mHealth Israel_Rhon klinikum overview_Oct 2015_Digital Health and Network Medicine

RHÖN-KLINIKUM AG
Digital Health and Network Medicine
October 2015
Jens-Peter Neumann, CFO

2
Disclaimer
• This document has been prepared by RHÖN-KLINIKUM AG (“RHÖN-KLINIKUM” or “the Company”) for information purposes only, solely for use during this presentation. It must be treated
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could cause actual results to differ materially from those projected or implied in such statements. The Company or its advisers or representatives accept no obligation to update any
forward-looking statements set forth herein or to adjust them to future events or developments. Further, this presentation contains market, price and performance data which have been
obtained from Company and public sources. The Company believes that such information is accurate as of the date of this presentation. The information contained in this document has
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negligence or otherwise) for any loss whatsoever arising from any use of this document, or its contents, or otherwise arising in connection with this document.
• Nothing in this presentation is intended as, or constitutes an, offer or invitation to purchase or sell any RHÖN-KLINIKUM securities, and neither it nor part of it shall form the basis of, or be
relied upon in connection with, any contract or commitment whatsoever.
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• This document is given in conjunction with an oral presentation and should not be taken out of context.
• For computational reasons, rounding differences of ± one unit (€, %, etc.) may occur in the tables.
RHÖN-KLINIKUM AG - October 2015

Content
1 Business Model and Investment Strategy for Digital Health
2 Network Medicine and IT Strategy
3
- Appendix

4
RHÖN-KLINIKUM at a Glance
Group revenues € 1,080m to 1,120m
EBITDA € 145m to 155m
Total number of beds in the market: 500,671 3)
GUIDANCE
FY2015
Ownership in German
hospital market
Germany’s first listed hospital operator
 The only publicly listed pure-play on the German acute-care
hospital sector
 Focus on specialized and high end-medicine
 5 locations with 5.300 beds
 >15,000 employees
 ~ 1.5% of the total German hospital market 1)
 ~ 8% of the German private hospital sector 1)
1) Based on number of beds of RHÖN-KLINIKUM/total beds and ø-CMI of ~1,5 per bed
2) Based on statutory and private insured patient revenues
3) latest available total number of beds in the market as of 2013
(Source: Federal Bureau of Statistics Germany ‚Grunddaten d. Krankenhäuser‘, Sept 2014)
German hospital market 2)
 Total hospital expenditure ~ €80bn
 10Y CAGR +3,5% p.a.
public
tax-
exempt
charity
investor
owned
34%
18%
48%
RHÖN-KLINIKUM AG - 1 - Business Model and Investment Strategy for Digital Health

5
Next Big Market Catalyzer:
Digital Health & Network Medicine
RHÖN-KLINIKUM AG, as of May 2012
Digitalization Disruptive transformation of health systems towards better medical supplies along
the chain of medical care and IT driven efficiency gains from coordinated care
Network
Medicine &
Big Data
intelligence
Innovative, more patient friendly treatment approaches
 Next level of transparency, health consciousness and patient orientation from
better access to health information and increasing use of wearables (e.g. Dr.
Google, electronic health file, healthcare apps)
 Further shift from inpatient to outpatient treatment and set up of network
solutions between doctors and patients as well as among doctors and other
healthcare providers (eg tele monitoring of stroke/heart patients, virtual
medical advise)
 Personalized medicine with less side effects from increasing amount of available
health data collected via wearables, biobanks, next generation sequencing and
better big data analysis tools (bioinformatics, cognitive diagnosis tools, cloud
computing, text data mining)
 Saving potential from less redundancy in diagnostics and therapies

6
Digital Health in Germany is lagging far behind
Huge growth
opportunities
for innovative
health
providers
„Medicine 1.0 versus Internet 4.0“:
 Germany traditionally more reluctance at patients and doctors:
 non-transparent, atomistic and
decentralized provider structure
 traditionally rigid sector boarders
between outpatient and inpatient
and between acute, rehab and
nursing care, partially paid from
different insurance schemes
 high data security fears
 patient feels „at the mercy“ of
an obscure system
 But currently strong political will and dynamic to force digitalization into the
German Health system (E-health law, digital agenda of Health Ministry)
 set up of legal preconditions for secure and barrier free data transfers
(e.g. for electronic patient file and open telematic infrastructure)
 First trials to develop new reimbursement solutions by health insurance
providers

