Spire Healthcare Group Plc · LSE:SPI
Spire Healthcare — Investor Day (April 2018)
122 slides from Spire Healthcare's investor day presentation, Apr 24, 2018
Slide 1: Spire Healthcare: Our Five Year Strategy – 80/100/200
Spire Healthcare: Our Five Year Strategy – “80/100/200” 24 April 2018 1
Slide 2: Important information: forward-looking statements
Important information: forward-looking statements These materials have been produced by Spire Healthcare Group plc (the “Company”) for your information and for illustration purposes only and contain certain forward-looking statements relating to the business of the “Company” and its subsidiaries (co
Slide 3: Strategy Overview – Spire at an Inflection Point
Strategy Overview – Spire at an Inflection Point Justin Ash Chief Executive Officer 3
Slide 4: Spire is at an Inflection Point: What You Will Hear Today
Spire is at an Inflection Point What You Spire Execution Five-Year Will Hear Strategy of Financial Today Overview Plan Targets 4
Slide 5: Strategic Context
Strategic Context • Demand for UK healthcare provision will continue to rise rapidly • NHS waiting lists (especially for elective work), rationing and restrictions are growing • Increasingly people are becoming informed consumers of and prepared to pay for healthcare, with choices digitally enabled
Slide 6: The Key Focus Of Our Strategic Reset
The Key Focus Of Our Strategic Reset Areas of focus: • Deliver leadership in clinical quality and customer care • Revenue growth focussed on private • Lower, disciplined capex focussed on optimising current sites and supporting their capacity and reach • Deliver returns on recent new builds; further
Slide 7: Market Context
Market Context S2 Spire Healthcare 5 Covking after cas
Slide 8: Market Context: A Sector with much Opportunity
Market Context A Sector with much Opportunity Consumers Continuing increasingly growth in demand prepared to pay for for UK healthcare healthcare (NHS backdrop) Quality will No clear become the key Independent differentiator Sector Winner Digital communication and pathway growing in importance 8
Slide 9: Market Context: Changing Consumer Expectations
Market Context Changing Consumer Expectations At least 23% of population currently … supported by worsening of NHS willing to consider private… waiting time Expectation of 25% 100% ease of access to NHS services 20% Don't know 20% 80% A lot easier 16% A little easier 15% 60% No difference A little h
Slide 10: Market Context: Quality is the Winner
Market Context Quality is the Winner Access and Quality underpin patient motivations to use private hospitals … … but the key differentiator is Quality 60% 60% 57% 51% 47% 44% 40% 40% 31% 26% 26% 25% 20% 20% 16% 0% 0% Faster access Private room Access to Higher Quality of Price of Technology Locatio
Slide 11: Why Quality Matters to Stakeholders as well as Shareholders
Market Context Why Quality Matters to Stakeholders as well as Shareholders Patients • Excellent clinical outcomes drive propensity to recommend and reputation 2022 Strategy • Great Quality results in Regulator Outstanding inspection ratings • 80% Private • 100% quality • Strong reputation for Qualit
Slide 12: Market Context: fragmented and variable on quality
The IS - fragmented and of Market Context variable Currently No strength Clear Winner and quality on Quality “We found that most patients had prompt access to effective treatment and experienced personalised care from highly skilled and caring staff.” However… “Our inspections also identified concer
Slide 13: Market Context: Digital Communication Becoming a Key Driver
Market Context Digital Communication Becoming a Key Driver Key influencers on patient decision re choice of provider 60% 53% 40% 32% 23% 20% 20% 3% 0% My GP My friends/family A search engine A ratings website Other Improve GP Be # 1 in patient Build digitally Key referral satisfaction and enabled pa
Slide 14: Spire's Strategic Reset
Spire’s Strategic Reset S2 Spire Healthcare 4 Covking after a
Slide 15: Spire Today: The Largest UK Independent Hospital Group
Spire Today The Largest UK Independent Hospital Group 134 operating 39 hospitals, 775,000 8,380 FTEs theatres & 11 clinics and patients and 3,900 1,800 patient 1 cancer centre (IP, DC and OP) consultants beds 98% of 70%* of 9.1% patients rate hospitals rated of all UK “Excellent” or “Good” or hip &
Slide 16: Extensive and Well-Positioned Network of Locations
Spire’s Strategic Reset Extensive and Well-Positioned Network of Locations Spire hospitals Spire clinics Spire cancer centre Note: Shading of map reflects population density, with areas of greater population density shaded darker 16
Slide 17: Spire Already the UK #1, and Well-Positioned to Win
Spire’s Strategic Reset Spire Already the UK #1, and Well-Positioned to Win Relative market shares: leading private hospital operators Key Scale Spire Total UK revenues Competitor A Competitor B £500m Competitor C Private payor Competitor D only (PPO) revenues Competitor E £500m Operating theatres 1
Slide 18: Strong Local Market Positions Reinforce Opportunity
