Financial results

Capio’s financial model is based on an interaction in which the quality of healthcare drives productivity and a sound financial balance, which enables new investments to improve quality. It is vital that the entire organization understands what creates high quality and that development can be measured and monitored with the help of relevant key figures.

The employees who work close to patients can influence activities on a day-to-day basis and this important work is supported by Capio’s internal financial reporting. Accurate, relevant and timely reporting provides direct feedback on the financial consequences of our activities. This ensures a sound basis for decisions and continuous process improvements, leading to more efficient use of resources, and more healthcare for the money.

Reporting reflects responsibility and activities, with the patient as the starting point

Capio’s organization is decentralized and built on the patient’s needs, up through the organization. Internal financial and operational reporting is structured in line with the organization and reflects responsibility and activities all the way from the care unit treating the patient, to the Group management.

The reported results are of course important, but another equally vital parameter is that reporting enables us to understand and analyze the factors contributing to the results. This includes patient volumes, the level and rate of productivity, and the number of doctors and nurses contributing to healthcare production.

Important support for managers at all levels

It is vital that managers at all levels of the organization, especially those working closest to patients, have access to and understand the reports and the interactions between quality, productivity and finances. This will enable them to adopt appropriate improvement measures and compare outcomes with other similar units within Capio. This understanding also contributes to making Capio better prepared to meet the changing conditions in the healthcare market.

Systematic efforts, such as support from an effective IT system, are therefore made to ensure access to the reports, and that the reports present relevant information. This will optimize development and improvement opportunities. To make it easier to understand the financial results, Capio’s has an income statement classified by function which reflects the organization’s direct and indirect costs.

Capio provides training in Modern Management for managers within the organization, including to ensure that information is handled correctly and leads to wise decisions. One example is the efforts during the year to minimize unnecessary duplicate work in wards, and thereby release more time for the patients.

Pedagogical structure for increased understanding

The financial reports are pedagogically divided into different sections, with the respective areas of responsibility illustrated by specific colors. Operational managers receive relevant operational information and some financial information. At business area level, there is information on cash flows and working capital, for example, while information at Group level also includes financing and Group-wide tax matters.

An important aspect of providing healthcare services is to ensure a purpose-built and pleasant environment. Capio owns and operates many hospital properties. The real estate business is related to the healthcare business, but sets different requirements in terms of leadership skills, financing and follow-up compared to the healthcare business. As a consequence, the real estate business is accounted for and followed up separately in the financial reports. In order to ensure financial reports that can be compared between the various operating units, each care unit is charged a market rent.

Production requirement as the starting point

Unlike many other healthcare providers, Capio’s starting point is not the costs of delivering healthcare, since this is a variable that to a great extent can be influenced with the help of quality initiatives leading to increased productivity. Capio’s financial model is based on planned healthcare production, such as the number of expected patient visits during a day, week or month. Based on this information, the expected revenue from patient visits can be calculated. With a clear objective for the level of productivity to be achieved, which means the number of visits that can take place, with high quality during a certain period, the need for resources can also be determined – such as the number of employees required to achieve the objective. The resources used thus constitute the direct costs of the healthcare produced. To avoid bottlenecks and be able to guarantee steady high quality with good productivity, this is also a question of ensuring that the right resources and competences are used, as well as good planning of resources.

Productivity – a central key figure

The financial model’s non-financial key figures, or KPIs (Key Performance Indicators), are used to measure production, productivity and resources, which are naturally key aspects of planning and managing activities to achieve healthcare of high quality for more patients, with the same resources. Using the productivity measure, which is a central aspect, managers in the organization can work to ensure that staff and medical equipment, and other relevant resources, are used effectively, by matching resources to the planned production. The aim is to maintain stable, high productivity, in order to ensure the effective use of resources.

A commonly used productivity measure in inpatient care is average length of stay (AVLOS). By introducing modern new treatment methods, the quality of treatment will be improved, which in turn leads to increased productivity such as shorter AVLOS, and that more patients can be treated with the same amount of resources. This means that good healthcare of high quality can be offered to more patients. There are various examples of this link within Capio’s activities. The Capio Group has activities in several countries and thus has good opportunities to compare various units’ development within relevant areas, and to share best practice between its activities in Sweden, Norway, France and Germany.

A sound financial balance allows for investments in better healthcare

When the finances are in balance, with sound financial results and cash flows, Capio can create scope for investments in its operations, which in turn contribute to higher quality and more productive healthcare. This is becoming increasingly important as healthcare requirements increase, concurrently with a tightening of public healthcare budgets.

For example, in 2015, a new hospital, which consolidates three hospitals into one, opened in Bayonne, with modern premises to support the implementation of Modern Medicine. In addition, Capio invests approximately 3% of annual net sales in net capital expenditures. In 2014 and 2015, for example, this included major investments in Capio St Göran’s Hospital in Stockholm as a consequence of the modernization of the hospital premises, and this project is continuing in 2016.