Efficiency – International
During the year, Alliance Medical continued to drive efficient cost-effective solutions to our patients and customers. Scanmed introduced improved controls and reporting processes that supported business performance monitoring, identifying inefficiencies and action planning.

OUR 2019 PRIORITIES		OUR PROGRESS
Increase gross margin by improving efficiency in the use of consumables and increase the effectiveness of our clinical staff		In Life Molecular Imaging, we set up a Phase II clinical trial for an additional product and, by vertically integrating into Alliance Medical's radiopharmacies and scanning centres, costs were further reduced Within Alliance Medical's Italian business, we are consolidating facilities within the same geographical area, where appropriate. During 2019, the largest of these projects is the consolidation of four facilities in Genoa to a new facility (Pannatome). By consolidating facilities, we are able to provide a better service for our patients and realise cost and operational efficiencies
Further roll-out of Group integration initiatives		Group-wide integration activities are progressing well, including: Aligning incentives for senior management within the Group Establishing internal audit processes Establishing an international management team Creating a business intelligence (BI) database providing consistent operational metrics and benchmarking
UK operations to drive switch from short-term solutions to longer-term solutions with hospital trusts		The UK successfully transitioned longer-term solutions for four previous short-term mobile customers. The transition is proving to be a success evidenced by strengthening of long-term partnerships with hospital trusts
Integrating Life Molecular Imaging into the broader molecular imaging business and accelerating the sale of broader neuro isotopes into our existing and new markets		Rebranded Piramal to Life Molecular Imaging, and integrated the business with Alliance Medical Created a new back-office function within Life Molecular Imaging's Berlin office that supports the businesses in northern Europe
Global procurement initiative		Introduced a new sustainable capital expenditure optimisation programme, aimed at reducing the costs of our imaging equipment

OUR 2020 PRIORITIES

Further roll-out of Group integration initiatives, including moving towards standardised group reporting and a core ERP system Standardisation of operational metrics consistently within the BI tool Finalisation of the capital expenditure optimisation programme, including the process to identify possible assets that can be upgraded or relocated to reduce capital expenditure Exploration of opportunities to use AI to drive service improvement within our imaging businesses Develop a tool to optimise staff rotation UK operations to continue the drive to switch from short-term solutions to longer-term solutions with hospital trusts

Alliance Medical

Clinical efficiency forms an integral part of how we measure performance within Alliance Medical. Daily and weekly reports measuring efficiency are published and circulated to all operational managers. Capacity management calls occur every morning to ensure we utilise available resources effectively and efficiently.

Clinical efficiency measures¹

	Year-on- year trend		2019		2018		2017
Average turnaround times
Receipt of referral to scan (days)			4.8		6.6		6.7
Scan to publication of clinical reports (days)			4.9		4.6		4.6
Did not attend (DNA) rates			6.3%		7.2%		6.1%

¹ These measures relate to the UK only, with roll-out of standardised measures across territories to be implemented as part of Group integration.

In the UK, we continued rolling out static facilities in support of our contracts with the NHS. This enables a higher volume of patients to be treated each day when compared to mobile clinics. We successfully provided longer-term solutions to four previously short-term mobile customers. The UK management team has also introduced a new efficiency programme, focusing on improving site performance, staff utilisation and external benchmarking of KPIs.

In 2020, we will continue a Phase II clinical trial, evaluating the effectiveness of a new product by using and vertically integrating Alliance Medical's radiopharmacies and scanning centres, which will further reduce costs.

Within our Italian business, where appropriate, we are consolidating facilities within the same geographical areas. During 2019, the largest of these projects was the integration of four facilities in Genoa to form a new facility in Pannatome. These consolidations allow us to provide a better service to our patients, while also delivering cost efficiencies for the business.

A new system, called 1Alliance, was rolled out to approximately 50% of our sites in Ireland, and provides senior management a real-time operational view of the various sites in terms of the number of patients scanned, available slots, and turnaround times.