Spire’s Strategic Reset Strong Local Market Positions Reinforce Opportunity Spire’s hospital ranking in revenue within its catchment area Spire’s hospitals that are leading in their catchment Hospitals ranked as Leaders areas (rank 1 or 2, in revenue terms) Key strategic Hospitals ranked as Follower
Slide 19: Spire's Private Proposition matches Consumer Need
Spire’s Strategic Reset Spire’s Private Proposition matches Consumer Need Clinical excellence Rapid access Easy to High to diagnostics understand Quality Very low clinical and treatment pricing regulatory infection quality scores rates outcomes 51% rate as a key motivation for private 47% rate as a
Slide 20: Our Vision
Spire’s Strategic Reset Our 5 Year Vision “To become the go-to UK independent healthcare brand, famous for clinical quality and customer care” 20
Slide 21: Spire's 5 Year Strategy
Spire’s Strategic Reset: Spire’s 5 Year Strategy Strategic goals and key enablers First choice for private patients Private Growth Plan and deliver operational excellence Operational Excellence Become best place to work Consultant Team Engagement Capability Become best place to practise Most recomme
Slide 22: What We are Changing and What It will Deliver (1 of 2)
Spire’s Strategic Reset What We are Changing and What It will Deliver (1 of 2) Strategic goals What we are changing What it delivers and key enablers • Improve services • Step-change in First choice for private growth • Digital, marketing and private patients telephony upgrade Plan and deliver • Dat
Slide 23: What We are Changing and What It will Deliver (2 of 2)
Spire’s Strategic Reset What We are Changing and What It will Deliver (2 of 2) Strategic goals What we are changing What it delivers and key enablers • Central recruitment • High performance Become best place focus culture To work • Step change in comms • High capability and development people Most
Slide 24: Strategic Reset Targets Strong Revenue Growth and Improved Cash Flow
Spire’s Strategic Reset Our Strategic Reset targets Strong Revenue Growth and Improved Cash Flow / Capital Returns Revenue (£m) 1,170 NHS 932 262 Other Private 288 Self- 374 187 pay 426 499 PMI 2017 NHS Self-Pay PMI Notts, Mancs, St A 2022 CAGR% (2)% +14% +3% +13% ~5% Capex target in a typical year
Slide 25: Measuring our Achievements – 80/100/200
Spire’s Strategic Reset Measuring our Achievements – 80/100/200 Key priority Measure 2017 Actual 2022 Vision Self-Pay Growth 12% p.a. underlying, >10% p.a. First Choice for 9.6% p.a. for Group Private Patients % Private Revenue 69% c. 80% Consultant Consultant 67% 90% Engagement Engagement Employee
Slide 26: Agenda and Spire Presenting Team
Agenda and Spire Presenting Team Item Presenter Title Strategy Overview: Justin Ash Chief Executive Spire at an Inflection Point Officer Execution of Plan: Dr JJ de Gorter Group Medical Clinical Quality and Customer Care Director Alison Dickinson Chief Nursing Officer Execution of Plan: Dan Rees Jon
Slide 27: Execution of the Spire Plan – Clinical Quality & Customer Care
Execution of the Spire Plan – Clinical Quality & Customer Care Dr JJ de Gorter Alison Dickinson Group Medical Director Chief Nursing Officer 27
Slide 28: Clinical Quality & Customer Care: Spire's 5 Year Strategy
Clinical Quality & Customer Care Spire’s 5 Year Strategy Strategic goals and key enablers First choice for private patients Private Growth Plan and deliver operational excellence Operational Excellence Become best place to work Consultant Team Engagement Capability Become best place to practise Most
Slide 29: Why Quality Matters to Stakeholders as well as Shareholders
Clinical Quality & Customer Care Why Quality Matters to Stakeholders as well as Shareholders Patients • Excellent clinical outcomes drive propensity to recommend and reputation 2022 Strategy • Great Quality results in Regulator Outstanding inspection ratings • 80% Private • 100% quality • Strong rep
Slide 30: Becoming Famous for Quality
Clinical Quality & Customer Care Becoming Famous for Quality Right thing Quality data to do increasingly for our visible to patients consumers Regulator Funders Consultants becoming beginning to aligning with increasingly differentiate high quality rigorous on quality providers 30
Slide 31: Quality Data is becoming Increasingly Visible to Consumers
Clinical Quality & Customer Care Quality Data is becoming Increasingly Visible to Consumers 31
Slide 32: Spire Can Evidence Great Clinical Outcomes (1 of 3)
Clinical Quality & Customer Care Spire Can Evidence Great Clinical Outcomes (1 of 3) 32
Slide 33: Spire Can Evidence Great Clinical Outcomes (2 of 3)
Clinical Quality & Customer Care Spire Can Evidence Great Clinical Outcomes (2 of 3) 33
Slide 34: Spire Can Evidence Great Clinical Outcomes (3 of 3)
Clinical Quality & Customer Care Spire Can Evidence Great Clinical Outcomes (3 of 3) 34
Slide 35: Regulators, Funders and Consultants Increasingly Discerning Towards Quality Providers
Clinical Quality & Customer Care Regulators, Funders and Consultants Increasingly Discerning Towards Quality Providers We regulate independent acute healthcare Regulator becoming providers in the same way as their NHS counterparts and we expect them to meet the increasingly rigorous same standards.
