Ascent Health. Financing first class clinical care. Siemens Financial Services

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1 Ascent Health Financing first class clinical care Siemens Financial Services

2 Ascent Health - financing first class clinical care It is predicted that by 2010 the NHS will face a significant resource gap as the disparity between real term funding increases and total cost pressure widens. The government has tended to view existing financial problems as a series of local deficit issues, to which a number of industry commentators believe increased productivity based on competition, would be a solution to this resource gap. A relatively new and innovative entrant to the UK market is Ascent Health, a wholly owned subsidiary of Health Inventures, a twelve-year old operator of elective healthcare facilities in the United States. Initially the clinical partner in the Mercury Health consortium that won one of the largest contracts in the British Government s Independent Sector Treatment Centre programme, Ascent is currently using its expertise to set up and run specialty hospitals and day surgery centres in the UK. The approach is to provide turnkey development and operations management services to elective surgery and diagnostic imaging companies that it owns in partnership with local stakeholders such as consultants and public sector hospitals. From our involvement in Mercury it was apparent that the government was looking to increase private sector involvement at all levels of the NHS. We soon realised that our US model could work in the right markets with the right partners. said Christian Ellison, UK MD of Ascent Health. We gained confidence that the right partners were out there as we started to see pockets of latent entrepreneurialism within the NHS, which, dare I say it, seemed stifled by the traditional NHS structure. So in 2004 Ascent began the search for partners. In a classic example of opportunity meeting preparedness Ellison and his team literally stumbled across the path of a group of orthopaedic surgeons from Oxford at a trade show. And yes you ve guessed it, they were looking for a management company to help them set up an independent hospital.

3 We needed a specialist medical asset finance provider who could move quickly. Luckily we found Siemens and they were, and continue to be, a joy to work with. Christian Ellison, UK MD of Ascent Health Inspired solutions During 2005 the parties established a Limited Liability Partnership, which trades as the Oxford Clinic for Specialist Surgery (Oxford Clinic) and began the search for premises in the Oxford area. With so many of the consultant partners based in the NOC, it was an obvious place to start. The opportunities which attracted the NOC management to working with their consultants and a private sector operator included a fixed revenue stream, like facility rental, and non-clinical support services such as food and laundry. As Ellison goes on to say, The NOC is a world renowned orthopaedic services provider. We have strengthened the NOC s position by enabling them to develop predictable fixed income streams, and perhaps most importantly, securing the private patient business at the NOC, which was rapidly migrating to other private facilities within Oxford. At the turn of the year 2006 the team had found the site solution right under their feet in the form of an existing building on the NOC campus and by April 2006 developments were underway. The site immediately underwent a refurbishment as well as the construction and commissioning of two new state of the art operating modular theatres, designed specifically with the treatment of musculoskeletal conditions in mind. The two theatres are incredibly innovative and not because of what is inside but how they came into being, enthuses Ellison. They were built and fitted out entirely offsite. They then were delivered and connected to the existing building via a new indoor walkway. The whole process is cost effective and incredibly efficient. It also gave us the opportunity to re-configure the layout of the existing suite and create a brand new day surgery suite, where there had previously been traditional ensuite rooms. The Oxford Clinic was born. Quality recognition Once the partnership was established and premises secured the Oxford Clinic faced three major hurdles, namely finance, recruitment and insurers recognition. Ellison is keen to stress the importance of recognition from the major insurers such as BUPA, AXA PPP and Standard Life. The simple fact is that without their support you don t have a business. Such was the strength of the management team and confidence with the business model that in all more than 20 private health insurance firms have accredited Oxford Clinic. The Oxford Clinic has built a high quality clinical and management team. Ellison again, We were fortunate in that many of the top clinical staff in Oxfordshire wanted to work with our consultant partners and that we were also able to transfer a number of quality people from the NOC that were previously working on the site we developed. We ultimately had our local management team in place by 1 April 2006 which gave increased impetus to the project.

