The new mix of healthcare facilities – Meeting demand through specialized ambulatory clinics

1. The new mix of healthcare facilities – Meeting demand through specialized ambulatory clinics Fried Oelschlegel – Healthcare Development Holding Co. ; Jeddah 01. December 09.40 am

2. 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 F.O. Specialized Clinics - 2 -

3. Ambulatory Care Group Practice/ Centre for Specialty Care Physician Office for Specialty Care Primary 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 • “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 F.O. Specialized Clinics - 3 -

4. 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. F.O. Specialized Clinics - 4 -

5. Experts – a wide spectrum of responsibilities • Follow Up & Recurrence Management Academic Activities Staff Education Research CME Family ??? F.O. Specialized Clinics - 5 -

6. Drivers for specialized & sub-specialized care Cardiovascular Diseases Musculoskeletal Diseases Autoimmune Diseases Cancer Endocrinology Disorders • 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 F.O. Specialized Clinics - 6 - Beeson, Ann Int Med, 1980

7. Single Incision Laparoscopic Cholecystectomy • One 1.5 – 2cm incision Technological Impacts • Open Cholecystectomy • One 10-18 cm incision • Laparoscopic  • Cholecystectomy • Three to four 1 cm incisions Technological innovations in healthcare over the past 20 years are generally characterized as: Less Invasive Having a Shorter Life Cycle Open heart surgery  25-30 years Angioplasty  10-15 years Bare metal stent  7-10 years Drug-eluting stent  3-6 months Increasingly Costly 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) F.O. Specialized Clinics - 7 -

8. Process & Outcome Measures - Example F.O. Specialized Clinics - 8 -

9. Traditional definitions are not obsolete 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. Tertiary Care Hospital Secondary Care – General Hospital Primary Care Centre Physician Office Centre for specialized care fulfill the classical definitions for provision of tertiary care F.O. Specialized Clinics - 9 -

10. 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?” “…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…” F.O. Specialized Clinics - 10 - 10

11. The Business Case 4 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 F.O. Specialized Clinics - 11 -

12. Financial Indicators & sustainable success • Professional management • Group practice model with Physician Partnership • 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 F.O. Specialized Clinics - 12 -

13. a core issue for driving the business F.O. Specialized Clinics - 13 -

14. 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 butneed the will, courage and patience for change management. F.O. Specialized Clinics - 14 -

15. Taking the new model to the next level 3 Clinic Centre Functions Hospital F.O. Specialized Clinics - 15 -

16. a possible future scenario …. In the past: Hospitals have operated clinics In 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 We need to have doctors coordinate with hospitals to drive the efficiency of the hospitals…” F.O. Specialized Clinics - 16 -

17. …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 F.O. Specialized Clinics - 17 -

18. Two questions & two short answers Specialized care in rural areas Will not be sufficient Taking specialty care to previously neglected rural 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 Will be a side effect only Easing the “ burden “ 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 . F.O. Specialized Clinics - 18 -

19. 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 )

20. ? Do You Have Any Questions? ? ?