STRATEGY DEVELOPMENT

A. COMPANY PROFILE
Overview Asklepios Kliniken Gmbh
The company is name Asklepios Kliniken Gesellschaft Mit Beschrabkter
Haftung, Hamburg, Germany. The company Founded in 1985 by Dr. Bernard gr.
Broermann, the sole shareholder and was formed on 19 June 1985. Asklepios is
the second largest clinic operator in Germany with around 150 healthcare
institutions in 14 federal states and more than two million patients treated per
year. Commitment to top medicine, quality, and social responsibility. Acute
hospitals for all levels of care and specialist clinics, psychiatric and forensic
facilities, post-acute clinics (rehabilitation), other healthcare institutions (medical
centres, care homes) and medical service providers. Focus on clinics included in
the state-level hospital planning of the federal states as part of the public
healthcare system. Expertise in the long-term restructuring of formerly loss-
making, publicly run hospitals on the basis of a proven and systematic
development plan.
The healthcare group Asklepios Kliniken GmbH is one of the leading
private operators of hospitals and healthcare facilities in Germany. The hospital
group is known for highly qualified patient care with a clear commitment to
medical quality, social responsibility and innovation. The company pursues a
responsible and sustainable growth strategy geared towards high quality and
innovation. Asklepios has been performing dynamically on this basis since it was
founded 30 years ago. The Group currently has around 150 healthcare facilities
throughout Germany and employs more than 45,000 people. Approximately 2.2
million patients were treated in Asklepios Group facilities in the 2014 financial
year.
History
 1985 Founded by the lawyer and auditor Dr Bernard gr. Broermann
 1990s After the fall of the Berlin Wall, East Germany was a focus of regional
expansion
 2005 Largest hospital privatization in Germany: Acquisition of what is today
Asklepios Kliniken Hamburg
 2007 Substantial expansion of psychiatry with the acquisition of several
psychiatric and forensic facilities
 2010 Asklepios goes to the public capital market with a company bond (EUR
150 m)
 2011 MediClin becomes part of the Asklepios Group: acquisition of 52.7% of
the Offenburg hospital group
 2013 Successful financing measures: syndicated loan (EUR 325 m) and debut
on the promissory note market (EUR 300 m)

Vision
The vision Asklepios are :
 With the Asklepios vision, Asklepios describe the development and position of
the company on the hospital market on the basis of their successes and future
goals: Asklepios is the market leader in the relevant competitive fields of size,
profit and innovation.
 The Asklepios pursue a long-term and growth-oriented international marketing
strategy. The ownership structure facilitates stability and independence from
short-term speculative developments on the capital market and at the same time
also provides access to the funding opportunities that are necessary for their
continued growth.
 The Asklepios have achieved and maintain their leading position in efficiency
and quality through the development and implementation of state-of-the-art
methods of medical treatment and process optimisation: The Asklepios stand
for humane and high-quality medical care. Asklepios offers comprehensive
one-stop medical treatments and is a trendsetter for new cross-sectoral
 interdisciplinary services. Their staff are able to identify with the company
because of the motivational and fair working atmosphere provided to them.

