Fresenius Helios

The business development in 2018 was a mixed picture. While preparatory measures for expected regulatory requirements and a decline in the number of admissions weighed on business at Helios Germany, Helios Spain continued to show dynamic growth.

Helios content

With the transfer of the post-acute business to Fresenius Vamed, Fresenius Helios will focus even more on the acute hospital business and its continued internationalization.

Fresenius Helios is Europe’s leading private hospital operator. The company comprises Helios Germany and Helios Spain (Quirónsalud); both are part of the holding company Helios Health. Helios Germany operates 86 hos­pitals, around 125 1 outpatient clinics, and 10 1 prevention centers. The company is the largest provider of inpatient and outpatient care in Germany. Helios Germany offers high-quality treatment across the entire range of medical services. Quirónsalud operates 47 hospitals, 57 outpatient centers, and around 300 Occupational Risk Prevention (ORP) centers. Quirónsalud is Spain’s largest private hospital operator with a comprehensive range of inpatient and outpatient medical care.

1 The year-on-year increase is mainly related to a changed reporting method. The figures now include locations instead of corporate entities.

Business Development

Fresenius Helios increased sales by 4% (6% 1) to €8,993 million in 2018. Organic sales growth was 3%.

Sales of Helios Germany decreased by 2% (increased by 2% 1) to €5,970 million. Organic sales growth was 2%. Sales are impacted by a decline in admissions, inter alia due to a trend towards outpatient treatments. In addition, vacancies among specialized nurses and doctors in some of our hospitals led to a decline in the number of cases. Measures to swiftly fill vacant positions have been intensified. In order to benefit from the trend towards outpatient treatments, Helios Germany is expanding outpatient services in a separate division. In addition, a new business segment was established to develop attractive innovative business models and exploit resulting growth opportunities.

Helios Spain increased sales by 17% to €3,023 million. Quirónsalud has been consolidated since February 1, 2017. Organic sales growth was 6%.

EBIT of Fresenius Helios remained on the previous year’s level at €1,052 million (increased by 3% 1). The EBIT margin was 11.7%. EBIT of Helios Germany decreased by 14% (- 10% 1) to €625 million with a margin of 10.5%. Given a significant fixed-cost base, top-line performance impacts EBIT over-proportionately. Additionally, EBIT development of Helios Germany is negatively affected by DRG catalogue effects, preparatory initiatives for expected regulatory requirements (e.g. clustering), and a lack of privatization opportunities in the German market. An unexpectedly high fluctuation rate among doctors and the shortage of personnel in the field of nursing had an additional negative impact on earnings.

EBIT of Helios Spain increased by 26% to €413 million, mainly due to the strong operating performance and the additional month of consolidation compared to the prior-year period, with a margin of 13.7%.

1Adjusted for German post-acute care business transferred from Fresenius Helios to Fresenius Vamed

Sales and earnings development
€in millions 2018 2017 Change
Sales 8,993 8,668 4%
    Helios Germany 5,970 6,074 - 2%
    Helios Spain 3,023 2,594 17%
EBIT 1,052 1,052 0%
    Helios Germany 625 725 - 14%
    Helios Spain 413 327 26%
EBIT margin in% 11.7 12.1
    Helios Germany 10.5 11.9
    Helios Spain 13.7 12.6
Net income1 686 728 - 6%
  • 1 2017: 11 months’ contribution of Helios Spain
  • 2 Net income attributable to shareholders of Fresenius SE & Co. KGaA

Transfer of post-acute care business

On July 1, 2018, 38 health care facilities and 13 service companies in Germany specializing in inpatient rehabilitation and care were transferred from Fresenius Helios to Fresenius Vamed. Fresenius Helios will now focus even more strongly on the acute care hospital business and its continued inter­nationalization. The strategic focus of Fresenius Helios will remain on its acute care hospitals, as well as the outpatient acute care – including preventative medicine – and outpatient post-acute care. The transaction had a total volume of €468 million.

Acquisitions / New hospital buildings

In September 2018, Helios Spain opened a new hospital in Córdoba. The company now has six hospitals in Andalusia. Quirónsalud has invested €50 million in this new hospital.

In October 2018, it was announced that Helios Spain had entered the attractive private hospital market in Colombia with the acquisition of Clínica Medellín. Clínica Medellín operates two centrally located hospitals in Medellín, a major city of 2.5 million people. The two facilities have a total of about 185 beds. The total investment for Clínica Medellín is more than €50 million. Fresenius Helios expects the trans­action to close in Q1 2019, pending antitrust and regulatory clearance.

 
  2018 2017 Change
Acute clinics Germany 83 88 - 6%
    Beds 28,802 29,438 - 2%
    Dwell time (days) 5.9 6.2
Acute clinics Spain 47 45 4%
    Beds 7,019 6,652 6%
    Dwell time (days) 4.2 4.3
Patient numbers Germany 5,321,445 5,324,164 0%
    Patients treated in ­hospital 1,218,199 1,237,068 - 2%
    Patients treated as ­outpatients 4,073,047 4,028,503 1%
Patient numbers Spain 13,318,066 11,592,758 15%
    Patients treated in ­hospital 437,855 353,307 24%
    Patients treated as ­outpatients 12,880,211 11,239,451 15%

Investments

In 2018, Fresenius Helios invested a total of €634 million (2017: €6,508 million). Of this, €60 million accounted for acquisitions. The main focus of investment in Germany was new construction and the modernization of hospitals in Duisburg, Dachau, Wiesbaden, and Wuppertal, among other locations.

In Spain we are investing around €40 million in the construction of a proton beam therapy center in Madrid. Scheduled for opening at the end of 2019, it will be the first facility of this type for treating cancer patients in Spain.

Further, we are investing around €30 million in a new hospital site in Torrejón, which is located just outside of Madrid. The opening of the new facility is planned for 2021.

Act to enhance nurse staffing levels

The Act to Enhance Nurse Staffing Levels (PpSG) entered into force on January 1, 2019 in Germany. From 2020, nursing costs will be deducted from the standardized base rates and the costs for direct nursing patient care will instead be fully reimbursed by the health insurance companies via separate care budgets. In 2019, each additional nursing job caring for bedridden patients – compared to 2018 – will be fully reimbursed by health insurers. In addition, from 2019, a reg­ulation setting a minimum limit for nursing will apply to hospitals in Germany for the following areas: geriatrics, intensive care, cardiology, and trauma surgery. This regulation is valid for one year and is intended as a provisional measure. From 2020, GKV1 and DKG2 will jointly set minimum limits for additional areas in hospitals as well.

Please refer to pages 75 f. of the Group Management Report for the 2019 financial outlook of Fresenius Helios. For ­further information on Fresenius Helios, please see www.helios-gesundheit.de (in German only) and www.quironsalud.es/en (in Spanish and English).

1 Central Association of the Statutory Health Insurance Funds

2 German Hospital Association