Slide 36: Significant Recent Investment in Clinical Expertise and Capacity
Clinical Quality & Customer Care Significant Recent Investment in Clinical Expertise and Capacity is Driving Improvement New dedicated clinical roles 36
Slide 37: Clinical Governance Framework Significantly Strengthened
Clinical Quality & Customer Care Our Clinical Governance Framework has been Significantly Strengthened over the Past 12 months • Ward-to-Board clinical oversight and assurance • CMD/CEO involved in over 60 clinical quality forums p.a. • Clinicians involved at every level in monitoring clinical quali
Slide 38: Step-Up in Systems for Consultant Oversight
Clinical Quality & Customer Care There has been a Considerable Step-Up in Systems for Consultant Oversight • No compromise on Appraisal compliance • Robust Biennial review of practising privileges • Strong local links with NHS medical directors • Unique Support to Consultants with CMA / GDPR require
Slide 39: Unique Data-Driven Assurance Systems
Clinical Quality & Customer Care We have Recently Launched Unique Data-Driven Assurance Systems Example: Treatment intervention outliers by specialty CAR ENT GAS GEN GYN NE OPH ORT PLA POD URO • Continuous system-wide reviews and follow-up • Analysis of treatment/follow-up rates by specialty • Stati
Slide 40: How We are Driving Clinical Excellence
Clinical Quality & Customer Care How We are Driving Clinical Excellence Investment in Clinical Expertise and Capacity Rigorous Clinical Governance from Ward to Board Robust Medical Oversight of Consultant practice Forensic Use of Data to Drive Continuous Improvement Relentless Focus on Being ‘Outsta
Slide 41: Becoming 'Outstanding' Everyday
Becoming ‘Outstanding’ Everyday 41
Slide 42: Our CQC Performance Today
Becoming ‘Outstanding’ Everyday Our CQC Performance Today 70% of Spire sites ‘Outstanding’ or ‘Good’ Requires Outstanding Good Inadequate improvement Spire Overall 8% 62% 30% 0% Independent Sector 7% 62% 31% 0% NHS 7% 41% 50% 2% 42
Slide 43: Spire Results are Improving Year on Year
Becoming ‘Outstanding’ Everyday Spire Results are Improving Year on Year % Locations rated Good or Outstanding by CQC Inspection Number Well Overall Safe Effective Caring Responsive Year inspected led 2015 8 63% 63% 57% 100% 100% 63% 2016 25 64% 48% 88% 100% 92% 64% 2017 4 100% 75% 100% 100% 100% 10
Slide 44: Renewed Focus on Areas Requiring Improvement
Becoming ‘Outstanding’ Everyday Renewed Focus on Areas Requiring Improvement % of hospitals ‘requiring Key improvement actions improvement’ • Deep dive on ‘Safe’ and ‘Well-led’ in Safe 43% unannounced audits • Safe staffing emphasis including ‘daily huddle reviews’ Effective 17% • New e-tool to be r
Slide 45: Some 'Outstanding' Hospitals in Our Estate
Becoming ‘Outstanding’ Everyday Some ‘Outstanding’ Hospitals in Our Estate Safe Well-Led Caring • Montefiore • St Anthony’s • Sussex • Nottingham • Cheshire • Leeds • CQC State of Care Report (2018) highlighted Spire Cheshire as a special case study for ‘Outstanding’ • Another 2 Spire hospitals rate
Slide 46: Going Over and Beyond CQC
Becoming ‘Outstanding’ Everyday What is changing – Going Over and Beyond CQC Internal inspections driving excellence (70+ inspections p.a.) • ‘Requiring improvement” hospitals: 2 internal inspections p.a. • ‘Good’ and ‘Outstanding’ hospitals: 1 internal inspection p.a. • Inspections are a mix of ann
Slide 47: Real-time 'Quality on a Page' Report (Redacted)
Becoming ‘Outstanding’ Everyday What is changing – Real-time “Quality on a Page” Report Redacted 47
Slide 48: Other Quality Initiatives
Becoming ‘Outstanding’ Everyday What is changing – Other Quality Initiatives Investment in quality resources • Clinical experts recruited to the central team to drive quality and test assurance • Intensive hospital onsite support where required • Pursuing clinical accreditations - Macmillan, Bupa, S
Slide 49: Project Outstanding
Becoming ‘Outstanding’ Everyday What is changing - ‘Project Outstanding’ • Create a Spire culture that is focussed on quality, safety and the customer • Ensure that getting to ‘Outstanding’ is considered everyone’s responsibility • Identify best practices and rolling out to all sites via learning ne
Slide 50: Achieving our Targets