The Asklepios Principle

The Asklepios has established a clear maxim for their work: “United for
Health”. After all, health is a concern for all of th and it can only be created,
maintained and restored by working together.
The Asklepios corporate activity is geared towards forward-looking
medicine of the highest quality for all patients entrusted to their care. Medical care
at the basic level is just as significant a part of the hospital care structure as that at
the top, and indeed throughout the entire chain of treatment. The continual
development of their medical services is further supported through clinical
research. Using the latest knowledge management tools, The Asklepios also
ensure that the more recent scientific findings are circulated knowledge is
disseminated throughout their hospitals.
People form the focus of the Asklepios philosophy: even in the most
cutting-edge medical care, personal attention is the key to regaining your health
and each patient should therefore receive the best personal care possible. This
principle also applies to their staff: their identification and satisfaction with their
work is their priority. The Asklepios accomplish this with an atmosphere of
transparency and respect, which also accommodates personal requirements and
support. A high degree of individual responsibility as a result of decentralisation,
short decision-making processes and an “open door” policy contribute to this, as
does their comprehensive range of instruction, training and further education
opportunities.
The Asklepios are committed to their role as a socially-conscientious
company. With their public care commitment, their hospitals are realising an
important duty of the utmost responsibility. For this reason, Asklepios adheres to
the highest principles of integrity as the benchmark for all of their actions, both
internal and external. As a family business, Asklepios pursues long-term business
goals. Rather than paying dividends, all profits generated are reinvested within the
company. Their commitment to health promotion among school pupils in as many
of their locations as possible exemplifies their commitment to taking on social
responsibility.

Location
The Asklepios offer you a national network of emergency hospitals, rehabilitation
clinics, nursing homes, private practices and medical centres, all of which make us
the European leader. Here you can find Asklepios facilities.

Figure 1. Asklepios Hospital Location

Source : http://www.asklepios.com/, 2015

Organisation & Management

Decentralisation is a significant organisational principle at Asklepios.
Decisions are made on-site at the facilities and involve a high degree of personal
responsibility and extensive financial autonomy. If necessary, the hospital
receives support from other facilities within the group and from experts in the
group divisions.
 Group Division (Central Help – Decentralised Success)
Asklepios supports a decentralized company structure through expert
knowledge from the central group divisions in order to react to its patients in an
economical and efficient way and in their best interests. These service units
combine the information and expertise of the entire company, developing
strategies and recommendations for action and then making their results and
services available to hospitals.
 Regions (A Wealth of Competence at the Hamburg Location)
The Asklepios Clinics in Hamburg are the choice of every second hospital
patient in the Hanseatic city. They are also the largest private hospital cluster in
one location in Europe, formed by a successful combination of ten clinics, five of
which focus on specialised care. With around 10,000 members of staff, the
Asklepios Kliniken Hamburg GmbH ranks among the largest private employers in
the city, and, thanks to its 1,500 training places, is also one of the most significant
national training facilities in the healthcare sector. The Asklepios Hamburg has a
huge influence on the German hospital scene. The reference hospital of the
Asklepios Future Hospital has is located in Hamburg-Barmbek and puts Hamburg
on the map as a global IT reference centre in the hospital sector. In addition, the
research facility Asklepios proresearch has transformed Hamburg into a
competent and global contact for clinical research. The Asklepios Kliniken
Hamburg GmbH originated from the former Landesbetrieb Krankenhäuser (LBK).
At the end of 2004, the Hanseatic city of Hamburg sold a total of 74.9% of its
shares in two stages. With privatisation, sustainable investments were made in the
clinics and the high-quality care was secured. The executive management consists
of Stephan Leonhard, Dr Christoph Mahnke, Anja Rhode as well as Dr Thomas
Wolfram.
Ten Asklepios Clinics in the Hamburg area belong to the Asklepios
Kliniken Hamburg GmbH as do medical service providers and other subsidiaries:
 Figure 2. the Asklepios Kliniken Hamburg GmbH as Do Medical Service
Providers and Other Subsidiaries
Source : http://www.asklepios.com/, 2015

 Corporate Management
The corporate management of the Asklepios Group is led by the CEO and
management expert Dr. Ulrich Wandschneider, the vice chairmen and accountant
Dipl.-Kfm. Stephan Leonhard, the business economist Dr. h.c. Peter Coy and the
physician Dr. med. Roland Dankwardt.
Through their various specialised fields, these individuals cover all of the
top management skills required in a hospital group. The goal of the company is to
retain and expand the Asklepios Group market leadership to the private clinic
sector. The joint actions of corporate management are always focused on the
attainment and guarantee of this strategic objective.

