Fresenius Helios

We are more than the sum of our parts: our strong clinic network and the interdisciplinary exchange of know-how guarantee our patients best-in-class treatment and care. The increase in hospital admissions was again the basis for successful growth in 2010. Our mission is to continue improving the high standard of quality we provide.

Key Figures of Fresenius Helios

  • Hospital operation
€ in millions 2010 2009 Change
1 Net income attributable to HELIOS Kliniken GmbH
Sales 2,520 2,416 4%
EBIT 235 205 15%
Net income1 131 107 22%
Operating cash flow 311 219 42%
Capital expenditure/acquisitions 179 203 -12%
Order intake n/a n/a  
Employees (December 31) 33,321 33,364 0%

€ in millions 2010 2009 Change
1 Net income attributable to HELIOS Kliniken GmbH
Sales 2,520 2,416 4%
EBIT 235 205 15%
Net income1 131 107 22%
Operating cash flow 311 219 42%
Capital expenditure/acquisitions 179 203 -12%
Order intake n/a n/a  
Employees (December 31) 33,321 33,364 0%

Fresenius Helios is one of the largest German private hospital operators. The HELIOS Group operates 63 proprietary clinics. In addition to 43 acute care hospitals, including 5 maximum care clinics in Berlin-Buch, Erfurt, Krefeld, Schwerin, and Wuppertal, the HELIOS Group has 20 post-acute care clinics. 28 medical care centers and 4 nursing homes are also affiliated with HELIOS. The Group has more than 18,500 beds and treats more than two million patients – including approximately 600,000 inpatients – each year. HELIOS had more than 33,000 employees at the end of 2010.

HELIOS’ medical and commercial success is based on four strategic goals:

  • enhancing patient protection and leading position in quality management
  • safeguarding the existence and further development of the clinics on a sustainable basis
  • building HELIOS into a knowledge enterprise
  • selective growth and consolidation of HELIOS’ market position

We measure the quality of our medical results in order to systematically improve the standard of treatment and care we provide. Our sustainable achievements are visible: we compare our medical and commercial targets with the actual results in various publications and on our website.

BUSINESS DEVELOPMENT

In 2010, Fresenius Helios increased its sales by 4% to €2,520 million (2009: €2,416 million). Excellent organic growth of 5% was achieved (2009: 7%), mainly driven by a higher number of admissions. The divestiture of an acute care clinic reduced sales by 1%. The acute care clinics accounted for 88% of sales (2009: 89%), while the post-acute care clinics accounted for 9% of sales (2009: 9%). 3% was attributable to other revenues (2009: 2%).

These figures reflect the high confidence that patients and doctors place in us. They are also evidence for the successful restructuring of the acquired clinics.

As the table shows, both sales and earnings were much improved:

€ in millions 2010 2009 Change
1 Net income attributable to HELIOS Kliniken GmbH
Sales 2,520 2,416 4%
thereof acute care 2,229 2,142 4%
thereof post-acute care 222 211 5%
EBITDA 318 286 11%
EBITDA margin in % 12.6 11.8  
EBIT 235 205 15%
EBIT margin in % 9.3 8.5  
Net income1 131 107 22%

€ in millions 2010 2009 Change
1 Net income attributable to HELIOS Kliniken GmbH
Sales 2,520 2,416 4%
thereof acute care 2,229 2,142 4%
thereof post-acute care 222 211 5%
EBITDA 318 286 11%
EBITDA margin in % 12.6 11.8  
EBIT 235 205 15%
EBIT margin in % 9.3 8.5  
Net income1 131 107 22%

EBITDA increased by 11% to €318 million (2009: €286 million). The EBITDA margin rose to 12.6% (2009: 11.8%). Fresenius Helios achieved an excellent EBIT growth of 15% to €235 million (2009: €205 million). The EBIT margin also improved, climbing to 9.3% (2009: 8.5%). Net income1 was €131 million, an increase of 22% (2009: €107 million).

Fresenius Helios’ business exhibits stable cash flows. The cash flow margin was 12.3% (2009: 9.1%). In 2010, days sales outstanding were 38 days (2009: 36 days). This is also reflected in the low loss on revenue of 0.2% (2009: 0.2%).

HOSPITAL ADMISSIONS AND TREATMENTS

The introduction of Diagnosis Related Groups (DRGs), with standardized base rates in each federal state, means hospitals in Germany face increasing competition for patients. The HELIOS clinics have successfully adjusted to the changed reimbursement and competitive conditions. Due to the broadening of services being offered and our high treatment quality, we were able to increase the number of inpatients treated in Germany by 3% to 640,296 (2009: 620,268). We also treated substantially more outpatients at our clinics in 2010. The number of outpatient admissions was 1,696,919 (2009: 1,634,170), an increase of 4%.