Procurement

Procurement opportunities are assessed continuously to extract economies of scale and other benefits. Centrally procured products and services include scanners, insurance, finance, banking and certain IT services. We leverage Group-wide knowledge to disrupt the traditional market approaches to enable efficiencies. This approach was most apparent for scanner maintenance, where equipment manufacturers were encouraged to revisit their service offerings in the market with resultant efficiencies and cost benefits. We are sustainably changing our way of procuring scanning equipment going forward.

Within the UK, the procurement team focused on changing the way we procure transport services for our mobile business to a more flexible and cost-effective model. We are also in the process of implementing a new capital expenditure optimisation programme for requirements across Europe, which includes an annual tender exercise to procure a significant proportion of maintenance capital expenditure from one provider, with expected savings on imaging equipment to be further realised.

Information management and technology

During 2019, we continued to assess options to use new technology to improve the services we offer our patients, from both a quality and efficiency perspective. To this end, we partnered with leading organisations to ensure that the application of the technology is evidence-based and validated.

We are also exploring ways in which we can increase efficiency through the use of AI, which we expect will provide additional tools for radiologists to allow a more accurate and quicker diagnosis of our patients. We continue to invest in technology to enable the business to make more informed decisions, and a BI tool was put in place to allow the capture of information and comparison of operational metrics across different regions. This will be further developed in 2020.

We also invested in AI research projects this year. Specifically, we worked with Oxford University in the UK to develop two AI products that will support cancer diagnostics. We believe that our investment in AI initiatives will improve reporting times going forward and we continue to evaluate opportunities for growth in this area.

We also initiated Phase II clinical trial on our TAU products and committed to acquiring three digital PET-CT scanners as part of our PET wave 2 contracts with the NHS.

Poland

Scanmed conducted an internal review aimed at identifying operating inefficiencies and, based on this, developed action plans to address identified areas for improvement. These included improving operating theatre utilisation, staffing ratios, procedure mix and subcontracting inefficiencies.

In the face of fixed-price NFZ funding, medical salaries and other cost pressures, Scanmed delivered budgeted margins in outpatient clinics, specialist clinics and the majority of cathlabs. Inpatient services were more challenging, where adjustments in staffing levels, theatre utilisation and coding were all impacted. The combination of a growing economy and widely applied governmental social programmes are contributing to general cost increases within the Polish economy.

Where possible, Scanmed entered into cardiac co-ordinated care arrangements, which provide for additional NFZ funding for the delivery of comprehensive treatment plans. Greater focus was placed on the growing number of procedures where NFZ funding is unlimited, such as acute coronary syndromes, childbirth, selected oncological treatments, hip replacements and diagnostic imaging.

Procurement

Scanmed has a centralised procurement function that continually monitors savings, prices and opportunities to maximise efficiencies within the business, as well as supplier relationships. Purchases are subject to regular tender processes, which are guided by best-in-class standards and includes specialist input from doctors and heads of medical specialisations across the Group. This ensures the best available pricing is secured across a diverse supplier base and that we derive the best value for our consumables and equipment purchases. Reviews and tenders are regularly conducted to obtain the best available pricing, with adequate diversification of suppliers to mitigate against concentration risk.

In 2019, we undertook multiple value-for-money equipment replacement initiatives, which provided a positive financial outcome in addition to vendor technology support, warranties, increased features and future-proofing the business against changes in regulatory requirements. The combination of these benefits resulted in improved recognition from senior medical stakeholders, along with improved financial outcomes.

Information management and technology

During the year, we focused on various recruitment drives to enhance our IT capabilities, including the appointment of a new Chief Information Officer (CIO) and restructuring our IT department. We are increasingly focused on developing consistent and standardised equipment and services. In light of this, during the year we introduced new agreements with service providers, which led to improved cost efficiencies and enhanced service levels.

Scanmed's IT activities also focused on the creation or modification of new processes and tools to support the developments in business control. For example, our automated procure-to-pay process provided improved control over procurement, financial and reporting capabilities. Scanmed also introduced a re-engineered and automated paperless payroll system to optimise accuracy and efficiency. In particular, automated doctor settlements reduced potential process errors, allowing for additional controls and more effective use of resources.