Group Business Model

Asklepios is an integrated healthcare group with a clear commitment to
quality, innovation and social responsibility. Its 150 healthcare facilities in 14
German states make the Asklepios Group one of the leading hospital operators in
Germany. Acute hospitals providing all levels of care, specialist clinics,
psychiatric and forensic facilities, rehabilitation clinics, nursing homes and
medical centres allow for integrated treatment chains and the establishment of
medical clusters, which explain the Group’s substantial regional market shares.
The development and expansion of medical specialisms also ensure that Asklepios
is represented throughout Germany.

Asklepios Kliniken GmbH is composed of three subgroups:

Figure 3. Group Structure Asklepios Kliniken GmbH

Source : Annual Report Asklepios Kliniken GmbH, 2014

It focuses on the non-cyclical acute market. 84.5 % of the business volume

related to acute care hospitals and around 14.5 % to the rehabilitation sector. The
remaining revenue was generated by the additional medical facilities. In total, the
150 healthcare facilities treated 2,186,876 patients in the financial year. The
Asklepios Group employed 34,255 full-time equivalents in the past financial year
(previous year: 34,439).
The operating entities are mainly consolidated subsidiaries. Asklepios
Kliniken GmbH, the parent company of the Group, is responsible for the areas of
strategy and financing, as well as for carrying out monitoring, management and
controlling functions. Asklepios is realizing functional synergies, for example in
the areas of finance and financing, insurance, quality management, medicine and
science, procurement and IT. Asklepios Kliniken GmbH (AKG) forms a
consolidated tax group for VAT purposes with the majority of the group
companies. Standard intercompany agreements on exchanging services and
cooperation agreements have been concluded between the group entities.
Organisation & Management
Decentralisation is a significant organisational principle at Asklepios.
Decisions are made on-site at the facilities and involve a high degree of personal
responsibility and extensive financial autonomy. If necessary, the hospital
receives support from other facilities within the group and from experts in the
group divisions.

 Group Division (Central Help – Decentralised Success)

Asklepios supports a decentralized company structure through expert
knowledge from the central group divisions in order to react to its patients in an
economical and efficient way and in their best interests. These service units
combine the information and expertise of the entire company, developing
strategies and recommendations for action and then making their results and
services available to hospitals.
 Regions (A Wealth of Competence at the Hamburg Location)
The Asklepios Clinics in Hamburg are the choice of every second hospital
patient in the Hanseatic city. They are also the largest private hospital cluster in
one location in Europe, formed by a successful combination of ten clinics, five of
which focus on specialised care. With around 10,000 members of staff, the
Asklepios Kliniken Hamburg GmbH ranks among the largest private employers in
the city, and, thanks to its 1,500 training places, is also one of the most significant
national training facilities in the healthcare sector. The Asklepios Hamburg has a
huge influence on the German hospital scene. The reference hospital of the
Asklepios Future Hospital has is located in Hamburg-Barmbek and puts Hamburg
on the map as a global IT reference centre in the hospital sector. In addition, the
research facility Asklepios proresearch has transformed Hamburg into a
competent and global contact for clinical research. The Asklepios Kliniken
Hamburg GmbH originated from the former Landesbetrieb Krankenhäuser (LBK).
At the end of 2004, the Hanseatic city of Hamburg sold a total of 74.9% of its
shares in two stages. With privatisation, sustainable investments were made in the
clinics and the high-quality care was secured. The executive management consists
of Stephan Leonhard, Dr Christoph Mahnke, Anja Rhode as well as Dr Thomas
Wolfram.
Ten Asklepios Clinics in the Hamburg area belong to the Asklepios
Kliniken Hamburg GmbH as do medical service providers and other subsidiaries:

Figure 2. the Asklepios Kliniken Hamburg GmbH as Do Medical Service

Providers and Other Subsidiaries
Source : http://www.asklepios.com/, 2015

 Corporate Management
The corporate management of the Asklepios Group is led by the CEO and
management expert Dr. Ulrich Wandschneider, the vice chairmen and accountant
Dipl.-Kfm. Stephan Leonhard, the business economist Dr. h.c. Peter Coy and the
physician Dr. med. Roland Dankwardt.
Through their various specialised fields, these individuals cover all of the
top management skills required in a hospital group. The goal of the company is to
retain and expand the Asklepios Group market leadership to the private clinic
sector. The joint actions of corporate management are always focused on the
attainment and guarantee of this strategic objective.

