mHealth Israel_Rhon klinikum overview_Oct 2015_Digital Health and Network Medicine

RHÖN-KLINIKUM AG

Digital Health and Network MedicineOctober 2015

Jens-Peter Neumann, CFO

2

Disclaimer

• T h i s d o c u m e n t h a s b e e n p r e p a r e d b y R H Ö N - K L I N I K U M A G ( “ R H Ö N - K L I N I K U M ” o r “ t h e C o m p a n y ” ) f o r i n f o r m a ti o n p u r p o s e s o n l y , s o l e l y f o r u s e d u r i n g t h i s p r e s e n t a ti o n . I t m u s t b e t r e a t e d c o n fi d e n ti a l l y b y a tt e n d e e s a t s u c h p r e s e n t a ti o n a n d m u s t n o t b e d i s t r i b u t e d , p a s s e d o n o r o t h e r w i s e d i s c l o s e d .

• T h i s p r e s e n t a ti o n c o n t a i n s f o r w a r d - l o o k i n g s t a t e m e n t s t h a t r e fl e c t t h e m a n a g e m e n t ’ s c u r r e n t v i e w s w i t h r e s p e c t t o c e r t a i n f u t u r e e v e n t s a n d fi n a n c i a l p e r f o r m a n c e . A n u m b e r o f f a c t o r s c o u l d c a u s e a c t u a l r e s u l t s t o d i ff e r m a t e r i a l l y f r o m t h o s e p r o j e c t e d o r i m p l i e d i n s u c h s t a t e m e n t s . T h e C o m p a n y o r i t s a d v i s e r s o r r e p r e s e n t a ti v e s a c c e p t n o o b l i g a ti o n t o u p d a t e a n y f o r w a r d - l o o k i n g s t a t e m e n t s s e t f o r t h h e r e i n o r t o a d j u s t t h e m t o f u t u r e e v e n t s o r d e v e l o p m e n t s . F u r t h e r , t h i s p r e s e n t a ti o n c o n t a i n s m a r k e t , p r i c e a n d p e r f o r m a n c e d a t a w h i c h h a v e b e e n o b t a i n e d f r o m C o m p a n y a n d p u b l i c s o u r c e s . T h e C o m p a n y b e l i e v e s t h a t s u c h i n f o r m a ti o n i s a c c u r a t e a s o f t h e d a t e o f t h i s p r e s e n t a ti o n . T h e i n f o r m a ti o n c o n t a i n e d i n t h i s d o c u m e n t h a s n o t b e e n i n d e p e n d e n t l y v e r i fi e d , a n d n o r e p r e s e n t a ti o n o r w a r r a n t y , e x p r e s s o r i m p l i e d , i s m a d e a s t o , a n d n o r e l i a n c e s h o u l d b e p l a c e d o n , t h e f a i r n e s s , a c c u r a c y , c o m p l e t e n e s s o r c o r r e c t n e s s o f t h e i n f o r m a ti o n o r o p i n i o n s c o n t a i n e d h e r e i n . N e i t h e r t h e C o m p a n y n o r a n y o f i t s r e s p e c ti v e a ffi l i a t e s , a d v i s o r s a n d r e p r e s e n t a ti v e s s h a l l h a v e a n y l i a b i l i t y w h a t s o e v e r ( i n n e g l i g e n c e o r o t h e r w i s e ) f o r a n y l o s s w h a t s o e v e r a r i s i n g f r o m a n y u s e o f t h i s d o c u m e n t , o r i t s c o n t e n t s , o r o t h e r w i s e a r i s i n g i n c o n n e c ti o n w i t h t h i s d o c u m e n t .

• N o t h i n g i n t h i s p r e s e n t a ti o n i s i n t e n d e d a s , o r c o n s ti t u t e s a n , o ff e r o r i n v i t a ti o n t o p u r c h a s e o r s e l l a n y R H Ö N - K L I N I K U M s e c u r i ti e s , a n d n e i t h e r i t n o r p a r t o f i t s h a l l f o r m t h e b a s i s o f , o r b e r e l i e d u p o n i n c o n n e c ti o n w i t h , a n y c o n t r a c t o r c o m m i t m e n t w h a t s o e v e r .

• T h i s p r e s e n t a ti o n i s n o t a n o ff e r o f s e c u r i ti e s f o r s a l e o r a n y s o l i c i t a ti o n t o b u y o r s e l l R H Ö N - K L I N I K U M s e c u r i ti e s i n t h e U n i t e d S t a t e s o f A m e r i c a . S e c u r i ti e s m a y n o t b e o ff e r e d o r s o l d i n t h e U n i t e d S t a t e s o f A m e r i c a a b s e n t [ [ ? ? W I T H O U T ? ? ] ] r e g i s t r a ti o n o r a n e x e m p ti o n f r o m r e g i s t r a ti o n u n d e r t h e U S S e c u r i ti e s A c t o f 1 9 3 3 , a s a m e n d e d .