Mid- and Long-Term Growth Prospects
Strategic growth and business development at RHÖN-KLINIKUM
7
GENERAL
GROWTH
STRATEGY
I
Gain
additional
market share with
clear business
profile +3% to
+4% p.a.
Oppor-
tunistic and
accretive acquisi-
tions fitting our
portfolio
Net-
work medicine,
medical research and
technology driven
innovations
ORGANIC INORGANIC NEW BUSINESS AREAS
II III
LONG-TERM
Innovation Management and Technology Leadership in the Medical Field
 Operation of internal innovation management structures (e.g. development of IT Alliance Platform)
 Actively structured market surveys for suitable innovations (regarding rules of the German market)
 Evaluation of incoming offers of innovative products (both, requested and unsolicited offers)
 Formal structuring of participations in separate investment holding
7RHÖN-KLINIKUM AG - 2 - Innovation and Investment Strategy

Investment Strategy of Venture Holding
Investment Focus  Target start-up companies with strong, growth-oriented
business model that is strategically relevant
 Geographic focus: Germany, Europe (incl. Israel), North
America
Requirements of Target
Company
 Product/concept based on leading technology that stands out
from competitors and for which product/market readiness is
imminent.
Our Goals  Focus on long-term, advantageous partnership
 Strengthening of our competitive position through access to
innovative solutions and markets
 Generation of investment income
Investment Volume  Individual investments up to EUR 2.5 million
 Minority investment of around 25-30% intended
8RHÖN-KLINIKUM AG - 1 - Business Model and Investment Strategy for Digital Health

9
List of criteria for assessing whether a target company offers innovative IT/medtech
solutions and is therefore of interest
On-site meeting between target companies (first assessment of product, management,
financial resources, experience, competitions, etc.).
Review of data, products, publications, etc. by Investment Committee (IC) and other RKA
experts from clinics regarding possible interest for clinic operations
Invitation to start-up companies to give a presentation to experts at one of our locations
Decision by IC whether there should be a pilot at a location (3-4 months)
At the same time, start of due diligence
Recommendation to management of the investment holding for investment through IC
General Investment Process
Searching for, reviewing and selecting target companies through 7 steps
I.
II.
III.
IV.
V.
VI.
VII.

10
Main Criteria for Initial Investment Appraisal
Closing efficiency gaps between patient and medical supplier
as well as between different sectors and providers with focus on
 high-end acute and specialized hospital
 outpatient centres
 network medicine
Inter-sectoral
NetworkMedicine
Outpatient Centres (MVZ),
GPs, Specialists, other
(General) Hospitals in the
Region
Rehab, Elderly
Care, Nursing
Services
Maximum Care
and Specialized Hospitals
with focus on Cardio,
Neuro, Oncology, Pneumology,
Orthopaedics, Psychiatrics
Patient-centred processes and care
IT-based comprehensive integration of all value chain elements

Content
11
- Appendix

12
Future healthcare strategy
 Network medicine as the future healthcare strategy
 Navigation of the patient through the jungle of service providers
 Disease pattern focusses on the correct clinic
 Best possible healthcare of patient at appropriate place
 Close proximity and short waits as additional requirement
Network medicine as the future healthcare strategy!
RHÖN-KLINIKUM AG - 2 - Network Medicine and IT Strategy

13
Network medicine: Remedy for obscure system

14
Global prerequisites for
network medicine
 The heterogeneous landscape of service providers must be organized
in transparent and plannable service alliances (networks):
 Navigation of the patient through the jungle of service providers
 Institutionalization of the alliance (contractual obligation of network
partners)
 Regulatory framework for participation must be specified (mainly quality
parameters of the houses and comfort standards)
 Rules and authorities for patient navigation (“anchor physician”, etc.)
 Economical questions for cost and proceeds distribution must be resolved
 IT working surroundings for network medicine must be established

15
WE for healthcare
 RKA and partners in network medicine
 WE for Healthcare as umbrella organization
 Helios, Asklepios and other as partners
 Supplementary insurance model „Pluscard“
We for healthcare: RKA and Partners in network medicine

16
 The goals of network medicine
 Patient and required expertise matching in the alliance
 Reasonable allocation of resources based on disease pattern
 Processing and usage of knowledge/data from alliance for optimal care of
patients (Big Data and healthcare research)
 Establishment of IT platform for network medicine
Concrete goals of network medicine

