Polikum - the future of the German outpatient market?
publication date: Dec 1, 2009
Polikum, the Berlin based chain of polyclinics has received an investment from Palamon Capital Partners. We look at why and what is happening in the German outpatient market.
Set up in 2003, Polikum has pioneered a return to the large polyclinics, which dominated primary care in Eastern Germany. These combine family generalists with specialists under one roof. So far Polikum has three outpatient clinics, of which the largest employs 100 staff, but Holger Kleingarn at Palamon says the aim now is to build smaller clinics with maybe 10-25 doctors and 20-40 nurses. “Polikum started with a clinic with 100 staff and working on trial and error now knows the optimum size is a lot smaller.”
The aim is to build centres, under the one Polikum brand, with strong back office with shared patient records and to work in the statutory insured market, rather than in the more lucrative, but much smaller, private insured market. The company recently delayed plans to set up a large clinic in Munich and will now focus on adding 5-7 clinics in Mecklenburg, Saxony or Thuringia, areas closer to Berlin where there are major doctor shortages, where payments are likely to rise and where local politicians will smile on incomers. The general aim is to go from 80 doctors today to maybe 200 in five years time.
Kleingarn says that, so far, Polikum has not yet made a profit after group costs, although individual centres are in the black, but says that patient satisfaction levels are very high: “We score 5 out of 5 across the categories. Patients like the idea of having a single centre and they like the way the doctor can fix a meeting with the specialist under the same roof in the meeting. They don’t have to wait around for 2-3 hours to see someone which is fairly common for statutory insured patients. The patient record system means the specialist doesn’t have to repeat all the questions asked by the family doctor.” There used to be 400 polyclinics in the former East Germany and patients liked that approach.
Since 2004, some 1,200 MVZs, or medical care centres have been set up in Germany. This provided a capital structure which allowed external shareholders. Most are small. Only around 200-250 have 10 or more doctors and two thirds have been set up by hospitals, who see outpatient centres as a way of increasing their patient flow.
Many doctors distrust these new organisations, in which they become salaried employees rather than business owners. Kleingarn says the trick is to employ the right people: “Polikum employs 60-70% women because we can provide the flexibility they want. It also works hard to create an environment which is attractive to younger hospital doctors who don’t want to work evenings and weekends.” Polikum gives the doctors a share in the business.
In fact, many German doctors practice in communal buildings. Kleingarn says: “I think there are around 1,000 Doctor’s houses or Ärztehäuser in West Germany, where 10 or more doctors share a single set of premises, but generally practice as individuals.
Other large outpatient groups, which are not owned by hospitals, include Atriomed, owned by Techniker Krankasse, with large centres in Leipzig, Munich, Cologne and Hamburg and Endokrinologikum in Hamburg.
Kleingarn adds: “This isn’t a typical private equity investment. We are in it for the long-haul for 7 or 10 years.”
Set up in 2003, Polikum has pioneered a return to the large polyclinics, which dominated primary care in Eastern Germany. These combine family generalists with specialists under one roof. So far Polikum has three outpatient clinics, of which the largest employs 100 staff, but Holger Kleingarn at Palamon says the aim now is to build smaller clinics with maybe 10-25 doctors and 20-40 nurses. “Polikum started with a clinic with 100 staff and working on trial and error now knows the optimum size is a lot smaller.”
The aim is to build centres, under the one Polikum brand, with strong back office with shared patient records and to work in the statutory insured market, rather than in the more lucrative, but much smaller, private insured market. The company recently delayed plans to set up a large clinic in Munich and will now focus on adding 5-7 clinics in Mecklenburg, Saxony or Thuringia, areas closer to Berlin where there are major doctor shortages, where payments are likely to rise and where local politicians will smile on incomers. The general aim is to go from 80 doctors today to maybe 200 in five years time.
Kleingarn says that, so far, Polikum has not yet made a profit after group costs, although individual centres are in the black, but says that patient satisfaction levels are very high: “We score 5 out of 5 across the categories. Patients like the idea of having a single centre and they like the way the doctor can fix a meeting with the specialist under the same roof in the meeting. They don’t have to wait around for 2-3 hours to see someone which is fairly common for statutory insured patients. The patient record system means the specialist doesn’t have to repeat all the questions asked by the family doctor.” There used to be 400 polyclinics in the former East Germany and patients liked that approach.
Since 2004, some 1,200 MVZs, or medical care centres have been set up in Germany. This provided a capital structure which allowed external shareholders. Most are small. Only around 200-250 have 10 or more doctors and two thirds have been set up by hospitals, who see outpatient centres as a way of increasing their patient flow.
Many doctors distrust these new organisations, in which they become salaried employees rather than business owners. Kleingarn says the trick is to employ the right people: “Polikum employs 60-70% women because we can provide the flexibility they want. It also works hard to create an environment which is attractive to younger hospital doctors who don’t want to work evenings and weekends.” Polikum gives the doctors a share in the business.
In fact, many German doctors practice in communal buildings. Kleingarn says: “I think there are around 1,000 Doctor’s houses or Ärztehäuser in West Germany, where 10 or more doctors share a single set of premises, but generally practice as individuals.
Other large outpatient groups, which are not owned by hospitals, include Atriomed, owned by Techniker Krankasse, with large centres in Leipzig, Munich, Cologne and Hamburg and Endokrinologikum in Hamburg.
Kleingarn adds: “This isn’t a typical private equity investment. We are in it for the long-haul for 7 or 10 years.”