Clinical Quality & Customer Care Achieving our Targets Our Goal : To be Famous for Clinical Quality and Customer Care • Every site inspected by CQC this year to be rated Good/Outstanding 2018 • 100% Compliance on key domains • Every site to be rated ‘Good’ or ‘Outstanding’ 2019 • Leverage PHIN data
Slide 51: Execution of the Spire Plan - Operational Excellence
Execution of the Spire Plan - Operational Excellence Justin Ash Chief Executive Officer 51
Slide 52: Operational Excellence: Spire's 5 Year Strategy
Operational Excellence Spire’s 5 Year Strategy Strategic goals and key enablers First choice for private patients Private Growth Plan and deliver operational excellence Operational Excellence Become best place to work Consultant Team Engagement Capability Become best place to practise Most recommend
Slide 53: Significant Momentum in Operational Changes
Operational Excellence Significant Momentum in Operational Changes What we are changing What we will deliver • Strengthen hospital • Greater consistency of leadership and accountability performance • Become customer-centric • Improved customer recommendation • Improve attractiveness to • Increased p
Slide 54: Determination to Succeed in New Hospitals in 2018
Operational Excellence Determination to Succeed in New Hospitals in 2018 Operational highlights: • Focus on quality and achieving ‘Good’ / ‘Outstanding’ CQC ratings • Strengthened senior leadership within each hospitals • Targeted consultant recruitment drive • Targeted investment in technology • Pr
Slide 55: Execution of the Spire Plan - Operational Excellence
Execution of the Spire Plan - Operational Excellence Dan Rees Jones Fergus Macpherson Operations Director Operations Director 55
Slide 56: Variations in Hospital Performance
Operational Excellence Average of top 3 hospitals Average across estate Variations in Hospital Performance Average of bottom 3 hospitals Customer experience Place to practise 94% 92% 85% 75% 67% 36% % of patients 'extremely likely to recommend' % of consultants rating services as 'Excellent' or 'Goo
Slide 57: Hospital Leadership and Clusters
Operational Excellence Hospital Leadership and Clusters What we are changing What it will deliver • Establish Clusters • Knowledge sharing • Greater OD / hospital interactions • Improved performance through • Commercial and clinical KPIs driven alignment • Resource optimisation and skill mix Enhance
Slide 58: Become the most recommended customer experience
Operational Excellence Become the most recommended customer experience What we are changing What it will deliver • Optimise the patient journey; take it • Improved patient scores online • Admission: online booking • Improved local recommendation • Discharge: electronic discharge • After-discharge: q
Slide 59: Become the Best Place to Practise
Operational Excellence Become the Best Place to Practise What we are changing What it will deliver • Optimising theatre utilisation • Enhanced access to theatres • Targeted investment in equipment • Grow consultant business and • Alignment of central and local marketing initiatives increase share of
Slide 60: Become the Best Place to Work
Operational Excellence Become the Best Place to Work What we are changing What it will deliver • Major revamp of incentive • Improve staff engagement and schemes – high quality hurdle retention • Reward and recognition • High performance culture platforms – ‘Spire for you’ • Reduce agency spend • As
Slide 61: Plan and Deliver Operational Excellence
Operational Excellence Plan and Deliver Operational Excellence What we are changing What it will deliver • Data-driven operational • Reduced variance & improved management performance • Clusters • Enhanced profitability • More ODs, enhanced hospital • Strengthened leadership; adapt and engagement re
Slide 62: Pathology: A Unique Capability
Operational Excellence Pathology: A Unique Capability What we are changing What it will deliver • Investing in our unique, national • Improved Quality in pathology Pathology network • Enhanced service levels for patients and consultants • National Quality Database driving high accreditation status •
Slide 63: Scale in National Distribution and Procurement