  2010 2009 Change
Inpatient and semi-inpatient admissions 640,296 620,268 3%
Acute care clinics 606,880 586,123 4%
Post-acute care clinics 33,416 34,145 -2%
Outpatient admissions 1,696,919 1,634,170 4%

  2010 2009 Change
Inpatient and semi-inpatient admissions 640,296 620,268 3%
Acute care clinics 606,880 586,123 4%
Post-acute care clinics 33,416 34,145 -2%
Outpatient admissions 1,696,919 1,634,170 4%

As the table below shows, our other structural data and performance indicators also improved. At the acute care hospitals, the average length of stay improved slightly to 6.9 days (2009: 7.1 days). The average length of stay at the postacute care clinics in 2010 was 29.5 days (2009: 29.7 days). At 80.2%, the occupancy level at the post-acute care clinics was below that of the previous year (2009: 82.5%).

  2010 2009 Change
1 Separate presentation of one clinic, which was part of an acute care clinic until 2009
2 Germany only
Acute care clinics 42 43 -2%
Beds 15,097 15,116 0%
Length of stay (days) 6.9 7.1 -3%
Post-acute care clinics1 20 19 5%
Beds 3,467 3,467 0%
Length of stay (days) 2 29.5 29.7 -1%
Occupancy2 80.2% 82.5%  

  2010 2009 Change
1 Separate presentation of one clinic, which was part of an acute care clinic until 2009
2 Germany only
Acute care clinics 42 43 -2%
Beds 15,097 15,116 0%
Length of stay (days) 6.9 7.1 -3%
Post-acute care clinics1 20 19 5%
Beds 3,467 3,467 0%
Length of stay (days) 2 29.5 29.7 -1%
Occupancy2 80.2% 82.5%  

INVESTMENTS IN HOSPITAL BUILDINGS

In 2010, Fresenius Helios invested €268 million in its clinics (2009: €272 million). Own investments were €166 million (2009: €124 million), equivalent to 7% of sales. About €49 million of this was invested in new buildings under construction at two hospitals in Krefeld; a total of €180 million will be invested there by 2014. Another important project was the acquisition of the land and buildings at the hospital in Siegburg, which was a prerequisite to start its reconstruction in December 2010.

€ in millions 2010 2009 Change
1 Total of purpose-related public investment subsidies according to Section 9 of the Hospital Funding Act (KHG).
Investments 268 272 -1%
Own investments in property, plant and equipment 166 124 34%
Subsidies1 89 69 29%
Acquisitions 13 79 -84%

€ in millions 2010 2009 Change
1 Total of purpose-related public investment subsidies according to Section 9 of the Hospital Funding Act (KHG).
Investments 268 272 -1%
Own investments in property, plant and equipment 166 124 34%
Subsidies1 89 69 29%
Acquisitions 13 79 -84%

Our investments assure the continued operation of the hospitals and the high standards of medical quality they provide over the long-term. The level of public subsidies was 43% (2009: 45%).

WAGE TARIFF AGREEMENT

HELIOS aims to be an attractive employer. HELIOS concluded a Group-wide trade union wage tariff agreement with ver.di (the United Services Union), in force since the end of 2006, and with the Marburger Bund, in force since the beginning of 2007.

HELIOS began negotiations on new pay scales with the Marburger Bund and ver.di. We expect an agreement to be reached with the two trade unions in the first half of 2011.

POSITION IN THE HOSPITAL MARKET

HELIOS’ business model is based on growth through acquisitions on the one hand, and growth in admissions and treatments on the other. One element of our acquisition strategy is the regional proximity of hospitals – sufficiently close to one another to form networks (clusters). Regional clustering enables cost savings, especially by concentrating non-medical services (for example, laundry or catering) in one hospital. Moreover, patients benefit from the bundling of medical expertise from the HELIOS clinics in – and also outside – the region. For instance, doctors on emergency duty can consult the HELIOS Group’s stroke centers via a videoconferencing link. Supported by experts at the larger clinics, they can make an efficient diagnosis and act fast.

After a hospital is acquired, we carry out modernizations. Besides structural improvements, this also includes alterations – in some cases even the construction of completely new buildings – and investment in medical equipment. We also reorganize the hospital’s internal processes and implement the proven HELIOS quality management system. This ensures a target-driven, performance-oriented management of the hospital. Our goal is to increase the EBITDA margin of an acute care clinic to 15% within five years after acquisition.

The restructuring plan of our acute care clinics includes all clinics within the Group according to their years of consolidation.

In 2010, HELIOS acquired the St. Marienberg district hospital in Helmstedt/Lower Saxony. The hospital has 267 beds and, with 620 employees, treats about 12,000 patients each year. The hospital had revenues of about €32 million in 2009. It is being consolidated as from January 1, 2011.

