch/index_f.asp

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France an exception or a model ?

• More than 60 of surgery operations are performed
  in French Private Hospitals (Vs Public)
• Two tariffs scales are determined for private
  sector, including Physicians fees, tariffs are
  about 40 lower than for public hospitals
• Efficiency includes quality and cost reduction
• Is this situation to enhance or to criticize ?

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Evolution of French Social Security Deficit
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Acute Care Hospitals in France ( mean
value)
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Acute Care Private Hospitals in France 2005M
medicine, S surgery, O Obstetrics, AMB
Ambulatory
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BAQIMEHP 2007 Study on  French Private
Hospitals Companies
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Générale de Santé - France

• Since its creation in 1987, Générale de Santé
  is the first French and European network of
  private hospitals, with a 16 market share in
  France in 2006. In 2005 Générale de Santé
  generated revenues of  1,435 million.
• 173 hospitals, clinics and health centers
• 4 900 independent medical practitioners.
• 16 540 employees and 1.8 million patients per
  year.
• More than 12 740 beds and places.
• The Générale de Santé share is listed on the
  Eunorext Paris Premier Marché since June 19, 2001
  and is part of the following indices SBF 120
  and Next 150.

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GDS share value (from 2001 to April 25, 2008)
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National Health Service (UK)

• Archetypal centralized public sector. Annual
  budget by national parliament. 28 Strategic
  Health Authorities SHAs and 304 Primary Care
  Trusts PCTs
• About 15 of non emergency surgery is undertaken
  privately
• Increasing independent sector treatment centers
• Hospital Sector Increasing number of NHS Trusts
  are being converted into Foundation Trusts (more
  freedom). They are not accountable to the Health
  Minister but Monitor Increase local competitive
  pressures and patient choice
• DRG payment known as PbR Payment by Result (90
  of hospital activity in 2008)

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Ramsay Health Care - United Kingdom Company
listed on the Australian Stock Exchange, which
operates 65 hospitals in Australia and 3 in
Indonesia ² TC Treatment Center
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BDPK - Wettbewerb bedeutet (Gespräch EU
Kommission am 07.02.2008)

• Heute Patienten wählen das Krankenhaus
• Qualität der Dienstleistung
• Ruf der Ärzte
• Rahmenbedingungen/Ausstattung
• Morgen Krankenkassen wählen das Krankenhaus
• Preis (Gesundheitsfonds!)
• Sonst Differenzzahlung durch den Versicherten
• Der deutsche Krankenhausmarkt verträgt KEINE
  Subventionen in Form Defizitfinanzierung

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Private Hospitals Companies in Germany by
courtesy, Jens Wernik (BDPK)

• Rhön-Klinikum AG. Financial Report 2006, Turnover
  increase 36,5 1,9 Billion, Consolidated
  profit 23,5 109,1 Millions. 1 394 035
  patients treated in 45 Hospitals belonging to the
  group with 30 409 Employees by the end of 2006
• In 2006 Capio, a Sweden based hospital-group
  takes over Deutsche Klinik GmbH (8 Hospitals, 4
  mainly basic care 4 Hospitals as
  management-contractor)
• Fresenius international provider of medical and
  pharmaceutical solutions takes over
  share-majority of Helios, one of the major
  stakeholders with 58 Hospitals (turnover 2004
  1.161 Mio)

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Evolution of German hospitals activity
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Die RHÖN-KLINIKUM AG
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Italy Data AIOP 2005

• 1,276 public and accredited private medical
  institutions. Private represents about 530 units.
  
• The accredited private contribution to services
• 41.5 of medical institutions.
• 21 of beds,
• 16 of patients,
• 19 of in-hospital days
• 12 of healthcare workers.

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Examples of waiting-list reduction in Lombardy
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EU / Important initiatives from private sector

• Mater Private Health Care in Ireland, member of
  the Irish Association of Private Hospital (around
  30 hospitals).
• Dare Care project of the Federation of
  Enterprises in Belgium (FEB) opportunities to
  create new jobs and foster economic growth
• APHP Portugal, só um sistema que garanta a
  "pluralidade de prestação, competitividade,
  eficiência e liberdade de escolha da unidade de
  saúde e do médico" poderá trazer maiores
  benefícios aos utentes.