Operational Excellence Scale in National Distribution and Procurement What we are changing What it will deliver • Leveraging scale and national • Greater flexibility network for distribution • Greater consistency • Leveraging scale in procurement • Enhanced service levels • Lower cost 63 63
Slide 64: Spire Manchester – Improved Profitability
Operational Excellence Spire Manchester – Improved Profitability What we are changing: • CQC ready • Leading orthopaedic team won from competitor • Strengthened management • Equipped and further investing in innovative technology • Private activity ahead of plan Improved profitability 64
Slide 65: Spire St Anthony's – Profitable
Operational Excellence Spire St Anthony’s – Profitable What we are changing: • ‘Good’ CQC now awarded • Strengthened management • 50 new consultants (+20% growth) • Strong momentum in self- pay • Momentum in eReferrals • £5m cost base reduction (2017 vs 16) Profitable 65
Slide 66: Spire Nottingham – Good Progress
Operational Excellence Spire Nottingham – Good Progress What we are changing: • CQC – ‘Good’ • Strengthened management • Focused consultant acquisition • Develop NHS referrals • YTD Self-Pay volume +120% vs 2017 Good progress 66
Slide 67: Significant Momentum in Operational Changes
Operational Excellence Significant Momentum in Operational Changes What we are changing What we will deliver • Strengthen hospital • Greater consistency of leadership and accountability performance • Become customer-centric • Improved customer recommendation • Improve attractiveness to • Increased p
Slide 68: Execution of the Spire Plan - Private Revenue Growth
Execution of the Spire Plan - Private Revenue Growth Peter Corfield Chief Commercial Officer 68
Slide 69: Private Revenue Growth: Spire's 5 Year Strategy
Private Revenue Growth Spire’s 5 Year Strategy Strategic goals and key enablers First choice for private patients Private Growth Plan and deliver operational excellence Operational Excellence Become best place to work Consultant Team Engagement Capability Become best place to practise Most recommend
Slide 70: Five-Year Financial Targets
Private Revenue Growth Five-Year Financial Targets Revenue (£m) 1,170 NHS 932 262 Other Private 288 Self- 374 187 pay 426 499 PMI 2017 NHS Self-Pay PMI Notts, Mancs, St A 2022 CAGR% (2)% +14% +3% +13% ~5% 70
Slide 71: Working With The Operations Team
Private Revenue Growth Working With The Operations Team What we are changing What it will deliver • Establish Clusters • Knowledge sharing • Greater OD / hospital interactions • Improved performance through • Commercial and clinical KPIs driven alignment • Resource optimisation and skill mix Enhance
Slide 72: Spire's 5 Year Growth Projections
Private Revenue Growth Spire’s 5 Year Growth Projections Private Growth NHS PMI Self-Pay Slight Decline, Above Accelerated Capitalise On Market Growth Any Upside Growth 72
Slide 73: Valued NHS Partner
Valued NHS Partner £288m Total Revenue 86% eReferral 102k 3,275 5,893 NHS Discharges Hip Replacements Knee Replacements 15wks Average Waiting Time 56 Contracts Source: Spire MI, Full Year 2017 73
Slide 74: NHS Revenue Growth: Outlook Is Uncertain; Cautious Forecast
NHS Revenue Growth Outlook Is Uncertain; Cautious Forecast YoY Growth in NHS Revenue 2012-2020 Source: LaingBuisson 2017, with data modelled to strip out central London. Spire MI – underlying performance ? NHS CAGR – Actual & L&B Forecast L&B Spire L&B (F) Spire (F) 8% 8% 7% (2)% 74
Slide 75: Spire Holding Share Despite NHS Volatility
NHS Revenue Growth Spire Holding Share Despite NHS Volatility Decline In GP Referrals In Q4 Spire Holding Market Share GP Referrals - Independent Providers Share of Independent Providers Market Share of NHS GP Referrals Jan 15 – Dec 17 eReferral Discharges Spire Q4 2016 Q4 2017 Source: NHS England S
Slide 76: Key Success Drivers In The NHS Market
NHS Revenue Growth Key Success Drivers In The NHS Market 1 2 A Good NHS Partner Compliance 3 4 Strong National & Operating Local Discipline Relationships 76
Slide 77: Tactical Initiatives To Maintain Share In A Volatile NHS Market
NHS Revenue Growth Tactical Initiatives To Maintain Share In A Volatile NHS Market Flex Patient Pathway Maximise Slot Utilisation eReferral Sales Drive Broaden Footprint Waiting List Contracts 77