17
IT-strategy for network medicine
 NEEDS (hospitals and medical practitioners):
 routinely exchanging all information electronically (all participating
organizations)
 data/information of care/treatment across the entire care continuum
(over all sectors)
 a longitudinal patient record must combine documents like images,
encounters, labs …
 extensive communication and collaboration capabilities have to be available
 secure messaging, notifications, subscriptions and query access
(and of course) right IT-platform for network medicine

18
MPI: Base element of the “IT-Alliance Platform”
HIS HIS
MPI
HIE
ID Request ID Request
Provide and
register
documents and
data
Search and query
documents and
data
Patient
Identity
Feed
MPI: Master Patient Index

19
Alliance-Platform on a glance

IT Infrastructure for network medicine
We use the „ICW Solution Portfolio“:
 Care Coordination
 Care Management
 Patient Engagement
 Health Information Exchange
 Master Patient Index
• Activities at a glance
• Overview of most recent documents
• Medications (issued and which dose)
• Vital signs (f.e. blood pressure, weigth)
• Personalized notifications
• Exiting allergies
• …..
Quick access to entire care
continuum
Open Standards instead of
proprietary Interfaces (IHE,
HL7…)

21
Summary
 Conclusio:
 The Alliance Platform is just arising
 Practitioners, specialists and hospitals are integrated
 But:
 Mobile devices are always be with us
 Mobile Technologies enable new culture of treatement
 Big Source of Data for “Medical Analytics”
 Virtual-Reality doctors are booming
We need a strategy for including
the „mobile devices and the outcoming results“
Consequence:

Content
22
- Appendix

Bad Berka
Our Portfolio in Detail
 Revenue > €165m*
 Beds > 660
 ~ 43,000 patients
23
Bad Neustadt (Saale)
 Beds > 1,440
Frankfurt (Oder)
 Beds > 830
More than 2/3 of revenue line from growth segments:
cardiovascular, oncology, pneumology, neurology, special orthopedics and psychiatrics
* Revenues based on FY 2014 figures
UKGM Giessen-Marburg
 2 locations in Giessen and
Marburg with > 2,200 beds
 3rd largest university clinic
in Germany with
~ 80 divisions/institutes
RHÖN-KLINIKUM AG - Appendix

61
82
34
46
0
10
20
30
40
50
60
70
80
90
04 05 06 07 08 09 10 11 12 13
billion€
Hospital revenues (core market segment for RHÖN-KLINIKUM)
Outpatient acute care (additional growth opportunities)
24
Sustainable Growth: The German Hospital Market
Healthcare expenditure in Europe in % of GDP
Healthcare expenditure in Germany in % of GDP
Source: OECD health statistics, current expenditure on health care (July 7, 2015)
Source: Federal Bureau of Statistics Germany, “Gesundheitsausgabenrechnung” (2014)
Acute care healthcare expenditure in Germany
CAGR +3.5%
CAGR +3.4%
 Germany is among the top healthcare spenders in Europe
 The healthcare sector on average grows faster than GDP
 Patient and payment structure in German hospitals:
- patients insured in the statutory health insurance: ~90%
- privately insured patients ~10%
Resilient growth market with average rate ~3.5% p.a.
Source: OECD health statistics, current expenditure on health care (July 7, 2015)
11.1% 11.1% 11.0% 11.0% 10.9%
10.1%
8.9% 8.8%
8.5%
8.1%
7%
8%
9%
10%
11%
12%
in%ofGDP(2013ornearestyear)
9.7%
10.2%
10.7%
11.2%
11.7%
2001 2004 2007 2010 2013
trend
increase
11.7%
11.2%
10.7%
10.2%
9.7%

25
Source: Federal Bureau of Statistics Germany 2014
 Rising life expectancy
 Increase in proportion of elderly and multimorbid people
- Today, 28% of the total population is older than 60 years
- This share will increase to 32% in 2022 and to 37% in 2032
 Increase in “lifestyle” diseases and chronically ill people
 Structural rise in demand
Age structure in Germany
2014 2022
Men Women
I. Changing Demographic Patterns
 New products and wider range of indications
- Access to new patient groups who were regarded untreatable in the past
(e.g., replacing heart valves at 80 year old patients)
 Innovative, more patient-friendly treatment approaches
- Demand for minimal-invasive procedures or personalized medicine
 Higher severity mix, additional patient groups, increasing efficiency
II. Progress of Medical Technology and New Treatment Methods
Organic Growth: Driven by Two Megatrends

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