Performance review: Alliance Medical

Chief Executive Officer: Alliance Medical overview

The business’s incorporation into Life Healthcare from November 2016 has provided both Life Healthcare and Alliance Medical with improved stability and opportunity to grow with skills and knowledge sharing taking place.

The key financial performance indicators monitored by Alliance Medical at a Group level are revenue, EBITDA and cash generation measured against budget and prior year. At a site level, KPIs vary so as to optimise site level performance and quality across Alliance Medical. The business operates at approximately 200 sites, and consolidation into single metrics is not considered appropriate.

For the financial year ended 30 September 2017, revenue was GBP261 million (2016: GBP233 million) and EBITDA was GBP69 million (2016: GBP62 million), using constant currency rates. Our revenue growth was impacted by higher PET-CT scan volumes and associated radiopharmaceutical sales. In Ireland, performance improvements were driven by the full-year impact of clinic acquisitions and higher volumes across most sites. In the UK the business was adversely impacted by the pricing pressure experienced in the mobile business. Italy benefited from strong performance in static sites as a result of contract extensions and clinics increasing numbers of private patients. Performance in Italy was hampered by lower MRI volumes due to the introduction of the Appropriateness Decree, which has since been reversed.

There is a strong underlying demand for diagnostic imaging services in the markets in which we operate, and the business continues to seek attractive growth markets owing to an under-penetration of imaging services compared to international benchmarks. This is primarily driven by an increasing disease burden globally, ageing populations, increased focus on early diagnosis, and advances in medical technology. Additionally, public sector facilities are characterised by ageing equipment that will need to be replaced or upgraded, supporting demand for Alliance Medical services in long-term partnerships and through more traditional contracting arrangements.

Guy Blomfield
Chief Executive Officer: Alliance Medical Group

Principal service offering overview

Alliance Medical generates the majority of its revenue from the provision of MRI, CT and PET-CT services.
A summary of Alliance Medical’s business capabilities and their primary drivers are provided below.

Performance review

Growth

In May 2017, the Life Healthcare board approved Alliance Medical’s acquisition of Life Radiopharma Group (previously Eckert & Ziegler) for EUR13 million (including debt of EUR6 million). The acquisition created Europe’s largest integrated radiotracer supply and imaging organisation. It extended Alliance Medical’s molecular imaging presence in Europe and supplements our PET-CT scanning services and radiopharmacy facilities.

The acquisition of the Albaro clinics business in Italy took place in December 2016 for EUR7 million. This acquisition further enhances Alliance Medical’s service provision to public and private patients in Genoa, Northern Italy.

The UK business acquired Direct Medical Imaging in August 2017 for GBP3.5 million. This acquisition supplements the UK’s existing service offering. Alliance Medical continues to work on the development of NHS partnership solutions in the UK.

Quality: Clinical governance

Alliance Medical operates across western Europe. Although each of the geographies is responsible for determining and monitoring indicators relevant to their operations, a business-wide clinical governance framework is utilised with the following characteristics:

  • Providing effective operational risk management according to a prescribed process. This ensures that all aspects of clinical risk are managed appropriately.
  • Same-day escalation of serious untoward incidents from clinical governance teams to the Country Medical Director. The Country Medical Director informs the country board and the Chief Medical Officer: Alliance Medical. The Life Healthcare operational board is appraised of material incidents.
  • Monitoring of introductory, corrective and preventive actions following potential or actual serious untoward incidents.
  • Introducing guidelines, policies and procedures to avoid repeat errors.
  • Continuously improving corporate quality and service.
  • Ensuring systems and processes are sufficient to maintain patient safety with necessary understandable patient information.

Each of our geographies measure patient satisfaction levels and complaints, and generate reports required for reportable incidents in their respective country. Our geographies record contract or customer-specific metrics as required and operational metrics for efficiency analysis.

