Capio’s financial model is based on an interaction in which the quality of healthcare drives productivity and balanced financial results, which can be devoted to new investments to improve quality. It is vital that the entire organization understands what creates good quality and that the 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 and operational reporting. Accurate, relevant and timely reporting provides direct feedback on the operational and 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 spent.
Reporting reflects responsibility and activities, with the patient as the starting point
Capio’s 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 naturally important, but another equally vital parameter is that the reporting enables us to understand and analyze the factors contributing to the results. This includes for example patient volumes, the level and rate of productivity, and the number of doctors and nurses contributing to healthcare production.
Pedagogical structure for increased understanding
Capio’s financial reports are pedagogically divided into different sections, with the respective areas of responsibility illustrated by specific colors, see picture at the next page. Care unit managers receive relevant operational information and some financial information. At Business Area level, there is additional information on cash flows and working capital, for example, while information at Group level also includes financing and Group-wide income tax matters.
An important aspect of providing healthcare services is to ensure a purpose-built and pleasant environment. Capio owns and operates some hospital properties. The real estate business is related to the operational healthcare business, but sets different requirements in terms of leadership skills, financing and follow-up compared to the operational 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 internally charged with a market rent.
To show Capio’s financial model, reports prepared in line with the model are presented as supplementary information to the legal financial statements in the Annual Report. For further information regarding Capio’s financial model, refer to the section “Capio’s financial model” on page 22 in Capio Annual Report 2017.
Blue: The operational part where the responsibility lies within the business
Green: The operational part with addition for real estate – responsibility on business area level
Yellow: Non-operational part, e.g. legal responsibilities either on Group or business area level
Red: Financial part (net debt) with responsibility either on Group ( Treasury) or business area level
Net sales correspond to the remuneration received
for the healthcare provided within each activity.
Overhead costs reflect the infrastructure we need to run our operations, but are not linked directly to the provision of patient care. Salaries for managers, IT infrastructure costs and HR costs are all examples of overhead costs. Since overhead costs are generally fixed, an increase in business volume has a direct positive impact on the financial results.
Direct costs reflect the use of direct resources in our activities, such as salaries to doctors, nurses and other clinical personnel, materials, X-rays and the cost of premises. Direct costs are to a large extent variable over time.