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Europe Sightseeing (At the top)
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EU 27 countries but 268 Regions

• Austria, Belgium, Bulgaria, Cyprus, Czech
  Republic, Denmark, Estonia, Finland, France,
  Germany, Greece, Ireland, Italy, Hungary,
  Lithuania, Leetonia, Luxemburg, Malta,
  Netherlands, Poland, Portugal, Rumania, Slovakia,
  Slovenia, Spain, Sweden and UK
• 268 regions with sometimes independent health
  systems (Spain, Italy, Germany)
• Who is in Europe but not in EU Swiss, Norway,
  ex Yugoslavia republics, Albania

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Private Investment

• Increase of health costs is expected in EU
• Financing health system remains a tricky
  challenge
• Public Health is one of the first goal of all
  European governments
• Social costs must be limited or reduced for
  competitive industrial performance
• A solution could be a partnership with private
  corporate, by specific contract and efficiency
  involvement
• P4P is a useful tool, but programs have to be
  clear

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Turn-over in Ownership. Fast and Furious!

• In april 2008 Vitalia (Blackstone) French group
  of 50 clinics received 18 propositions for
  transact (Le Quotidien du Médecin N8357 21
  avril 2008)
• In 2007 Capio AB (Apax Nordic Capital) agreed
  to sell its operations in the UK to Ramsay Health
  Care Limited. The European Commission mandated
  the divestment of the UK operations for
  competition reasons.
• In 2005 Fresenius bought Helios (Germany) 1,5
  Billion
• In 2005  Générale de Santé  bought up Hexagone
  Group (private hospitals) 430 million

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100 Hedge Funds to watch Financial Times,
special report - Friday April 27 2007
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100 Hedge Funds to watch Financial Times,
special report - Friday April 27 2007London
Epicenter of Capitalism Forbes June 4, 2007
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Global Financing System and Healthcare

• Differences concerning stock exchange, sovereign
  funds and private equity
• The danger of over-reacting to recent events
• Knowledge of investment strategies and ROIC
  including benefit
• Financial markets have a tendency to go one step
  to far (Jacques Agrain, CEO Swiss Ré FT April 28
  2008)
• Stability and durability are two major factors
  for healthcare investment

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Investment in Healthcare

• Why ?
• This market is increasing but not predictable
• Tariffs (pharmaceutics, device or hospitals) are
  discussed by government
• Who ?
• Public money is limited by European budget rules
• A wide range of investors concerned hedge
  funds, banks, congregations, associations,
  foundations, physicians, etc.
• Where ?
• International, European, National, Regional or
  Local
• An investor needs security and ROIC
• Where is the comparative advantage (Adam Smith)

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World stock of direct investment abroad of
world GDP Stocks in Billions
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Return On Invested Capital ROIC in US
Industries, 1992 2006. Harvard Business Review,
p 83, January 2008.
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Return On Invested Capital ROIC in US
Industries, 1992 2006. Harvard Business Review,
p 83, January 2008.
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No  Gold Standard  for Healthcare

• Private hospital activity is growing all around
  Europe
• Hospital Organisation requires a community of
  interest between managers and medical staff.
  Benefit for efficiency ?
• For success, a collaborative process is always
  need
• Importance cost differences for the same
  procedure are ubiquitous, even in US states
• An observatory of European reforms and solutions
  is necessary, using medico-economics studies
  based on DRG and cost
• We have to coach public healthcare reforms, by
  application of private management expertise

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Policy fixes, public funds, and political
frustration

• USA / purports to honor consumer sovereignty
  over political governance, but suggest
  surprisingly a high degree of transatlantic
  convergence
• The cost horizon looks unbounded and
  uncontrollable
• Policymakers are bothered and bewildered by the
  demands the system makes but less bewitched than
  heretofore by correctives health policy analysts
  offer up
• An American researcher looks at European
  health reforms. In Reforms and Regulation of
  healthcare systems in Europe, 2006.

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Can You Say What Your Strategy Is ?

• Who is the timekeeper ? For Investment
  perspectives where is the end point ?
• Competitiveness is a choice and a necessity
• Let the market choose, is it possible ? Product
  life cycle is endless in health but investment
  and ROIC not !
• Barriers are policy makers analysis of a close
  population. Choices are difficult in a complex
  model.
• Change for economic reasons is easier than for
  social ones !
• A key solution a clear collaboration between
  regulator and operator (public and private).
• High performance with a high integrity the
  lifes inevitable ethical challenge, applied to
  healthcare.