As an experienced privatization partner, HELIOS is in an excellent position to make further acquisitions and will continue to focus on expanding its market position in Germany. Great strides were made in integrating the clinics in Sangerhausen, Lutherstadt Eisleben, Hettstedt, Northeim, and Bad Gandersheim, which were consolidated for the first time in 2009. Taken together, the number of admissions at these five locations increased by 2%. This was due to the above-mentioned measures that HELIOS swiftly implements after acquiring a clinic. They have significantly improved medical standards. HELIOS clinics are perceived as vital providers of excellent medical standing within the infrastructure of their local regions.

RESTRUCTURING PLAN ACUTE CARE CLINICS 2010


  Years in portfolio
  < 1 1 2 3 4 5 > 5 Total
Reported figures according to IFRS
Number of clinics - - 6 4 7 - 25 42
Sales in million € - - 186 261 175 - 1,607 2,229
Target    
EBITDA margin, in % - 3.0 6.0 9.0 12.0 15.0 15.0  
EBITDA in million € - - 11.2 23.5 20.9 - 241.1 296.7
Reported    
EBITDA margin, in % - - 4.0 10.8 11.9 - 15.8 13.9
EBITDA in million € - - 7.5 28.2 20.8 - 254.2 310.7
Number of clinics > target - - 3 3 4 - 14 24
Number of clinics < target - - 3 1 3 - 11 18

  Years in portfolio
  < 1 1 2 3 4 5 > 5 Total
Reported figures according to IFRS
Number of clinics - - 6 4 7 - 25 42
Sales in million € - - 186 261 175 - 1,607 2,229
Target    
EBITDA margin, in % - 3.0 6.0 9.0 12.0 15.0 15.0  
EBITDA in million € - - 11.2 23.5 20.9 - 241.1 296.7
Reported    
EBITDA margin, in % - - 4.0 10.8 11.9 - 15.8 13.9
EBITDA in million € - - 7.5 28.2 20.8 - 254.2 310.7
Number of clinics > target - - 3 3 4 - 14 24
Number of clinics < target - - 3 1 3 - 11 18

HELIOS SERVICE SPECTRUM

The HELIOS Group offers patients competent services in acute and outpatient care as well as post-acute care and residential care for the elderly. Our goal is to provide high standards of medical care in all areas and at all levels.

Acute care is the group’s core focus. 43 acute care clinics cover virtually the whole medical spectrum, with a broad-based portfolio ranging from basic and standard care hospitals through to maximum care hospitals. There are 28 medical care centers attached to the clinics, which also have an excellent reputation outside their local regions.

The total medical care we provide for our patients also includes relevant outpatient care after hospital treatment. Possibilities for treatment at either the clinic itself or our medical care centers and the collaboration with numerous external doctors enable a seamless integration of outpatient and inpatient care within the HELIOS network. The success of our concept was once again demonstrated by the high number of outpatient admissions in 2010.

Our acute and outpatient care concept is supplemented, both regionally and medically, by our post-acute care clinics. The numbers speak for themselves: in 2010, we treated more than 33,000 patients at our post-acute care clinics.

At our nursing homes, the mission is to provide quality residential care with dignity and respect. Residents additionally benefit from the close links with our acute care facilities, which assure fast and optimum treatment.

Our service offering is supplemented by a Web 2.0 tool. In 2010, HELIOS was the first German hospital operator to launch its own proprietary application for iPhone and Black- Berry – the KlinikFinder. The KlinikFinder enables GPS-supported searches for the nearest acute and post-acute care clinic or specialist, and establishes direct contact with the clinic. The application has been downloaded about 1,000 times since it was made available on the Internet. The content and functions are constantly being added to, and for the future it is planned to integrate clinics also beyond the HELIOS network.

In a mediatheque on the HELIOS website we provide a wide range of public digital information: information films for patients, interviews with employees, and videos giving portraits of our clinics. All the films are also available in our HELIOS channel on the Internet platform YouTube.

QUALITY OF MEDICAL RESULTS AND PATIENT CARE

In 2010, HELIOS continued its program for further improving the quality of its medical results. A unique quality management system, developed in-house, assures continuous improvement in the standards of patient care. More information on quality management and the “Initiative of Quality Management” (IQM) co-founded by HELIOS can be found here.

Another integral part of patients’ benefit, besides the quality of the medical outcomes, is the quality of the nursing care, which is also a factor of strategic relevance for HELIOS. For us, it is important that patients and their families are satisfied – and our efforts are bearing fruit. Here we report on the results of our patient survey. They show that we are on the right track.

It is our goal to constantly improve the quality of medical outcomes at HELIOS. We will continue to pursue this rigorously in 2011. We want to achieve standards of treatment quality that are better than the German average or other customary international benchmarks in all important areas. For further information, please see Fresenius Helios’ website at www.helios-kliniken.de (German only).

Please see here for the 2011 financial outlook of Fresenius Helios.

Information on the German hospital market can be found here and here.

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