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AAL Investment Forum 2010 - A business case in AAL: How does it work in practice?
AAL Investment Forum 2010 - A business case in AAL: How does it work in practice?
AAL Investment Forum 2010 - A business case in AAL: How does it work in practice?
AAL Investment Forum 2010 - A business case in AAL: How does it work in practice?
AAL Investment Forum 2010 - A business case in AAL: How does it work in practice?
AAL Investment Forum 2010 - A business case in AAL: How does it work in practice?
AAL Investment Forum 2010 - A business case in AAL: How does it work in practice?
AAL Investment Forum 2010 - A business case in AAL: How does it work in practice?
AAL Investment Forum 2010 - A business case in AAL: How does it work in practice?
AAL Investment Forum 2010 - A business case in AAL: How does it work in practice?
AAL Investment Forum 2010 - A business case in AAL: How does it work in practice?
AAL Investment Forum 2010 - A business case in AAL: How does it work in practice?
AAL Investment Forum 2010 - A business case in AAL: How does it work in practice?
AAL Investment Forum 2010 - A business case in AAL: How does it work in practice?
AAL Investment Forum 2010 - A business case in AAL: How does it work in practice?
AAL Investment Forum 2010 - A business case in AAL: How does it work in practice?
AAL Investment Forum 2010 - A business case in AAL: How does it work in practice?
AAL Investment Forum 2010 - A business case in AAL: How does it work in practice?
AAL Investment Forum 2010 - A business case in AAL: How does it work in practice?
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AAL Investment Forum 2010 - A business case in AAL: How does it work in practice?

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Kenneth Sandström, Finland …