Slide 78: Spire's 5 Year Growth Projections
Private Revenue Growth Spire’s 5 Year Growth Projections Private Growth NHS PMI Self-Pay Slight Decline, Above Accelerated Capitalise On Market Growth Any Upside Growth (2)% p.a. 78
Slide 79: Significant Partner In UK PMI
Significant Partner In UK PMI £426m Total Revenue 46% Total Revenue 28k Overnight Admissions 90k 44% Day Case Admissions Total Admissions 88% 100% Top 4 PMI Revenue Long Term Contracts Source: Spire MI, Full Year 2017 79
Slide 80: PMI: Stable Market Dynamics But Affordability An Issue
Private Revenue Growth: PMI Stable Market Dynamics But Affordability An Issue YoY Growth In PMI Revenue 2012-2020 2020 Declining Affordability Of Individual Real individual PMI average price and real disposable household income Index (2000=100) 140 Real average individual PMI price 130 120 110 Real
Slide 81: PMI: Key Initiatives To Gain Market Share
Private Revenue Growth: PMI Key Initiatives To Gain Market Share 1 2 Key Account Long-Term Management Relationships (KAM) 3 4 Ease of Service Doing Development Business 81
Slide 82: We Are Driving KAM & Ease Of Doing Business
Private Revenue Growth: PMI We Are Driving KAM & Ease Of Doing Business Bupa Fee Assured & Verified Online PMI Bookings Tool Bupa Fee Assured & Verified Surgeons PMI Online Bookings Via Portal Source: Spire MI 2018 Source: Spire MI, PMI online bookings through the PMI portal Growing our fee assured
Slide 83: We Are Delivering New Services In Paediatrics
Private Revenue Growth: PMI We Are Delivering New Services In Paediatrics We Have Delivered A New National Paediatrics Network Growth In Children & Young Person IP/DC Admissions 260 Volume of IP/DC Treatments 240 220 200 180 160 140 120 100 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep
Slide 84: Plans In Place To Grow Own PMI Proposition – inSpire
Private Revenue Growth: PMI Plans In Place To Grow Own PMI Proposition – inSpire Competitively Priced In-house inSpire Delivering Continued Income Growth PMI Proposition (inSpire) PMI monthly subscription price* Monthly Income Generated From inSpire £ £450,000 150 inSpire £400,000 Provider 1 £350,00
Slide 85: Spire's 5 Year Growth Projections
Private Revenue Growth Spire’s 5 Year Growth Projections Private Growth NHS PMI Self-Pay Slight Decline, Above Accelerated Capitalise On Market Growth Any Upside Growth (2)% p.a. 3% p.a. 85
Slide 86: Delivering Double-Digit Self-Pay Growth
Delivering Double-Digit Self-Pay Growth £187m 16% 29% Total Revenue YoY website traffic YoY Outpatient bookings 188% 63% 129% YoY webform enquiries Enquiries mobile devices YoY OP bookings via web 3,012 Spire GP appointments 40% Online GP bookings Source: Spire MI, Full Year 2017 & Q1 2018 86
Slide 87: Self-Pay Market: Favourable Dynamics And Focus Of Our Strategy
Private Revenue Growth: Self-Pay Market Favourable Dynamics And Focus Of Our Strategy YoY Growth in Self-Pay Revenue 2012-2020 Source: LaingBuisson 2017, with data modelled to strip out central London. Spire MI, underlying performance Self-Pay CAGR – Actual & L&B Forecast L&B Spire L&B (F) Spire (F)
Slide 88: Self-Pay: Key Initiatives To Gain Market Share
Private Revenue Growth: Self-Pay Key Initiatives To Gain Market Share Insight Customer Experience Brand Consumer Product & Sales Self-Pay Services Strategy Marketing Value Consumer Partner Distribution Distribution 88
Slide 89: Self-Pay Insight - Sophisticated Segment Targeting Tool
Private Revenue Growth: Self-Pay Insight - Sophisticated Segment Targeting Tool Tend to be older. They are NHS loyalists & Most likely to have prior experience of private advocates who trust medical professionals & healthcare. Tend to be younger & comfortably the advice they give. Generally unwillin
Slide 90: Self-Pay Insight - Target Self-Pay Segments 2, 3 & 5
Private Revenue Growth: Self-Pay Insight - Target Self-Pay Segments 2, 3 & 5 Tend to be older. They are NHS loyalists & Most likely to have prior experience of private advocates who trust medical professionals & healthcare. Tend to be younger & comfortably the advice they give. Generally unwilling t
Slide 91: We have Identified Significant Self-Pay Opportunity
Private Revenue Growth: Self-Pay We have Identified Significant Self-Pay Opportunity Potential Additional 1.3m People Willing To Self-Pay 91