• T h i s p r e s e n t a ti o n i s i n t e n d e d f o r d i s t r i b u ti o n i n t h e U n i t e d K i n g d o m o n l y t o : ( i ) p e r s o n s w h o h a v e p r o f e s s i o n a l e x p e r i e n c e i n m a tt e r s r e l a ti n g t o i n v e s t m e n t s f a l l i n g w i t h i n A r ti c l e 1 9 ( 5 ) o f t h e F i n a n c i a l S e r v i c e s a n d M a r k e t s A c t 2 0 0 0 ( F i n a n c i a l P r o m o ti o n ) O r d e r 2 0 0 5 , o r t h e O r d e r ; ( i i ) p e r s o n s f a l l i n g w i t h i n A r ti c l e 4 9 ( 2 ) ( a ) t o ( d ) o f t h e O r d e r o r t o t h o s e p e r s o n s t o w h o m i t c a n o t h e r w i s e b e l a w f u l l y d i s t r i b u t e d , o r a l l s u c h p e r s o n s t o g e t h e r b e i n g r e f e r r e d t o a s r e l e v a n t p e r s o n s . T h i s p r e s e n t a ti o n i s d i r e c t e d o n l y t o w a r d r e l e v a n t p e r s o n s a n d m u s t n o t b e a c t e d o n o r r e l i e d o n b y p e r s o n s w h o a r e n o t r e l e v a n t p e r s o n s . A n y i n v e s t m e n t o r i n v e s t m e n t a c ti v i t y t o w h i c h t h i s c o m m u n i c a ti o n r e l a t e s i s a v a i l a b l e o n l y t o r e l e v a n t p e r s o n s a n d w i l l b e e n g a g e d i n o n l y w i t h r e l e v a n t p e r s o n s .

• T h e i n f o r m a ti o n i n t h i s p r e s e n t a ti o n i s g i v e n i n c o n fi d e n c e , a n d t h e r e c i p i e n t s o f t h i s p r e s e n t a ti o n s h o u l d n o t b a s e a n y b e h a v i o r s i n r e l a ti o n t o q u a l i f y i n g i n v e s t m e n t s o r r e l e v a n t p r o d u c t s , a s d e fi n e d i n t h e F i n a n c i a l S e r v i c e s M a r k e t s A c t 2 0 0 0 , o r F S M A , a n d t h e C o d e o f M a r k e t C o n d u c t , m a d e p u r s u a n t t o t h e F S M A , w h i c h w o u l d a m o u n t t o m a r k e t a b u s e f o r t h e p u r p o s e s o f t h e F S M A o n t h e i n f o r m a ti o n i n t h i s p r e s e n t a ti o n u n ti l a ft e r t h e i n f o r m a ti o n h a s b e e n m a d e g e n e r a l l y a v a i l a b l e . N o r s h o u l d t h e r e c i p i e n t u s e t h e i n f o r m a ti o n i n t h i s p r e s e n t a ti o n i n a n y w a y t h a t w o u l d c o n s ti t u t e “ m a r k e t a b u s e . ”

• T h i s d o c u m e n t i s g i v e n i n c o n j u n c ti o n w i t h a n o r a l p r e s e n t a ti o n a n d s h o u l d n o t b e t a k e n o u t o f c o n t e x t .

• F o r c o m p u t a ti o n a l r e a s o n s , r o u n d i n g d i ff e r e n c e s o f ± o n e u n i t ( € , % , e t c . ) m a y o c c u r i n t h e t a b l e s .

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)

GUID

ANCE

FY

201

5

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 bed2) 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-ex-

emptcharity

investorowned

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

GENERALGROWTHSTRATEGY

I

Gain additional market share with clear business profile +3% to +4% p.a.

Oppor-tunistic andaccretive acquisi-tions fitting our portfolio

Net-work medicine,medical research and technology driven innovations

ORGANIC INORGANIC NEW BUSINESS AREAS

II III

LON

G-TE

RM

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 supplieras well as between different sectors and providers with focus on high-end acute and specialized hospital outpatient centres network medicine

Inte

r-sec

tora

l N

etw

ork

Med

icin

e

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

Co nc rete go a l s o f net wo r k m e dic in e


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

A l l i a nc e - P latfo r m o n a g la nc e


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)

Revenue > €200m*

Beds > 1,440 ~ 46,000 patients

Frankfurt (Oder)

Revenue > €135m*

Beds > 830 ~ 78,000 patients

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

Revenue > €570m*

2 locations in Giessen and Marburg with > 2,200 beds

~ 420,000 patients 3rd largest university clinic

in Germany with ~ 80 divisions/institutes

RHÖN-KLINIKUM AG - Appendix

04 05 06 07 08 09 10 11 12 130

102030405060708090

61

82

34

46

Hospital revenues (core market segment for RHÖN-KLINIKUM)Outpatient acute care (additional growth opportunities)

billi

on €

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)Netherla

nds

Switzerla

nd

Germany

SwedenFrance

Austria

Spain Italy UK

Ireland

7%

8%

9%

10%

11%

12%11.1% 11.1% 11.0% 11.0% 10.9%

10.1%

8.9% 8.8%8.5%

8.1%

in %

of G

DP (2

013

or n

eare

st y

ear)

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20139.7%

10.2%

10.7%

11.2%

11.7%

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


Health & Medicine

mHealth Israel_Rhon klinikum overview_Oct 2015_Digital Health and Network Medicine