Key insights and takeaways: 17 things we learned at HBI 2023
Our annual conference took place earlier this week in London. Over a jam-packed three days of HBI 2023, an impressive array of delegates from across Europe and beyond gathered in the heart of London and shared their insights into the myriad challenges and abundant opportunities the sector faces, and offered their views on how some of them might be addressed. Here are some of our key takeaways.
Slide packs and recorded content from HBI 2023 are available via the HBI app. Log into the app here! If you do not yet have access but would like to find out more about Connect membership, click here.
1) The long term sustainability of health care systems, in terms of resources and funding, is a problem that both governments and the private sector need to start addressing immediately. Estimates that health care expenditure will need to rise by 3% CAGR in nominal terms in wealthy countries due to ageing populations are unrealistic; Hedley Goldberg, managing director at financial advisory group Rothschild, thinks the true figure will be at least double this. For private investors this means it is actually a very sustainable industry to invest in. But the major supply bottlenecks, especially around workforce shortages, require radical solutions.
2) The slowdown in European M&A will last longer than anyone thought last year. Small and medium sized deals are still happening, but activity is down across the board and the dearth of larger deals will probably last until 2024 – and maybe even 2025.
3) Private credit funds are the only game in town at the moment for getting debt financing to fund large acquisitions, which is why borrowing costs are so high.
4) We will see an increasing number of minority investments going forward; this will be a big part of what gets deal activity started again.
From ‘The 2023 Healthcare M&A Landscape’ (presentation by Hedley Goldberg)
5) Most people in the German market are confident Lauterbach’s reforms won’t be too damaging, but there is still uncertainty around what form they will take. Smaller MVZs are being rolled up to try and get deals over the line before potential restrictions come in, and investors are still being scared off because nobody is quite sure what will happen.
6) The growth in private pay is a widespread phenomenon. Several places in Europe, including the UK, Spain, Portugal, Italy, as well as most of Central and Eastern Europe, are seeing much higher private pay growth rates than the sector as a whole. In Portugal almost half the population now have some form of private medical insurance cover (including the 1.4m or 14% of the population who are covered by a scheme for public sector employees and their families). Luz Saude now gets just 3% of its revenue from contracts with the NHS; CUF is now eschewing public pay entirely. Affidea is seeing a similar trend, with some 40% of its 1m patients in Romania now paying privately. Spire in the UK saw private revenue grow nearly 22% in the first half of 2021.
7) AI is a friend, not a foe. It is proving increasingly adept at examining images and detecting diseases; patients often prefer speaking with chatbots over doctors. Some speakers expressed hope it will replace radiologists, since the profession is known for burnout issues, whereas others are adamant AI should be viewed as a companion. But one thing is clear: there is more risk in not starting with AI. In terms of integrating it into workflows, the hardest part is change management. As Dr Nadine Hachach-Haram, founder & CEO at Proximie pointed out: “There’s a lot of low hanging fruit we could be starting with that can unlock a lot of value. Triaging patients, getting them to the right clinic in time. It really is a ‘make or break’ moment for healthcare systems across the world.”
8) The approach to solving the workforce crisis will have to be different for different sub sectors. But there is a general consensus that flexibility is key. Not only in terms of working hours, but also being accommodating to differing career goals amongst staff – some may want to work up from a junior level to a hospital director, others may just want to be a good nurse.
9) Homecare start-up platforms like Marta, Birdie, and Elder are well positioned to address the workforce issue in social care. By matching up caregivers with families directly through apps, these kinds of digital marketplaces give more autonomy and flexibility to caregivers, as well as a more tailored personal care experience for elderly patients and their loved ones. The sector needs to think beyond bricks and mortar facilities to help manage the health of ageing populations and embrace the potential of innovative, disruptive technologies.
10) Emerging markets face three major challenges: Trust (patients often don’t trust healthcare providers); talent; and credit (there is often an issue with collecting finances from patients which means investors and lenders are less willing to provide financing).
11) Ukraine needs the private sector and investors to help rebuild its health care infrastructure – now, not later. With 1,554 health care infrastructure facilities damaged, 184 completely destroyed, 615 pharmacies destroyed, and five regions affected (Kyiv, Chernihib, Donetsk, Mykolaiv, and Kharkiv), the cost of rebuilding is estimated as being at least $16.5bn over the next ten years. The three areas the Ukrainian Health Ministry sees the most potential for development are clinics, general hospitals, and cluster hospitals. As the CEO of Dobrobut Vadim Shekman says: “Despite the air sirens and missiles, life is going on. Cafes are open, hospitals are open, clinics are open. War is war but it doesn’t stop diseases from going on.”
12) Opportunities in women’s health extend past IVF, which only focuses on a sliver of time in a woman’s life. There is a whole sector which is largely underinvested in. There is a real opportunity to expand the services offered to things like menopause and endometriosis.
13) Better standards for more empathetic and synergised cultures internally must be set. Women make up 80% of the global health care workforce, but the numbers significantly drop off when it comes to senior leadership at the executive level. We need to ask why this is the case and adapt, for the benefit of both patients and employees.
14) Three keys to successful partnership are trust, sharing resources, and having a goal which takes into account cultural considerations as well as mutual interests. But, as Peter Wharton-Hood, group CEO at Life Healthcare pointed out, compromise is key! You can only have a successful partnership when both sides are willing to be slightly unhappy.
15) ESG/environmental initiatives at least sometimes align with other goals of health care businesses. In particular, improving the efficiency of operations, in terms of energy use, labour productivity and patient throughput, is not just good for the bottom line, it’s also good for reducing emissions, as is moving towards a more preventive system in which people are kept out of hospital.
16) If you want to mitigate political and regulatory risk, scale really helps. But even the harshest regulatory regime can be an opportunity. Bad news is rarely just bad news. Lower reimbursement leads to consolidation. And a poor environment in one country can spark opportunities in the neighbours.
17) In some outpatient sectors like dentistry in many geographies, tech deployment in areas like patient interaction and booking is still in the Dark Ages – but this means there is huge scope to reduce clinician time and improve workflow ahead.
We would welcome your thoughts on this story. Email your views to David Farbrother or call 0207 183 3779.