Slide 92: Delivering Self-Pay Growth Opportunity By Site
Private Revenue Growth: Self-Pay Delivering Self-Pay Growth Opportunity By Site Self-Pay Growth Opportunity By Hospital Size of opportunity Potential growth rate Average Volume & Growth Rate potential growth rate = c.150% Source: Spire SpOT model; Population modelled as most willing to self-fund med
Slide 93: Self-Pay: Focus On Speed And Access
Private Revenue Growth: Self-Pay Focus On Speed And Access Self-Pay Proposition When you have a health problem or notice a symptom it is normal to want to quickly find out… “What Is Wrong With Me?” Key services available include: 93
Slide 94: Growth In Our Private GP Proposition – Spire GP
Private Revenue Growth: Self-Pay Growth In Our Private GP Proposition – Spire GP Spire GP Spire GP Appointments 37 Hospitals Monthly Spire GP Appointments 80 GPs Since Launch National Coverage 800 700 30-minute Online Booking 600 Appointments 500 400 Downstream Integrated GP Revenue Platform 300 200
Slide 95: Developing A Competitive Pricing Strategy
Private Revenue Growth: Self-Pay Developing A Competitive Pricing Strategy Consumer Price Research Findings Improving Price Transparency 1 Diagnostics are price elastic New online price treatment pages Lowering diagnostic prices can grow 2 Enhanced finance options including demand WIP a digital fina
Slide 96: Transforming Access By Investing In Telephony
Private Revenue Growth: Self-Pay Transforming Access By Investing In Telephony Implementation Of Best Practice Impact On Business Performance Pilot Hospital Pre/Post Upgrade Enquiries OP Bookings Auto Performance Auto Answer Management Attendant Dashboard Training Compliance Source: Spire MI; Pre- c
Slide 97: Significant Focus On Improving Conversion Rates
Private Revenue Growth: Self-Pay Significant Focus On Improving Conversion Rates Within Local Sales Teams Self-Pay Conversion Rate By Hospital Q1 (CRM) Conversion Rate Measured by CRM Group Average = 42% Source: Spire MI recorded on CRM, Q1 2018 97 97
Slide 98: Developing Market Leading Digital Capabilities
Private Revenue Growth: Self-Pay Developing Market Leading Digital Capabilities Digital Enquires Spire GP Online Booking 2018 Development Online Customer Self Consultant Service Portal Appt. Booking 98
Slide 99: Significant Momentum In Digital Volume
Private Revenue Growth: Self-Pay Significant Momentum In Digital Volume Self-Pay Web Enquiries vs. Phone 14,000 Digital Telephone Volume of direct self-pay enquiries 12,000 10,000 8,000 6,000 4,000 2,000 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 17 17 17 17 17 17 17 17 17 17 17 1
Slide 100: Unique Capability In Geographic Specific Targeting
Private Revenue Growth: Self-Pay We Will Be Deploying Unique Capability In Geographic Specific Targeting Spire Opportunity Tool (SpOT) Helps Identify Local Potential 100
Slide 101: Summary - Private Pay Growth Execution
Private Revenue Growth Summary - Private Pay Growth Execution PMI Self-Pay Delivered Benefit Delivered Benefit Sophisticated New customers; Stable long term Stable revenue & customer Incremental contracts price confidence segmentation Revenue Geographic Strong PMI Incremental Marketing specific segm
Slide 102: Spire's 5 Year Growth Projections
Private Revenue Growth Spire’s 5 Year Growth Projections Private Growth NHS PMI Self-Pay Slight Decline, Above Accelerated Capitalise On Market Growth Any Upside Growth (2)% p.a. 3% p.a. 14% p.a. 102
Slide 103: Five-Year Financial Targets
Five-Year Financial Targets David Lomas Interim Chief Financial Officer 103
Slide 104: Five-Year Financial Targets: Revenue, Cost, Cash
Five-Year Financial Targets Revenue Cost Cash Drivers Efficiency Generation 104
Slide 105: Revenue Key Assumptions, 2018-2022
Five-Year Financial Targets Revenue Key Assumptions, 2018-2022 NHS PMI Self-Pay Increase in Single digit % Single digit % Double digit patient decrease p.a.; increase p.a. increase p.a. admissions strong regional driven by market driven by growing differences share gain and market and new new clinic
Slide 106: Revenue Profile (£m), 2017-2022
Five-Year Financial Targets Revenue Profile (£m), 2017-2022 1,170 262 NHS 932 Other 288 Private Self- 374 pay 187 499 PMI 426 2017 NHS Self-Pay PMI Notts, Mancs, 2022 St A CAGR (2)% +14% +3% +13% ~5% 106
