Anyone can put up a building. The key is staffing it with the right people, particularly in health care. This means the next decade will see the rise of new people-centric models and the demise of businesses that rely on more traditional employee/employer relationships.
You don’t have to look far to see how franchising of various sorts can lead to explosive growth. With revenue of £2.2bn, Specsavers, the largest UK eye care retail chain, now claims to be the largest optician chain in the world. It operates a sophisticated franchise model. Or take Home Instead. The US franchise chain is now almost certainly the largest player in UK domiciliary care. But it has also managed to create a Pan-European domiciliary care empire. Consultancy LEK told us that franchise chains probably account for half of all domiciliary care delivered in the USA today.
It is also an infinitely flexible model. Take outpatient medical specialist Welbeck Health Partners, whose CEO Andrew Chadwick-Jones we interviewed this week. Its model is based on a franchise between a team of university hospital physicians and Welbeck with a 50/50 share of equity. Welbeck claims attracting teams has many benefits – from growing a business almost overnight to better governance and engagement than the standard freelance hotelier model practiced in most European for-profit hospitals. That also explains its 30% per annum growth rate.
Of course, these models already exist in Europe. A quick rummage through our archive shows franchise models being deployed in outpatient chains across the Netherlands, Sweden and the UK; in dentistry across Portugal, Italy and Spain, and in most places for domiciliary care.
For many investors, franchises are anathema: they fear loss of control both financially and in terms of quality. And, yes, Spain has seen some spectacular dental chain failures (although we’d argue this has more to do with ‘get rich’ company cultures than the franchising structures themselves). Franchising is also mutable. Home Instead, for instance, is now buying back many of its franchisees in Ireland and Switzerland.
Of course franchising is just one approach. For example, hospital groups sometimes give physicians equity stakes – Mediclinic does this in South Africa and US operator HCA to some oncologists in London.
The basic point is simple. We need new models that engage a new generation of doctors, nurses, carers and managers both financially and emotionally. Because ultimately, you just can’t run a business without them.
We would welcome your thoughts on this story. Email your views to Max Hotopf or call 0207 183 3779.