Introduction to Apax Partners

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Introduction to Apax Partners

• June 2009

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Who Are We?
Industry leader Over 40 billion under
management and advice Investing out of a 17
billion pool of capital Pioneer in private
equity Established in 1969 in the US and 1981
in Europe Significant global reach 9 offices
in 9 countries Deep bench of industry
specialists 118 investment professionals Top
decile performance 15 year gross IRR
57 Focus on 5 sectors Healthcare, Tech
Telecoms, Media,Financial and Business Services,
Retail
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A large team local presence, global platform
Sweden Established 2004 IP 2 M Invested 690
Germany Established 1990 IP 13 M
Invested 3,488
UK Established 1977 IP 47 M Invested 11,484
Italy Established 2000 IP 6 M Invested 1,772
Spain Established 1989 IP 6 M Invested 922
China/Hong Kong Established 2005 IP 7 M
Invested N/A
India Established 2006 IP 5 M Invested 145
US Established 1969 IP 28 M Invested 3,680
Israel Established 1994 IP 4 M Invested 773
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Comprehensive Healthcare Sector Strategy
Medical Products /
Specialty Pharma /
HC IT
HC Services
Devices
Generics
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General Healthcare Group

• Largest private hospital group in the UK
• Operates 56 private hospitals (c.3,000 beds) and
  4 NHS units under the BMI and Netcare brands
  respectively
• Consolidating market Nuffield other individual
  units
• Owned by consortium
• Netcare South Africa
• Apax
• Board strengthened with appointment of Sir Peter
  Gershon, Chairman
• Netcare provided substantial operational know how
  and best practice in areas such as procurement,
  consultant recruitment, nursing hours
• Focuses on clinical excellence, quality of
  service and efficiency, with a deserved
  reputation in the independent health care sector
  for consistent achievement of these values

Original BMI Hospitals
New additions
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Capio

• Only pan-European private hospital operator
• 43 hospitals, 28 healthcare units with 14,500
  employees
• Market leader in Sweden, France and Spain
• Instead of traditional competition, chosen to
  collaborate with public healthcare
• Customers include county councils,
  municipalities, businesses as well as public and
  private insurance companies
• Ambition to be perceived as a cost-efficient
  provider of high-quality medical services

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Apollo Hospitals

• Strong brand and leading integrated healthcare
  player in Asia
• Pioneer in the corporate hospitals segment
• Network of 26 hospitals across the country with
  c.4,100 owned/JV beds additional operated beds
• Network of over 4,000 doctors, 6,000 nurses and
  an employee base of 30,000
• Clinical success rates comparable to the best
  hospitals globally
• Strong management team and excellent corporate
  governance practices
• Significant expansion plans across both hospital
  and pharmacy segments

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Case Studies
CASE STUDIES
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Fundación Jiménez Díaz
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AGENDA
Situation at FJD Capio Impact on Quality and
stakeholders
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HISTORY
SITUATION IN 2003 (PRE-CAPIO PERIOD)

• In medical terms
• High length of stay
• Lack of protocols
• Patients largely left out of the hospital's
  orientation
• Health-care services operating under faulty
  concept of quality
• Lack of coordination

• Bankrupt Hospital
• Lack of investment
• Inefficient organizational structure
• Unmotivated organization
• No concept of corporate practices (lack of
  business objectives)
• Resistance to change
• Sense of uncertainty arising from the state of
  the hospital

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HISTORY
SITUATION IN 2003

• The FJD enters into a joint venture with Capio in
  order to establish a new management model geared
  toward reversing the hospital's decline
• The hospital's three founding objectives remain
  untouched
• Health care
• Teaching
• Research
• All existing collective agreements maintained
• Members of the Capio Board of Directors join the
  FJD Board of Governors
• Management put in the hands of experienced
  professionals