An effective integrated governance and risk management framework exists across Alliance Medical which seeks to ensure that the quality of services provided to patients is continuously improved, the highest standards of care are safeguarded, and an environment is created in which clinical excellence is continually promoted. We continually strive to ensure that appropriate mechanisms to support this are in place, including:

  • Standard setting: Comprehensive policies and standard operating procedures are in place at corporate and unit level.
  • Audit: A comprehensive audit programme ensures that departments and units follow key policy directions and meet legislative and regulatory requirements.
  • Licensing and registration: Strategies to monitor and ensure compliance with the legal, statutory and regulatory requirements.
  • Incident reporting: All incidents are recorded, trended and reviewed at a national and regional level, and all serious incidents are reported within 24 hours and a root cause analysis is undertaken.
  • Risk register: Maintenance of an integrated corporate risk register which identifies key risks at a national, regional and local level and complements the other systems that are in place.
  • Clinical and other quality indicators: A comprehensive range of clinical and other quality indicators are collected and analysed at Company level including, but not limited to:
    • Patient satisfaction rates: We are committed to providing the highest quality of service to our patients. All feedback is welcomed and is used actively to improve what we do and the way in which we do it.
    • Propensity to recommend our services to friends and family: 95% of patients would recommend us to their friends and family.
    • Patient complaints: We recognise that at times, we might fail to meet patients’ individual expectations. Patients may experience a standard of care lower than they expected and may wish to raise their concerns to help to improve our service. We are committed to listen to their concerns and provide a full and appropriate response.
    • Image quality audit.
    • Turnaround times: We are committed to continually reviewing and improving our turn-around times, striving to be efficient while maintaining patient choice and convenience.
    • Radiology clinical audit: A clinical audit of radiology reports is performed, with a 10% random sample submitted to audit with quarterly reports sent to individual radiologists comparing their results to the national mean.
Efficiency: Procurement

Each geography in Alliance Medical is responsible for their procurement activities. We periodically assess procurement activities centrally to find economies of scale or other benefits that could be delivered via centralised procurement. Centrally-procured products and services include scanners, insurance, and finance and banking services.

In some areas, Group-wide knowledge is leveraged to disrupt the traditional market approaches to obtain better deals. This was most apparent for scanner maintenance where non-original equipment manufacturers (OEMs) were used to encourage OEMs to revisit their service offerings in the market.

Sustainability: Electricity, water and waste

Electricity, water and waste efficiency measures are recorded on a country-by-country basis as required by local regulation. Radioactive substances are manufactured via cyclotrons and are procured only at sites where these cannot be produced internally. Waste is managed in line with international waste disposal guidelines and in accordance with local legislation in each of our markets.

Sustainability: Human resources

Our human resource activities operate in accordance with the relevant local jurisdiction, the local market conditions and local employment requirements. Collectively, Alliance Medical employs 1 715 (2016: 1 633) people, 632 (2016: 617) of whom are clinical and 1 083 (2016: 1 016) non-clinical. In addition, Alliance Medical engages with 604 (2016: 563) self-employed clinical colleagues in Italy where a different clinical delivery model is in operation.

Employee retention, training and development are dictated by country requirements. Alliance Medical operates mandatory and non-mandatory training programmes in line with regulatory requirements for each region. Regions providing radiopharmacy or PET-CT services comply with the relevant local nuclear medicine/radiation protection mandatory training requirements.

Diversity statistics are recorded according to local legislation. In the UK for example, new legislation requires gender pay and bonus gaps to be reported effective from 6 April 2017. 2017 also saw the UK business comply with the requirements of the NHS Workforce Race Equality Standard which will be extended to incorporate disability statistics from 2018.

Sustainability: Health and safety

We have adopted health and safety policies that comply with applicable health and safety legislation, including the UK Health and Safety and Work Act of 1974, and the UK Health and Social Care Act of 2008. Alliance Medical has a health and safety committee to ensure compliance with these laws. In addition, the business employs third-party consultants, where appropriate, to provide advice and guidance to the business. This includes independent advice regarding health and safety laws and ways to improve Alliance Medical’s health and safety policies and procedures.

In our UK geography, there is mandatory online training for certain aspects of health and safety including manual handling and fire risk. We adhere to legislation covering video display usage, eye tests and radiation exposure monitoring for radiopharmacy employees.

Stakeholder engagement

Stakeholder management is delegated to the country management teams. Group-wide relationships are managed centrally only where necessary, such as with the Molecular Imaging Collaborative Network (MICN), a partnership between Alliance Medical, “the Christie”, NHS hospitals, patient representatives, academic centres, charities and commissioners. The partnership has a shared purpose of improving cancer survival rates and is widely acknowledged as an exemplar of how the independent sector supports the future of the NHS.

The top concerns and expectations of all key stakeholders is that Alliance Medical continues to provide service excellence and innovative imaging techniques to improve patient care while operating in line with the legal and regulatory requirements of the countries in which we operate. For customers, the delivery of these services should be cost effective, and provided in line with contracts. For patients, the key concern is rapid access to scanning services, at a time that suits them, with good levels of care.