Market Assessment Overview of the Greek Hospital Market Market Assessment
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Acute Hospitals Market, Greece Client • The client was one of the leading private equity investment firms considering investing in hospitals in Greece
Client Ask • The client wanted to evaluate an investment opportunity in the acute hospitals market in Greece and engaged SGS to assess the market potential of the same
Sutherland’s Solution • Undertook exhaustive desk research and collected credible information from authoritative sources for market size, competitive landscape and market trends • SGS analyzed the Greek hospital industry thoroughly using primary and secondary research techniques • Key indicators such as healthcare spending, bed to population ratio , occupancy levels were derived and taken into account to arrive at the market size • Key insights on the pillars of healthcare system in the country, namely, government body, social insurance funds, healthcare service providers, and individuals and employers were studied and their implications on healthcare spending were analyzed • The hospital bed supply shortfall was estimated for the future period • Regular updates were provided to apprise the client of the results
•Benefits to the Client • Based on the findings of our research, the client got an overview of the operational and profitability metrics of Greek hospitals in order to make a well-informed investment decision • The report helped the client gauge the existing capacity of the acute hospitals in Greece and the time frame in which a paucity of hospitals beds would occur
© 2011 Sutherland Global Services Inc., All rights reserved. Privileged and confidential information of Sutherland Global Services Inc.
www.sutherlandglobal.com January 10, 2013
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Greece has very high levels of private healthcare spending owing to poor public healthcare infrastructure Greece Healthcare Spending
€ 7.8 bn
€7.0 bn
€7.4 bn
€8.8 bn
€8.9 bn
€7.1 bn
€9.2 bn
€9.9 bn
% CAGR (2000-’07)
5%
4%
• Private contribution to healthcare expenditure in Greece remains inordinately high • Public healthcare spending as a percentage of total healthcare has declined from 75% in the early 90’s to 50% in 2007 • Poor quality of public healthcare services and elongated lead-times associated with public healthcare services has given a boost to the private sector
Source: National statistics, SGS research
© 2011 Sutherland Global Services Inc., All rights reserved. Privileged and confidential information of Sutherland Global Services Inc.
Note: Data has been randomized
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Though number of hospitals have declined over the review period, beds per hospital have increased Number of Hospitals – Private vs. Public
Beds per Hospital – Private vs. Public % CAGR (1999-’06)
% CAGR (1999-’06)
112
133
115
132
114
135
116
137
117
132
117
136
115
136
115
138
0.01%
-0.2%
1999 2000 2001 2002 2003 2004 2005 2006 Private
214
215
216
217
220
221
222
223
0.1%
42
46
48
47
47
48
49
50
1.2%
1999
2000
2001
2002
2003
2004
2005
2006
Public
Private Hospitals
Public Hospitals
Key Observations • Number of small private clinics have decreased significantly post 1990s owing to: • Low utilization and high operating costs • Inability to cope with competition from larger hospitals with better technology • More than 40% of the planned medical positions have remained unfilled in public sector owing to low salaries, fewer opportunities for private practice and
abandoned living standards in rural areas where majority of hospitals located
Source: SGS estimates, OECD
© 2011 Sutherland Global Services Inc., All rights reserved. Privileged and confidential information of Sutherland Global Services Inc.
Note: Data has been randomized
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Per capita availability of beds is higher in urban regions; developing regions are witnessing above-average growth Beds per Thousand People
Inpatients per Thousand People 32 47
33 48
34 49
35 50
36 51
37 52
38 53
39 54
0.3 1.4 2.6
0.3 1.5 2.7
0.4 1.5 2.5
0.5 1.6 2.4
0.6 1.6 2.3
115
116
117
118
119
119
121
0.2 1.2 2.4
0.2 1.3 2.5
120
0.1 1.1 2.3
4.5
4.4
4.6
4.7
4.8
4.8
220
222
225
226
227
240
250
4.4
245
4.3 2.1 3.1
2.2 3
2.3 3.2
2.3 3.3
2.4 3.4
2.5 3.3
2.6 3.2
2.7 3.1
121
120
123
126
127
128
129
130
1999
2000
2001
2002
2003
2004
2005
2006
102
103
104
105
106
107
108
109
1999
2000
2001
2002
2003
2004
2005
2006
Greater Athens Thessalia
CAGR (‘99-’06)
Macedonia Kriti
Peloponnisos Rest of Greece
Greater Athens Thessalia
Macedonia Kriti
Peloponnisos Rest of Greece
Greater Athens
Macedonia
Peloponnisos
Thessalia
Kriti
Rest of Greece
Beds/1,000 population
-0.28%
0.99%
0.47%
-0.72%
-0.72%
4.66%
Inpatients / 1,000 population
3.54%
3.14%
2.88%
5.73%
3.05%
2.98%
Key Observations • Capacity has been concentrated in urban cities but recent expansions have taken place in other regions (Rest Of Greece). Rest of Greece witnessed highest
compounded growth rate of 4.66% for beds per thousands population between 1999-2006 • Thessalia has witnessed very high growth in inpatient numbers but only a modest growth in supply and could be a region with bright prospects
Source: SGS estimates, OECD
© 2011 Sutherland Global Services Inc., All rights reserved. Privileged and confidential information of Sutherland Global Services Inc.