Group Business Model

Asklepios is an integrated healthcare group with a clear commitment to
quality, innovation and social responsibility. Its 150 healthcare facilities in 14
German states make the Asklepios Group one of the leading hospital operators in
Germany. Acute hospitals providing all levels of care, specialist clinics,
psychiatric and forensic facilities, rehabilitation clinics, nursing homes and
medical centres allow for integrated treatment chains and the establishment of
medical clusters, which explain the Group’s substantial regional market shares.
The development and expansion of medical specialisms also ensure that Asklepios
is represented throughout Germany.

Asklepios Kliniken GmbH is composed of three subgroups:

Figure 3. Group Structure Asklepios Kliniken GmbH

Source : Annual Report Asklepios Kliniken GmbH, 2014

It focuses on the non-cyclical acute market. 84.5 % of the business volume

related to acute care hospitals and around 14.5 % to the rehabilitation sector. The
remaining revenue was generated by the additional medical facilities. In total, the
150 healthcare facilities treated 2,186,876 patients in the financial year. The
Asklepios Group employed 34,255 full-time equivalents in the past financial year
(previous year: 34,439).
The operating entities are mainly consolidated subsidiaries. Asklepios
Kliniken GmbH, the parent company of the Group, is responsible for the areas of
strategy and financing, as well as for carrying out monitoring, management and
controlling functions. Asklepios is realizing functional synergies, for example in
the areas of finance and financing, insurance, quality management, medicine and
science, procurement and IT. Asklepios Kliniken GmbH (AKG) forms a
consolidated tax group for VAT purposes with the majority of the group
companies. Standard intercompany agreements on exchanging services and
cooperation agreements have been concluded between the group entities.

B. STRATEGY DEVELOPMENT
The Asklepios Strategy focuses on quality and innovation. The Asklepios
business strategy is characterized by its concentration on the core business of
being a modern hospital operator. The Asklepios expertise lies in the acquisition
and, when necessary, renovation of clinics and the successful long-term operation
of these clinics. The company boasts 25 years of demonstrated experience in the
field. Their interests in expansion are aimed primarily at clinics that fit their
profile in terms of professional direction, market position, regional situation and
last but not least, economic framework. In select areas, The Asklepios also operate
other health facilities and provide further clinic-related services.
Good medicine is dependent on the highest standards of quality. Quality
management has been a top priority at Asklepios for decades. The Asklepios
model of quality has inspired an entire generation of quality management
throughout Germany. The Asklepios played a major role in developing the
modern hospital quality systems and was the first company to implement these
systems. The Asklepios give the same attention to quality satisfaction as The
Asklepios do to the selection of the best physicians, who are ultimately the most
important guarantee of good medical practice.
Asklepios serves as a catalyst of progress in order to continually create
better solutions for their patients. In this way, They constantly improve their
services as well as their corporate organizational processes. Established through
the initiative and leadership of Asklepios, the “Asklepios Future Hospital” has
become the largest alliance for the development of new IT products and
procedures in the healthcare world. With this project, Asklepios has paved the
way for the future of “eHealth”.
Asklepios growth with quality and innovation. Asklepios offer high-
quality medical care under economic conditions for everyone. Asklepios boasts
over 25 years of experience in healthcare and hospital management. At the centre
of company activities is the constant development of their competences, a high
frequency of innovations, investments and solid financing potential. Asklepios
covers the entire spectrum of medical services within the company alliance:
Alongside basic, standard and specialised care, specialist hospitals are active in
specific fields far beyond the respective supply region. As a carrier of
rehabilitation clinics, Asklepios can guarantee complete in-patient treatment from
one source and occupies leading positions all over Germany. The range of
treatments available is complemented by nursing homes and healthcare centres.