Kenneth Sandström, Finland

http://www.aal-invest.eu/page/speaker-profiles-kenneth-1

Published in: Health & Medicine
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  • 1. A business case in AAL – how does it work in practice? 14.09.2010 Kenneth Sandström 14.09.10 Kenneth Sandström 1
  • 2. Experience tells How to avoid the project graveyard and move them into business cases Challenges are many One needs to be aware of them Solutions can be found Good business cases can be built Markets are changing and growing at an increasing speed Lots of opportunities for innovation EU integration efforts (digital agenda) are beginning to open bordes Fertile ground for investors and entrepreneurs 14.09.10 Kenneth Sandström 2
  • 3. Market focus (Elderly, Public vs Private) General Background on the Finnish Health- and Socialcare system  Health- and socialcare services are predominantly produced by the taxfunded public system  Some 20%of healthcare services are produced by private healthcare providers, mainly through occupational health  Private citizens expect to get a well performing system for their tax money and are generally reluctant to pay more for social- and healthcare services either through insurances or directly  The Finnish market is similair to many others in Europe Therefore when developing services and products for the elderly, the role of the publicly funded market is crucial The private market will grow in the future 14.09.10 Kenneth Sandström 3
  • 4. Business & Projects Observations based on experience from the point of view of service innovations and technology integration  Businesses/ Investors want returns as soon as possible (=urgency=good)  This means aquiring paying customers for existing services and products  The problem with the health- and socialcare services market is that markets with earningspotential generally have to be created and in order to do that a component of innovation is required Implication  Projects become an important tool in developing services and products, which adress the need for customers and market creation at the same time (the first call for AAL projects not so attractive, AAL deployment funding potentially very attractive)  Public and Private partnerships are a crucial element in creating the market for services and products  This generally means more investment and longer returns 14.09.10 Kenneth Sandström 4
  • 5. Challenges with integration of innovations into the public system?  Perceived chronic lack of budgetary funds due to underbudgeting  Municipal law –the balanced budget requirement forces municipalities into a plan economy, difficulty of justifying investments in service development  Costly laws and regulation =viewed as poor laws =no need to follow, until sanctions enacted= slow adoption of new services and techologies  Poor appreciation of cost of individual processes and their interrelationship as part of the big picture (Operational statistics incomplete and not used to the degree needed as part of managing the processes)  Suboptimization (between organizations, budgets, public &private)  Organizational inertia (perception of ’Doing nothing costs nothing’! = expensive from taxpayer point of view, management of changes and integration of changes challenging because of strong unions and regulations)  Public tender legislation kills innovation particularly in services – mechanisms that more clearly allows development and deployment 14.09.10 Kenneth Sandström 5 needed
  • 6. Innovation-Investment- Integration  How does innovation become part of the mega legacy health or social care processes? One possible solution  Turn over the keys Innovation during the trial to a nimble and motivated outsider with total control Home Care over the legacy structures and innovation – make Secondary it a mega project in the Care real world but with managable size =systemic change Primary Care 14.09.10 Kenneth Sandström 6 14.09.10 Sivu 6
  • 7. 14.09.10 Kenneth Sandström 7
  • 8. Background Elderly Care  Care personnel retiring in masses  General ageing  Costs escalating  Public sector not attracting enough employees  Funds tied up in institutionalized care, need to move more emphasis into home care  Huge absenteeism (20-25% and inefficiency in service production (approx ) 35%of working hours only producing services at customer) =Out of every euro only 25 cents worth of work is conducted in the customers home  Little innovativeness, penetration of new technology non-existant  Urgency  Huge public and private sector market potential 14.09.10 Kenneth Sandström 8
  • 9. Building on T-Seniority ( EU ICT- PSP, CIP project)  Medineuvo is a partner in the T-Seniority consortium together with the City of Tampere (3rd largets city) in Finland and other partners throughout Europe  Goal is to develope and trial services and technology to assist elderly to cope at home longer and for the service provider to increase efficiency (reduced physical visits)  Technology based on IPHN video communication technology using touch screen PC technology  User experience indicates users without prior computer experience learn to use the system in 5-10 minutes, are extremely happy about the interactive services and new friends aquired during the project  As part of the deployment part of the project Medineuvo has sofar acquired two new customers, Pyhtää (a small municipality) and the City of Espoo Oy Copyright by Medineuvo 14.09.10 Kenneth Sandström 9 (2nd largest city)
  • 10. Seniorline™ 14.09.10 Kenneth Sandström Copyright by Medineuvo Oy 10
  • 11. Lessons learned on business models  Unit based business models fits poorly with rigid budgeting requirements as per municipal law due to unpredictable nature of demand and hence costs  Business model needs to be as predictable to public customer as possible, i.e.  Fixed cost based  Outcome based, i.e linked to key performance criteria which have a clear cost associated to them either as a unit cost or a total budget  A combination of fixed and outcome based  Municipal carrot, i.e savings sharing, higher output for same money  To compensate for the fixed cost or performance based risks the company needs take on as large a responsibility as possible of the process and its production assets, to control change levers as well as possible = outsourcing  Outcome based earningsmodels will protect against price erosion in public tenders long term and support continous development 14.09.10 Kenneth Sandström 11
  • 12. Case Pyhtää A novel approach in elderly care (pop 5000) Goal: To support coping at home with novel approaches that lead to reduced use of expensive institutionalized care  The municipality outsources the customers, personnel and budget for 5+ years 3  The municipality retains its organizing and fiscal responsibilites according to the law  Medineuvo invests in the innovative services and technology and manages the personnel  The carrot for both the company and the municipality is shared income on 50/ 50 basis from netsavings of reduced institutional care =shared motives, good cooperation, prevention of sub-optimization  Changes and outcomes will be measured, researched, new standards will be developed, tested cost accounted for preparing the municipality for a very informed public tender process eventually Result : Faster development of processes, services and testing of technologies 14.09.10 Kenneth Sandström Copyright by Medineuvo Oy 12
  • 13. Elderly care concept – home sweet home -Pyhtää Hospital care PC long term care Nursing home €/ day He al th €/ visit Li €/ day 24 He ne Case manager ne al 24 th Li ed ce e ic ne i rv rv s Se Se Services for coping Elderly at 135 customers at home Home 3 with computers I nt n Se er io ni ac 24 at Medineuvo 24/7 or Pyhtää Li ti o ne •Competence ne n rm n Li Home care team fo •Multichannel 24 tio 1Doctor In •PMR a •Monitoring orm 5 nurses f 2 fysiotherapists •Logistics In 9 home carers •70 nurses 14.09.10 Kenneth Sandström 13 Copyright by Medineuvo Oy
  • 14. Earnings logic - Commitments  Budget compensation  Total home care budget moved to company, including personnel and support services  Savings compensation  Calculated on reduced insitutionalized days as measured on a quarterly basis compared to the last two years (2008-09) average. Net savings are shared 50/50. This accounts for higher cost of care of more frail elderly at home. This will help finance development long term  Commitments  Caring for 135 customers and moving approx 10 out of 60 institutionalized elderly into home care  Investment and development commitments as outlined on next slide  Other income sources in the future (Private market)  Commission on services and or products brokered  Sales of Seniorline client to relatives and friends  Advertising 14.09.10 Kenneth Sandström Copyright by Medineuvo Oy 14
  • 15. Company investments into the concept over time Why? Investments  Health and wellfare care center 24/ 7 Private investment  Interactive telepresence (video) – Seniorline ™  Seniorline™health content production enables development  Field management system without constraints of   Specialized doctor in geriatrics Preventive health coaching of chronic diseases public tender legislation   Senior coaching Discharge team Investments prioritized  Home hospital activities (remote monitoring, acute care, laboratory results, medication) Service integration based on impact on   Regular customer surveys reduction of   Continuous education of personnel Introduction of incentive program for personnel institutionalized days  to drive desired changes Project funding to be applied for jointly Investments paced over contract time 14.09.10 Kenneth Sandström Copyright by Medineuvo Oy 15
  • 16. Early results Effective time of work day spend at the home of the elderly by the care team increased from approx 35%to 60%in six months (consolidation of teams, reorganisation of tasks and routes, 24/ 7 preparedness introduced on the field as well) A reduction in institutionlized days becoming evident during the first 6 months particularly in the long term Primary Care area (almost 20 %reduction at end of the 7 th month) A new mobile care alarm system introduced and tested with possibility for two-way calling and GPS location Budget component needs adjustments to better reflect the actual prior costs, the original number did not account for all costs. Good cooperation in the joint finance committee. 14.09.10 Kenneth Sandström Copyright by Medineuvo Oy 16
  • 17. What next? The concept is innovative in technical, integration, service development and business model point of view Many municipalities very interested in the model Company is looking for outside investors with resources and know-how as co-investors in the concept or for a spin-off . The goal is to position this very promising business concept for a quantum leap. 14.09.10 Kenneth Sandström 17
  • 18. Innovation-Investment- Integration  Can innovation become part of the mega legacy health or social care processes? Innovation Home Care Absolutely! Through the 4Ps Secondary Public-Private-People- Care Partnership and development of the investor toolbox Primary Care 14.09.10 Kenneth Sandström 18 14.09.10 Sivu 18
  • 19. Thank you! Kenneth Sandström Medinovo Oy kenneth.b.sandstrom@gmail.com +358-40-847 7291 14.09.10 Kenneth Sandström 19

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