Note: Data has been randomized
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Primary pillars of the Greece healthcare system 1. Government Body
2. Healthcare service providers
Three main body: Ministry of Health and Welfare, Ministry of Labour and Social Affair and Ministry of Finance
National Health Service (NHS): Governed by Ministry of Health and Welfare
Controls following healthcare aspects:
Employs physicians and operates hospitals primarily in semiurban and rural areas
Hospital Infrastructure: hospital budget, number of personnel with specialty, salary levels, number of beds and purchase of technology Social insurance funds: financing funds, defining industry specific funds, range of benefits offered by each funds, contribution rate, types of providers and allocation of doctors Four for funds Pillars of Greece Health3. Social insurance funds care Governed by Ministry of Labour and Social Affair Institution of Social Insurance (IKA): Urban population (50% of total population covered) Organization of Agricultural Insurance (OGA): Rural population (25% of population covered) OPAD: Civil servants (7% of population covered) TEVE-TAE: Fund for merchants and small businessmen (13% of population covered)
IKA primary care: Significant presence in urban area Private players: Private hospitals and private doctors either work independently or contracted by social insurance funds
4. Individuals and Employers Individuals contribute to social insurance funds through payroll tax and general tax They also pay out-of their pockets as a part of copayments (like 25% of prescription drugs) Employers contribute to the pool of employee – employer contribution and pay to social insurance funds It also provides group private medical insurance to avail services at private hospitals
Source: SGS research
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Drivers influencing healthcare industry Drivers
Impact
Explanation
Indication
Increasing per capita disposable income
Increasing per capita disposable income will boost private healthcare spending
Ageing population with higher life expectancy
Ageing population will require higher healthcare services Need for elderly homes and rehabilitation centers will be more, where private players like IASO, AMC, Hygeia and Euromedica are not operating
Percentage share of age group 65 and above will increase from 20% in 2010 to 33% in 2050
Public private partnership in healthcare
Government’s move to introduce public private partnerships into healthcare industry will increase investments, reduce bureaucracy and expand beds / hospitals capacity
Announcements of one Oncological and one General hospital
Number of people who can afford private healthcare services, increase
Per capita disposable income has increased at CAGR (’03-’07) of 10.4%
PPP in healthcare budgeted at Euro 1.5 bn Lifestyle: prone to increase diseases
Higher proportion of people having daily smoking habits and eating habits to consume heavy fat food will increase chance of chronic diseases
Highest daily smokers amongst OECD and 21.9% adults are classified clinically obese
New avenues like spa and medical tourism are on rise
Improved healthcare capabilities along with attractive tourism locations put Greece in a better position for medical tourism
Euromedica acquired facilities in Rhodes and Kriti for medical tourism
It has been successful to attract patients from developed European countries like UK and Germany
Source: SGS research, OECD
© 2011 Sutherland Global Services Inc., All rights reserved. Privileged and confidential information of Sutherland Global Services Inc.
Note: Data has been randomized
www.sutherlandglobal.com January 10, 2013
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By 2011, hospitals in Greece are estimated to witness a shortfall of ~8% Beds – Available vs. Required 600 500
496
489 438
400 300
530
515 24%
24%
456
469
489
20%
200
26%
r) u H s(in d e B
100 0
2008E
Required beds
2009E
2010E
Available beds
2011E
Gap as a % of Available
Year
2008
2009
2010
2011
Sustainable utilization
55%
51.30%
50.50%
50.07%
60.60%
60.50%
60.30%
60.20%
Available Hospitalization days (At sustainable capacity)
13,134,362
12,324,259
12,222,569
12,569
Required Hospitalisation days
15,142,333
15,222,356
15,326,666
15,365,996
Hospitalisation days needed
20,203,336
20,333,256
21,597,444
21,899,789
Available Bed
43,821
45,621
46,952
48,936
Required Bed
48,859
49,550
51,523
53,012
5,038
3,929
4,571
4,076
Estimate Utilization
Additonal Capacity Required Source: SGS research, OECD
Š 2011 Sutherland Global Services Inc., All rights reserved. Privileged and confidential information of Sutherland Global Services Inc.
Note: Data has been randomized
www.sutherlandglobal.com January 10, 2013
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