Ramsay may be only the fifth largest private hospital operator in the UK but it is demonstrably the most cost-effective and has a clear-cut ambition to be the UK number one. We talk to Andy Jones about the individual market, NHS partnership, procurement and the hotelier model.
Becoming CEO at Ramsay six months ago was a big leg-up for Jones, previously COO at Nuffield, the big not-for-profit chain. A medical doctor, he comes across as straight talking, no nonsense with a very clear sense of priorities and a real passion for value healthcare
So what is his priority? He says that he spends over half his time on getting culture and team right. Here he is building on the Ramsay Way, the doctrine and values on which founder Paul Ramsay built the group. “We want to build a team that delivers efficient value-based health. If we get that right all else follows.” That means the right training for staff and a relentless emphasis on teamwork.
What does that mean in practice? A major initiative which Ramsay is launching is Speaking Up for Safety in which all staff take responsibility for safety. That also incorporates an anonymous feedback platform to report positive and negative experiences. From this Summer in every operating theatre any staff will be free to say: “Under the safety code we need to stop”. And in every operation, there will be someone wearing a red hat with overall responsibility for list safety.
The underlying strategy is clear. He reckons that Ramsay is the most cost-effective operator in the UK and as such can grow to be the number one player. The background here is that he expects delivery to change dramatically over the next 5-10 years. Day surgery, which today accounts for roughly 50% of volume across the UK hospital sector can rise to 80% in many categories he says. And he also sees huge opportunities in cancer and cardiology, with cancer in particular becoming a chronic disease. All this means that Ramsay needs to continue to remodel how it works.
Working with the NHS accounts for about 70% of Ramsay sales. Other healthcare service suppliers have told us that they have seen the NHS becoming much less friendly towards the private sector and talk of a subtle change in attitude in which any involvement with the for-profit sector is frowned upon. Jones disagrees strongly with this. He says that hospital trusts are increasingly willing to work much more closely with for-profit operators.
He is keen to move away from the basic model which he defines as “contracts of just one year with no minimum contracted work.” What that means is working much more closely with hospital trusts on five year or so contracts. He cites Colchester as an example, where Ramsay’s Oaks Hospital has recently entered into a collaborative partnership with Colchester Hospital University Foundation Trust to deliver care over a five year period. He reckons that increasingly NHS hospital trusts will have their work cut out handling acute elderly cases and that trusts will therefore be happy to partner with Ramsay in a model where it smoothly handles larger elective volumes. Ramsay has several such projects active already.
He is also keen to get involved in helping trusts with the early diagnosis of cancer, an area where the UK needs to improve.
What is also very clear is the close synergy between the UK and the rest of Ramsay. Procurement was centralised in Singapore some three years ago and is now morphing into rather more than squeezing lower prices out of big medtech and pharma. Ramsay UK also works very closely with Australia and France, both, particularly Australia, much larger organisations. Ramsay Australia, for instance, is the biggest oncology operator in the country and has a third of the private market.
He is fascinating on procurement. He says that across all the medical categories such as, say, orthopaedics, Ramsay now has global agreements with the top 3-7 suppliers. These agreements he says go far beyond best price. The aim is to partner with the best suppliers to roll out not just products, but also service offerings. For Jones, it is about establishing the best patient pathways.
Increasingly, Ramsay is also working with the major suppliers in each category with smaller suppliers often being dropped.
Like all UK hospital groups, Ramsay operates the hotelier model in which most doctors freelance at its facilities, typically once or twice a week and may also work at other competing chains.
Jones sees this changing. Ramsay is increasingly employing salaried doctors – Jones reckons the count has now risen to about 50 and he expects this to continue to rise. He also says procurement controls are being applied with doctors having a more limited choice of products. In general, they are also being far more involved in clinical pathways. Ramsay, in other words, is seeking to present itself as the best place to work for doctors who want to upgrade and grow their skills. He doesn’t think the basic hotelier model in which hospitals act as hotels which vie to be the place where doctors carry out their private practice has a long-term future.
Jones is also interesting on what the group is not focusing on. He is watching the central London market but given that capacity is about to soar 40% as new players such as Schoen and Cleveland enter the market and that demand is dropping as the Middle Eastern market gets fixed closer to home, he is not desperate to join it. Ramsay is more interested in the London suburbs and beyond the M25, where he says there is a big corporate payor market for private operators.
Private pay where patients pay cash for operations is the only part of the mix that is increasing in the UK. Rival operators such as BMI, Spire and HCA have responded by offering all-in prices. HCA, which dominates the central London market, has been advertising on the tube.
Jones says that Ramsay wants its slice of the pie but adds: “Out of pocket customers will never sustain a multi-site hospital chain.” He says that Ramsay plans to ensure that it always offers the best price in the market for any elective procedure. Given its low-cost base, it should be able to undercut competitors and still make money.
Nor is he interested in mouthing off private medical insurers (something that marks him out from most of his UK competitors). He says Ramsay is much less interested in dickering on price and much more interested in offering new day surgery and chronic disease management programmes for cancer. “That way we offer the insurers new products to sell.”
Two years back, Mark Page, his predecessor as CEO of Ramsay UK, said that if the UK voted Brexit the company would have a real headache as foreign labour started to disappear. Jones says that so far he has seen no sign of a Brexit impact on recruitment. As with other HR-aware groups, Ramsay’s focus is very much on selecting people who get lit up by delivering high-quality healthcare and giving them the training and management structure to deliver it. That sounds like a sensible approach.We would welcome your thoughts on this story. Email your views to Max Hotopf or call 0207 183 3779.