Slide 107: Drivers of Cost Efficiency, 2018-2022
Five-Year Financial Targets Drivers of Cost Efficiency, 2018-2022 Driver Comment Leverage value of recent Benefit from improved operational performance investment as each of St Anthony’s, Nottingham, Manchester grows to expected patient volume Improved bed and theatre asset Benefit from operational
Slide 108: EBITDA Profile (£m), 2017-2022
Five-Year Financial Targets EBITDA Profile (£m), 2017-2022 20+ 200+ ~30 150 2017 Underlying Estate Notts, Mancs, St A 2022 Margin 16% ~17% 108
Slide 109: EBITDA to Cash, 2018-2022
Five-Year Financial Targets EBITDA to Cash, 2018-2022 Element Comment Working capital Continue strong working capital management Capex Lower capex needed focused on investment in core estate to support quality and private growth Target of £80m Capex for maintenance, upgrades and capacity enhancement
Slide 110: Targeted Capex, 2018-2022
Five-Year Financial Targets Targeted Capex, 2018-2022 £m 2015 2016 2017 Target (£m) (£m) (£m) for a typical year (£m) Maintenance 31 26 37 c.30 Refurbishment and 7 7 20 c.30 Upgrades New capability & capacity 23 28 31 c.20 enhancements New build hospitals 48 89 31 0 Total Capex 109 150 119 c.80 110
Slide 111: Free Cash Flow (£m), 2017-2022
Five-Year Financial Targets Free Cash Flow* (£m), 2017-2022 Cumulative cash flow in 2018-22 = c.£0.25bn c.£80m £(14)m 2017 Higher Lower Depreciation Financing 2022 operating profit capex and WC costs and tax *FCF = cash available for paying down debt, shareholder returns, or other investments 111
Slide 112: Summary – Strong Business, Compelling Proposition
Summary – Strong Business, Compelling Proposition Justin Ash Chief Executive Officer 112
Slide 113: Summary: Strategic Context
Summary Strategic Context • Demand for UK healthcare provision will continue to rise rapidly • NHS waiting lists (especially for elective work), rationing and restrictions are growing • Increasingly people are becoming informed consumers of and prepared to pay for healthcare, with choices digitally
Slide 114: The Key Focus Of Our Strategic Reset
Summary The Key Focus Of Our Strategic Reset Areas of focus: • Deliver leadership in clinical quality and customer care • Revenue growth focussed on private • Lower, disciplined capex focussed on optimising current sites and supporting their capacity and reach • Deliver returns on recent new builds;
Slide 115: Summary: Spire's 5 Year Strategy
Summary Spire’s 5 Year Strategy Strategic goals and key enablers First choice for private patients Private Growth Plan and deliver operational excellence Operational Excellence Become best place to work Consultant Team Engagement Capability Become best place to practise Most recommended Customer Exc
Slide 116: Spire's Goals
Summary Spire’s Goals Key priority Measure 2017 Actual 2022 Vision Self-Pay Growth 12% p.a. underlying, >10% p.a. First choice for 9.6% p.a. for Group private patients % Private Revenue 69% c. 80% Consultant Consultant 67% 90% engagement Engagement Employee Team capability Engagement 81% 90% Most Fr
Slide 117: Spire's Plan over time
Summary Spire’s Plan over time 2019 – 2022 Rapid Profitable Growth 2018 • Focus on Clinical Consolidate quality • Focus on Clinical • Accelerate Self-Pay quality • Grow PMI market Our • Develop Self-Pay share Vision • Drive recent hospital • Selective NHS work “To become the go-to UK developments •
Slide 118: Q&A
Q&A S2 Spire Healthcare vis Corking after you
Slide 119: Our Five Year Strategy – 80/100/200
Summary Spire Healthcare: Our Five Year Strategy – 80/100/200 Private Clinical Quality/ Annual revenues Customer Care EBITDA = = = 80% of total 100% £200m+ 119 119
Slide 120: Spire Healthcare: Our Five Year Strategy
Spire Healthcare: Our Five Year Strategy – “80/100/200” 24 April 2018 120
Slide 121: Financial annex
Financial annex Spire Healthcare by Corking after ye.
Slide 122: Free Cash Flow, 2017
Free Cash Flow, 2017 2017 (£m) Operating Profit 92 Exceptional items (49) Operating Profit after exceptionals 43 Net capital expenditure (118) Depreciation & impairment 68 Working capital & other items 15 Operating cash flow 8 Cash financing costs (19) Cash tax paid (3) Free cash flow (14) Dividends