a. Corporate Development (Solid Growth Based on Expertise)

 Asklepios is growing: The Asklepios group has enjoyed continuous and high
growth over the past years. In 2000, the group consisted of 42 facilities,
which has already increased to 150 hospitals and health facilities by 2012.
 Continuous growth: Over twelve years, Asklepios has more than tripled its
number of facilities.

Figure 4. Solid Growth Based on Expertise

Source : http://www.asklepios.com/, 2015

 Asklepios acts: The Asklepios Group focuses mainly on acute medical care
and acute rehabilitation. Other group facilities include rehabilitation centres
and hospitals for psychiatry.
 The Asklepios guarantee: When Asklepios takes over a hospital, it guarantees
the needs-based care of the population with its high-quality hospital services.
The acquired facilities are usually run using all of the existing departments
and services.
b. Figures (Successful Growth)
The competition on the German hospital market has strengthened due to
the permanent budgeting of revenues, the introduction of the DRG system and the
increasing transparency of service and quality data. Asklepios responds to this
development with a clear concept: quality and innovation. After 25 years on the
market, The Asklepios are now the market leader, and this certainly isn’t without
reason. Here are some of their figures, for example: The Asklepios group has
almost tripled their number of facilities over the last 12 years and is now one of
the largest companies in the German healthcare system. The company currently
has over 140 health facilities in Germany and abroad. The main emphasis of the
Asklepios Group clinics is on acute medical care, which is reflected in the
percentage share of these clinics among the total number of clinics and in the total
revenue. Indeed, over 80 percent of revenue comes from their acute hospitals.
With a capacity of 26,500 beds in all the Asklepios facilities, their over 45,000
employees generate an annual turnover of roundabout 3 billion Euro. The clinics
acquired by Asklepios were owned by a diverse range of carriers, many of which
were public carriers. As a result, Asklepios has accumulated experience in the
acquisition and integration of hospitals from all levels of care. Through the
permanent internal transfer of expertise, each individual clinic benefits from the
synergy effects of the entire group. This often occurs, for example, with the help
of structured optimization programmes consisting of direct instructions
concerning intergroup processes. A wide range of experts in various specialized
divisions of the group support the optimization process directly on site.

c. Financial Status (Solidly Financed on a Long-Term Basis)

The financial status of the Asklepios Kliniken Verwaltungsgesellschaft
mbH is currently rated “BBB”. In comparison with the overall economy,
Asklepios is judged as “above average”, whilst also being seen as “much above
average” in sectoral comparisons. The company’s return on assets is slightly
above-average in comparison to the overall economy. The appropriate return on
equity is well above the overall economical level and is described by the rating
agency as good. So far, no other German hospital group has received and still
holds a better rating. The company’s equity capital is regularly increased through
a complete retention of earnings, meaning through reinvestment in the company.
The partners do not take any funds out of the company. As a result, the equity
ratio continues to rise despite the financing required for growth. In a
macroeconomic comparison, the equity base is therefore also considered to be
above-average.

On the basis of a clear alignment as an integrated healthcare group, the Asklepios

Group posted particularly good growth rates on the earnings and margins side.
The positive development in 2014 was made possible mainly by the conscious
decision of many patients to be treated in Asklepios’ modern, efficient facilities.
This growth exceeds the long-term industry average and shows that Asklepios
medical care based on safety and high treatment quality is well received by their
patients.