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AGENDA
Situation at FJD Capio Impact on Quality and
Stakeholders
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PATIENT SATISFACTION
Complaints
We have seen a steady decrease in the number of
complaints in spite of the activity increases
that have taken place during the period
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HUMAN RESOURCES

• Introduction of 35-hour work week
• Autonomous Community of Madrid Quality Plan
• Governmental measures on the proper balancing of
  work and family life
• Increase in the length allowed for maternity
  leave
• 1990 mandate requiring sector-wide pay parity
  upheld
• Launching of an incentive/objectives plan
• Employee Retention Plan including possibilities
  for development both in research as well as
  teaching opportunities (thanks to our partnership
  with the Universidad Autónoma de Madrid)

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HUMAN RESOURCES
Total staff
Increase in open-ended contracts
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HUMAN RESOURCES
Average salary
Equal-pay initiative that came into effect
primarily after 2006 brought about a substantial
increase in average salary
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QUALITY
Results of EFQM self-assessment
European Foundation for Quality management
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RESEARCH
The FJD is among the top nine centers in Madrid
in volume of biomedical and health-sciences
publications
15 centers in Madrid with the highest biomedical
and health-sciences output (1994-2002)
The FJD is the leading center in number of
appointments and is fourth in number of
publications, behind the Hospital de Ramón y
Cajal, the Hospital 12 de Octubre, and the
Hospital La Paz
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RESEARCH

• 250 ISI-indexed publications, with 180 originals
  coming out in 2006
• 95 externally-funded research projects
• 30 new clinical trials begun in 2007
• Participant in 3 research networks and 4 Centers
  for Biomedical Research (CIBER) under the
  Instituto de Salud Carlos III Program as well as
  3 networks in the Autonomous Community of Madrid
• 2007 outside financing topped 4.3 million
• In 2007, the Fundación Conchita Rábago--a part of
  the FJD--provided 29 basic and clinical research
  grants and also funded short-term fellowships in
  research institutes

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5 years later What has been achieved?

• 50m invested in CapEx
• Increased benefits for all staff
• Enhanced care protocols
• Renewal in teaching
• Improved quality performance
• Increased responsibility for providing care by an
  additional 100,000 citizens
• Change noted by patients, professionals, the
  Madrid Health Service, and the insurance industry
  alike

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Agenda

• Swedish Healthcare System and Capio St Gorans
  Franchisee Model
• Efficiency Improvement
• Impact on Quality and stakeholders

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Swedish Healthcare System

• 100 coverage of 9 million inhabitants
• Regional taxation from County Councils
• Private medical insurances very limited and
  self-pay non-existent

• Recent International Comparison
• Largest proportion of elderly
• Main stream regarding expenditure of GNP and
  costs staffing cost lower
• Together with Finland, the lowest number of beds,
  2 per 1000 inhabitants

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Care Contract between CStG and Stockholm County
Council

• CStG is one of five hospitals in Stockholm and
  located in the city centre
• Services offered to patients based on contract
  with Stockholm County Council.
• Services include responsibility for the
  population in a catchment area with 420,000
  inhabitants
• Demographic profile includes an elderly
  population, probably the oldest in Sweden
• Long term contract
• Initial contract running between 1999 2006,
  prolonged 2005 expiring 2012
• Details in contract renegotiated annually
• Volumes and case mix on macro level.
• Reimbursement and quality
• Buildings and land owned by Stockholm County
  Council, market rent paid

• Details in contract renegotiated annually
• Additional volumes and adjustment of case mix
  possible
• Reimbursement level and quality parameters
  adjusted.
• Special compensation (RD, pharmaceuticals, med
  tech, other)
• DRG system with fee for service based on
• Production delivery
• Fulfilment of quality parameters
• Fulfilment of environmental policy
• Production capped with respect to total
  reimbursement value

Quality and efficiency key drivers
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Some key figures for Capio St Gorans Hospital
2007

• 176,200 patients treated
• Main customer is Stockholm County Council 98,
  other counties 2, ?100 public patients.
  Currently no PMI or self pay patients allowed
• Market share in Stockholm 8

