How new primary care venture Lilliancare can address Germany’s GP shortage — an interview with Daniel Hefel
Daniel Hefel has spent two decades working in Germany’s private healthcare sector. Recently he decided to try his hand at entrepreneurship. In an interview with HBI, he explained the business model behind his new primary care venture, LillianCare, and how it can help solve Germany’s doctor shortage.
Daniel Hefel is leaving German imaging group medneo, which he has been running for the past three and half years, to work on a new primary care venture.
Daniel Hefel
“I wanted to try starting my own business. I had a couple of ideas. Two years ago I founded a company with friends in the photovoltaic sector in Switzerland, called Solardach24, and successfully scaled it up. I wanted to do something in healthcare but in healthcare it’s difficult because you always need an investor and at least a million euros to start anything. Plus you need doctors, and there are loads of regulatory requirements. But I liked the experience of starting a business and I really wanted to do something in healthcare.
“I said to myself that this time I really want to make a difference in the healthcare market; I don’t want to just focus on private and out of pocket patients. I spent a long time looking for a sweet spot. Nobody is really doing anything about the GP shortage in Germany, so I decided that’s where I want to focus.”
Hefel is joining recently-founded LillianCare as a late co-founder (two of the original co-founders have left). LillianCare is a new German primary care company founded in December 2022. Currently it has three clinics (one in Fürstenau, one in Nastätten and one in Neuerburg) but Hefel says the plan is to grow this to 200 clinics over the next five years.
Crucially, all the clinics are strategically placed in countryside locations that are 30-60 mins outside of cities, so they can serve underserved rural areas but the GPs who work there can live in the city and commute to work two or three days a week.
“The German healthcare system is somehow simultaneously really good but also totally nuts. We don’t have the waiting list problem that the UK has, but we have almost no digitalisation and the countryside is totally underserved.
“Today we have a shortage of 5,000 GPs in Germany. In 10 years the shortage could be as much as 11,000, according to some estimates (the total number of GPs is approximately 50,000). There’s an oversupply in cities and an undersupply in the countryside, which are for the most part medical deserts. Interestingly, you would assume that it’s mostly in Eastern Germany where the shortages are worst, but it’s actually worse in Rhineland-Palatinate and Lower Saxony.”
Whilst primary care hasn’t to date been an area the private sector has shown much interest in, some private equity firms have moved into the space. Triton Partners bought German primary care group MED:ON in 2020. Rothschild’s Five Arrows investment fund bought Irish group Centric Health (which also has operations in Germany) in 2018.
But Hefel says LillianCare is different from these as it is not doing a buy and build strategy.
“I really don’t like the buy and build approach, from an operational efficiency perspective. The old staff are still there in the acquired practice and legally you have to continue to have them work there for three years.
“We needed to have a game-changing tool, something that significantly increases efficiency and improves the workforce situation. We decided to go for a greenfield approach, opening clinics that are 100% owned and operated by us in the countryside.”
The game-changing idea that LillianCare is using to improve efficiency is as simple as it is groundbreaking: to make much greater use of physician assistants.
In the traditional German primary care system assistants do exist but they never take consultations by themselves.
“The US has about 180,000 physician assistants, the Netherlands is also using them, as are the Nordic countries. But in Germany we don’t delegate any work. We do have physician assistants but they’re mainly in hospitals.
“But about 60% of the primary care consultation work load can actually be done primarily by a physician assistant; only 40% of patients need to see a GP face to face.”
Another key part of LillianCare’s business model is to use digital tools to triage patients and teleconsultations to free up the workforce.
“We decided to do everything on our own tech. We have a strong IT team. Patients who check in online get a five-question questionnaire, and we decide who needs to see a doctor physically or virtually, and who can be seen by an assistant. We take the workstreams apart, moving patients into different pathways, which makes it very efficient. Given the doctors aren’t working in the clinic every day it’s very important to get everything connected and digital.
“You can do a lot with telemedicine. Telemedicine makes it much more flexible on staffing. In medneo we had an 8% rate of cancelled appointments due to staff sickness, which meant many patients were not getting scanned. But when we added remote scanning we got it down to 0.2%. The same thing is happening with LillianCare, because we have this telemedicine back up.”
Hefel says he doesn’t care whether the patients they get are privately or publicly insured, because the point of the model is to serve as many patients as possible.
“Private insurance coverage is very low in the countryside, about 5%, compared to 10% across the whole country. Our aim is to treat as many patients as possible in an efficient way and with nice hospitality. In primary care there is not a lot of margin. It’s a face to face business. So you can only be profitable if you make it more efficient.”
Hefel tells us that the first three clinics have been a huge success: before even opening they had 500-700 people signing up at each clinic. “Some of these people haven’t seen a doctor for two or three years. We’re breaking even much faster than anyone else because we have a waiting list before we’ve even started.”
The plan now is to scale the model and build 12 new GP clinics this year.
“We don’t want to make the mistake others have made of focusing on too many things. Better to just focus on one thing and on making it an efficient, stable platform that you can easily add things to because you’ve got a good standardised IT system. Other operators are adding specialisms because it makes sense for them, but we said we can do that later.”
Hefel says they are not afraid of competition because the GP shortage is so severe and the countryside is so underserved that the opportunity is almost unlimited.
“Currently no one else is working this way. If we could convince 5-6,000 doctors to work with our model, we actually wouldn’t need any more GPs in Germany.”
We would welcome your thoughts on this story. Email your views to Martin De Benito Gellner or call 0207 183 3779.
