Group caring through life annual report 2015 Enabling well-being Pihlajalinna is one of the leading providers of social and healthcare services in Finland. Extensive range of social and healthcare services offered to both private and public sector customers Nationwide actor: Strong presence 2015 in figures in Helsinki Metropolitan Area and Tampere region revenue EBITDA* Extensive range of social and healthcare services offered to both private and public sector 213.3 12.5 customers EUR million EUR million EBIT* personnel 31.12.2015 Founded in 2001 The CEO is the founder, Mikko Wirén 4.5 3,047 EUR million Company is headquartered in Tampere earnings per share Dextra clinics, dental outsourcings clinics, hospitals care services 0.03 * Excluding NRI’s During the first quarter of 2015 Contents long prepared social and healthcare CEO Review …………………………………………3 law tumbled to constitutional issues Sector and markets ………………………………4 Megatrends boost growth ………………………6 and was moved after the elections Municipality social and healtcare for the next government. cost rise in check …………………………………9 Strategy ………………………………………… 10 Year 2015 ………………………………………… 12 Business segments …………………………… 14 Private Clinics and Specialised Care ……… 16 Primary and Social Care ……………………… 18 Responsible business ………………………… 21 Renewing healthcare ………………………… 23 The company launched Personnel wellbeing …………………………… 26 asylum seeker reception centre Pihlajalinna Oyj operations in October 2015 and Corporate Governance ……………………… 28 listed on the main established reception centres in Board of Directors ……………………………… 30 list of Helsinki Stock Kokemäki, Kihniö, Jämsä, Renko Management Team …………………………… 32 Exchange and Karkku Financial Review 2015 ………………………… 36 The outsourcing of municipal social and healthcare services began in Parkano (1 January 2015), Kihniö (1 May 2015) Pihlajalinna and and Jämsä (1 September 2015) Fennia sign healthcare service agreement. Customer oriented, efficient and sustainable way of operating guarantees high quality services July April May June January March August February October November December well-being and better tomorrow ”What if the market model would not be the swearword of sote reform. It is not rocket science or lack of services but management, organising, setting objective and following them.” Teija Sutinen, Helsingin Sanomat, excerpt of editorial 12.11.2015 CEO Mikko Wirén The projects Strong growth continued 20155 Growth continues to be an objective Public and private of 2015 build The revenue of the whole year grew 43% to EUR 213.3 One of the most significant projects during the financial together (148.9) million. The majority of the organic growth was year 2016 is securing the positive profitability development The cornerstone of the the ground for brought by the social and healthcare total outsourcings and realization of the long term growth strategy. Our Pihlajalinna success has been future growth in Parkano, Kihniö and Jämsä. Investments in future objective is to grow via acquisitions and organically the good cooperation of public growth affected the profitability: strengthening of the via public sector outsourcings. We want to effectively and private social and healthcare. administration and support fuctions and developing the utilize the possibilities of health and care technology and We hope that we can expand and ERP system. I’m pleased that the profitability developed digitalization in our business operations. develop this approach now also on the more positively compared to the beginning of the year national level as part of the preparation of during the last quarter. Social and healthcare reform the social and healthcare reform. progression is important to Finland Year of the large projects It is absolutely essential to whole Finnish society that we Financial year 2015 has been a year of the significant, ensure the success of the social and healthcare reform. future growth building projects. The company was Pihlajalinna actively participates in the preparation of listed in the Nasdaq Helsinki main list in June 2015 the social and healthcare legislation with other actors. and started three major social and healthcare total Transparency of the financing and costs, clear and outsourcing contracts. The second largest social and equal quality criteria and developing customer oriented healthcare outsourcing take over in the company history operations according to the patients’ freedom of choice are was realized during the financial year in Kuusiokunnat important to all actors. and the service production started in 1 January 2016 at the same time when Jämsä outsourcing expanded Jobs and taxes to Finland significantly. We did also several acquisitions during the We are a Finnish company that employs thousands of year. I want to warmly thank the Pihlajalinna personnel social and healthcare professionals around the country. We and all our partners for the good and successful produce health and wellbeing, effective care, taxes and jobs cooperation. and through that better tomorrow. annual report • Pihlajalinna 3 Toimiala ja markkinat Steadily growing market The social and healthcare The Finnish social and healthcare market has grown quite steadily Municipality and joint market has grown quite in recent years, regardless of economic cycles, with an average authorities finances 2015 steadily in recent years, annual growth of 6 per cent. The market volume is approximately EUR 28 billion (2013). Health services include basic healthcare, regardless of economic cycles. specialised care, dental care and occupational healthcare. Social Social and healthcare services include support and housing services for the elderly and persons with mental or substance abuse problems, as well as day care services and services for children, young people and families, 49% for example. The healthcare market can be divided into private and public Education and culture healthcare services and other healthcare expenses, such as medicine and medical equipment. The growth rate of private services outperforms that of public services. This is due to the 28% outsourcing of healthcare services and the increased demand for privately funded healthcare services, for example. The private Other sector produces approximately one-fifth of all healthcare services. In Finland, social services are provided by the public sector, foundations and private enterprises. The role of the private sector 17% has also increased in social services; around 17 per cent of these services are privately produced. Muni cipalities have increased their cooperation with private service providers due to their weak Financing activities financial situation. Social and healthcare costs are the largest and other costs individual component of municipal expenditure. 6% Source: The Local Government Finance Programme/ Association of Finnish Local and Regional Authorities 4 Pihlajalinna • annual report people of all ages need our services Pihlajalinna 5 Megatrends boost growth Many trends globally and The population is ageing fast about the availability of public services and the need to in Finland will increase the Finland’s population is ageing faster than any other ensure rapid access to treatment in all situations. demand of social and healthcare country in Europe. According to the population forecast of Statistics Finland, the number of citizens over 65 will Municipalities in transition services in the long term. total almost 1.3 million by 2020 and exceed 1.5 million The economic situation of municipalities has deteriorated by 2030. Those over 65 also use the majority of social in recent years. Municipalities have been forced to increase and healthcare services. The increasing number of elderly their borrowing to cope with their expenses, of which people is expected to increase the demand for social and social and healthcare services account for an average of healthcare services in the long run. 49 per cent. Many municipalities have been forced to increase their tax rate to finance the growth in spending. Medical expenses insurance on the increase Many municipalities have made efforts to increase their The number of voluntary medical expenses insurance efficiency by outsourcing healthcare and social service policies has clearly increased in recent years: provision to the private sector. Another option has been a approximately one million Finns hold private health weakening in the level and availability of services, which in insurance. The reasons behind this include concern turn has increased waiting times for treatment. 6 Pihlajalinna • annual report Democraphic The share of over 65 year dependency olds of the population is ratio weakens estimated to increase from current 19,9% to 26 % by Occupational health care Good health and well-being is important 2030 and 29 % by 2060. plays an important role Finns smoke less and eat more healthily than before, and Employers are paying more attention to employees’ many of us also exercise in our leisure time. Wellness health, work ability and well-being at work. Instead of the trends also drive consumer habits. This has been treatment of diseases, the focus is on their prevention in reflected in the trend for healthy food, and consumption 17.5% 22.6% 25.6% order to extend careers and prevent disability at work. of “superfoods” is on the rise. People also expect According to the reimbursement data of Kela (the Social healthcare services to be more effective. We want to Insurance Institution of Finland) for 2013, a total of recover quickly from illnesses and