• Production
• AE inpatient care episodes
• 20,665 (84)
• AVLOS 3.7 days
• Elective inpatient care episodes
• 3,948 (16)
• AVLOS 2.6 days
• AE outpatient visits
• 40,876 (27)
• Elective outpatient visits
• 110,733 (73)
• Inpatient surgical procedures
• 8,153
• Day case procedures
• 5,781

• Allocated resources
• 275 beds
• 13 theatres
• 1,486 employees, of which
• 236 are doctors
• 584 nurses
• 314 assistant nurses
• 350 other

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CStG have a significant share of older
in-patientsMost of in-patients are 80-89 years
old
Over 50 of our in-patients are 70 years or older
and 30 are over 80 years Jan-Feb 2007 vs. 2008
Share of our in-patients ()
Antal 2007
Antal 2008
100-
90-99
80-89
70-79
60-69
50-59
40-49
30-39
20-29
10-19
0-9
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Agenda
Swedish Healthcare System and Capio St Gorans
Franchisee Model Efficiency Improvement Impact
on Quality and stakeholders
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CStG set-up enables efficient steering and
implementation of continuous improvement
effortsBenefit for patients, buyers and
employees

• Governance structure and set-up of clear
  management accountability enables efficient
  decision making
• Continuous improvement efforts implemented
• Business steering through regular follow-up of
  quality, production and cost KPIs
• Continuous improvement efforts using LEAN
  principles provide significant positive results
• On AE Reduced lead-times of 50 and improved
  working conditions for staff
• On wards Morning rounds ceased - replaced by
  team visits to patient as soon as there is a need
  for a further decisions.
• Resulting in improved patient treatment, shorter
  length of stay with continuous outflow of
  patients. Example Patients discharged before
  lunch increased from 7 to 47 .
• Business steering through regular follow-up of
  quality, production and cost KPIs

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LEAN principles used

• Enable employees to drive improvement efforts
  supported by line-management
• Work with continuous improvements, Kaizen
• Focus on customer value-adding activities and
  reducing waste
• E.g. waiting time, defects, transportation,
  overproduction, over-processing, inventory,
  motion
• Create continuous flow
• Creating a pull system linking activities
• Analyzing the tact and cycle time
• Leveling activities
• Standardizing key processes
• Visualizing the results and creating clear
  feedback

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AE Reduced lead-times by 30-40 for surgery
Week-days 2006-2008
Average time to treat patient
Decrease in time to treat patient 2008 vs. 2006
-37
-34
-26
-38
-39
-x
Source Akutliggaren QlickView
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Ward Continuous flow of patients to and from the
wards created
,
Prior to the process initiative the majority of
patients were discharged after lunch (2007 Q1)
The process initiative creates a more even flow
of patients discharged, creating free beds for
the incoming patients
Q1 2007
Q1 2008
Share of patients discharged per hour ()
Share of patients discharged per hour ()
Most patients discharged after lunch at 1 p.m.
Even flow created with fewer patients released
per hour
IN
In
OUT
Out
6
8
0
10
12
14
16
18
2
20
22
24
4
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Agenda
Swedish Healthcare System and Capio St Gorans
Franchisee Model Efficiency Improvement Impact
on Quality and stakeholders
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Contract with Capio provides additional value for
the county Quality parameters

• Participation in 24 National Quality Registries
  (NQR)
• Circulatory disorders 7 NQR
• Endocrinology 1 NQR
• Upper and lower GI disorders 4 NQR
• Musculo-skeletal disorders 8 NQR
• Tumour disorders 4 NQR

• Stockholm County Council Quality Score (according
  to contract)6 main parameters with 25
  sub-measures
• Evidence based care
• Safe care
• Patient focused care
• Effective care
• Equal care
• Care within reasonable time

Results above other hospitals in Stockholm CStG
scored number one
Results in level with and in some cases above
national averages