4 Siemens. Making healthcare affordable Innovative finance The business is innovatively funded. The finance is derived from equity from Ascent, its consultant partners and business finance, which includes specialist finance providers, such as Siemens. Given the uniqueness of the project, Ascent believes there have been few, if any, new medical facilities in the UK that have been financed in this way. Ellison sees the combination of shareholders in the business, consultants and a hospital operator, being the unique aspect of the venture. We all have a significant vested interest in making this venture work. All the incentives are properly aligned. The partnership is further strengthened by its external finance partners. Finance is at the heart of any organisation, public or private. Our use of finance is dictated by how best to use the capital that we had available. This includes our use of asset finance, noted Ellison. The original plan was for the Oxford Clinic to use equipment from the Nuffield Orthopaedic Centre NHS Trust (NOC), transferring the leases over. But at the last minute the NOC decided they still needed the equipment. So we needed a specialist medical asset finance provider who could move quickly. Luckily we found Siemens and they were, and continue to be, a joy to work with. We provided them with a list of equipment we required from which suppliers, some 35 in total, with assets ranging from hand-pieces to video equipment. And that was basically all that was required on our part. What really made the difference was that they chased our suppliers for documentation, delivery dates etc. rather than our suppliers having to chase the finance provider for payment. We found this level of support and contribution by a funding source incredibly refreshing. Did Ellison never consider buying the assets outright? Not for a second. The UK healthcare market is moving very quickly it might not seem it but as a relative outsider looking in, I can tell you it is. And the rate of obsolescence within many medical assets is matching this. Tying up our shareholders capital was not in the best interest of the business. Not only does the use of asset finance conserve working capital which as a start up is limited but it allows us more flexibility. There is intense pressure to have the latest and best kit; to constantly upgrade. It s a market situation we have to be able to attract the patients but also to attract and keep staff. Asset finance enables us to acquire the kit we need without hindering or constraining our financial flexibility. We protect our shareholders capital and improve cash flow.

5 First class service The facility already has very good patient satisfaction, which along with positive clinical outcomes are our two most important measures of success. The reaction by the local medical community to the Oxford Clinic has been equally positive. Ellison adds We ve had almost immediate patient activity but it takes time to get the message out to the local medical market. This is why involvement in and connections with local community are going to be crucial to our long term success. The Oxford Clinic is also hopeful of having a more direct working relationship with the NHS at the NOC and with other local and regional NHS commissioners and providers. Ellison, Whilst we are currently almost fully private we are looking at ways to work even more closely with the NHS. It s the way the market is going. The idea that the public and private sectors can function and survive in isolation of each other has long been dismissed. We re in place and if we can provide a first class service at a cost which is appealing to the customer then why not? The most important thing is the provision of quality medical care and positive clinical outcomes. The UK public, understandably, has a huge emotional attachment to the NHS. That just means we need to be that much better to meet public expectations and be successful. It s about looking at each parties strengths and combining them to offer a first class service irrespective of who is footing the bill. Ascent is now looking at a number of other opportunities around the country the UK needs a wide range of healthcare providers to give it flexibility to adapt to the accelerating needs of society. Ellison concludes, We re no silver bullet to the problems the NHS faces, I don t even believe one exists, but I firmly believe we can be a small part of the solution. How to reach Siemens To find out more about Siemens Financial Services call: or visit: Asset finance enables us to acquire the kit we need without hindering or constraining our financial flexibility

6 About Siemens Siemens Financial Services is a leading provider of innovative finance solutions to UK businesses and public sector organisations. With more than 250,000 customers Siemens has arranged finance for 90 of the current FTSE 100 companies and more than 50% of NHS trusts and local authorities. Active in a wide range of markets, Siemens provides solutions ranging from 1,000 to many millions for a diverse range of financing needs, including equipment and asset finance, treasury services and working capital finance. It is independently recognised as a business finance leader in a number of its core markets. With offices throughout the UK, Siemens Financial Services has more than 260 employees and is headquartered in Stoke Poges, Buckinghamshire. Siemens global headquarters is in Munich, Germany. Siemens Financial Services is a member of the Finance and Leasing Association. This brochure provides only general information. Information is correct at the time it was printed and can change at any time without prior notice. The contents of this brochure do not represent an offer nor is a substitute for an individual consultation with Siemens. Siemens Financial Services Ltd Sefton Park Bells Hill Stoke Poges Buckinghamshire SL2 4JS Tel: +44 (0) Fax: +44 (0) info.sfs@siemens.com