Figure Suistainable Growth Financial

Source : Annual Report Asklepios, 2014

d. Privatization
 With a sophisticated privatization strategy, Asklepios know how to open
up new perspectives for its acquired hospitals. The implementation of innovative
medical, functional and business management concepts has a positive effect on the
situation of each respective hospital. An acquired facility can:

 Eliminate existing investment losses

 Standardize treatment procedures
 Increase patient benefits and simultaneously reduce costs
 Actively participate in shaping regional health policies and healthcare.
 Dovetail out-patient and in-patient healthcare services
 Increase its reputation and competitiveness
In being integrated into the group, the acquired hospital has the chance to
make its competence effective beyond its own surroundings and to shape the care
of patients. Asklepios has proven that, as a company, it regularly steers this
privatisation process with above-average success. This is confirmed by its
superior market position, its impressive financial strength and the positive
reputation associated with the brand Asklepios.
The strategy of privatization in Asklepios has a strong partner for quality
and efficiency. To get a strong partner for quality and efficiency, Asklepios have
strategies:

Staff Conditions
When Asklepios acquire a hospital, highly-qualified jobs are secured. The
preserve qualified jobs performed with :

1. Privatisation Provides Staff with Opportunities

When Asklepios takes over a hospital, qualified job and training
opportunities are secured. Indeed, their highest priority is to safeguard jobs. In the
case of a sale, The Asklepios also take over all staff including the management and
head physicians. It is their aim to retain competent, experienced and motivated staff
within a facility on a long-term basis. You help them to guarantee their goal of
offering high-quality medicine and therefore form the focal point of the Asklepios
staff management. During a takeover, staff are subject to the existing collective
bargaining law. There is, however, a possibility to permanently leave this as is or
to sign a company-internal collective pay agreement. In their experience, the latter
offers the best possibilities for realising an adequate reorganisation of
compensation structure for the respective situation. Their staff are extremely
valuable to Asklepios, which is why The Asklepios retain existing training
facilities and promote the qualifications of all hospital personnel with further and
advanced training and develop innovative concepts for the transfer of knowledge
within the Asklepios Group.

2. Long-term Job Security through Investment

An example of the long-term safeguarding and creation of jobs is the
Asklepios Clinic Pasewalk. Through the establishment of new departments and
facilities for interdisciplinary early rehabilitation and transitional care facilities as
well as the formation of a medical care centre with 3 practices, 35 new jobs were
created. Clinic and funding organisations invested a combined total of around 42
million Euro in the comprehensive renovation work. Without this private
commitment, the 530 jobs and over 120 training positions in this structurally
fragile region would not have been secured. In securing them, Asklepios Clinic
Pasewalk became the largest employer and training facility in the region.

Healthcare Services
Their goal is to offer qualified local healthcare therefore to them,
privatisation also means a security of medical supply. When The Asklepios take
over a hospital, they don’t just continue to operate it, but they develop the offer
beyond the existing departments and services. They guarantee the continued
operation of the hospital in accordance with state hospital laws and the existing
hospital plan.
The Asklepios follow the strategy of further expanding the contractually
regulated co-operation between hospitals, practices, therapy, rehab and care
facilities and their respective cost-bearers. This takes place in the interests of both
the patients and the contributors. For years Asklepios has pursued the strategy of
treating suitable illnesses with integrative concepts. Patients profit from
interdisciplinary care, shorter distances and the involvement of treatment partners
such as rehabilitation clinics, outpatient aftercare or therapists.
To prevent bottlenecks in local healthcare, the co-operation of several
clinics with different but supplementary service profiles is necessary, which is
why they strive for cross-sectoral co-operation with various service providers in a
region.
With every involvement in a new hospital, they create a close co-operation
with neighbouring supply regions. In doing so, Asklepios arranges the supply
situation so that hospitals that are not in direct competition can co-operate with
each other, leading to mutual benefits. The aim of this strategy is to increase the
catchment areas, procure new patient clientele and develop an attractive
performance profile for the region.