Kenneth Sandström, Finland http://www.aal-invest.eu/page/speaker-profiles-kenneth-1

1. A business case in AAL –
how does it work in practice?
14.09.2010
Kenneth Sandström
14.09.10 Kenneth Sandström 1

2. Experience tells
How to avoid the project graveyard and move
them into business cases
Challenges are many
One needs to be aware of them
Solutions can be found
Good business cases can be built
Markets are changing and growing at an increasing
speed
Lots of opportunities for innovation
EU integration efforts (digital agenda) are beginning to
open bordes
Fertile ground for investors and entrepreneurs
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3. Market focus (Elderly, Public vs
Private)
General Background on the Finnish Health- and Socialcare system
 Health- and socialcare services are predominantly produced by the
taxfunded public system
 Some 20%of healthcare services are produced by private
healthcare providers, mainly through occupational health
 Private citizens expect to get a well performing system for their
tax money and are generally reluctant to pay more for social- and
healthcare services either through insurances or directly
 The Finnish market is similair to many others in Europe
Therefore when developing services and products for
the elderly, the role of the publicly funded market is
crucial
The private market will grow in the future
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4. Business & Projects
Observations based on experience from the point of view of
service innovations and technology integration
 Businesses/ Investors want returns as soon as possible (=urgency=good)
 This means aquiring paying customers for existing services and products
 The problem with the health- and socialcare services market is that
markets with earningspotential generally have to be created and in order
to do that a component of innovation is required
Implication
 Projects become an important tool in developing services and products,
which adress the need for customers and market creation at the same time
(the first call for AAL projects not so attractive, AAL deployment funding
potentially very attractive)
 Public and Private partnerships are a crucial element in creating the
market for services and products
 This generally means more investment and longer returns
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5. Challenges with integration of
innovations into the public system?
 Perceived chronic lack of budgetary funds due to underbudgeting
 Municipal law –the balanced budget requirement forces municipalities
into a plan economy, difficulty of justifying investments in service
development
 Costly laws and regulation =viewed as poor laws =no need to follow,
until sanctions enacted= slow adoption of new services and techologies
 Poor appreciation of cost of individual processes and their
interrelationship as part of the big picture (Operational statistics
incomplete and not used to the degree needed as part of managing the
processes)
 Suboptimization (between organizations, budgets, public &private)
 Organizational inertia (perception of ’Doing nothing costs nothing’! =
expensive from taxpayer point of view, management of changes and
integration of changes challenging because of strong unions and
regulations)
 Public tender legislation kills innovation particularly in services –
mechanisms that more clearly allows development and deployment
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needed

6. Innovation-Investment-
Integration
 How does innovation become part of the mega legacy health or social
care processes?
One possible solution
 Turn over the keys Innovation
during the trial to
a nimble and motivated
outsider with total control Home Care
over the legacy structures
and innovation – make Secondary
it a mega project in the Care
real world but with
managable size
=systemic change Primary Care
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14.09.10 Sivu 6

7. 14.09.10 Kenneth Sandström 7

8. Background Elderly Care
 Care personnel retiring in masses
 General ageing
 Costs escalating
 Public sector not attracting enough employees
 Funds tied up in institutionalized care, need to move more emphasis into
home care
 Huge absenteeism (20-25% and inefficiency in service production (approx
)
35%of working hours only producing services at customer) =Out of every
euro only 25 cents worth of work is conducted in the customers home
 Little innovativeness, penetration of new technology non-existant
 Urgency
 Huge public and private sector market potential
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9. Building on T-Seniority ( EU ICT-
PSP, CIP project)
 Medineuvo is a partner in the T-Seniority consortium
together with the City of Tampere (3rd largets city)
in Finland and other partners throughout Europe
 Goal is to develope and trial services and technology
to assist elderly to cope at home longer and for the
service provider to increase efficiency (reduced
physical visits)
 Technology based on IPHN video communication
technology using touch screen PC technology
 User experience indicates users without prior
computer experience learn to use the system in 5-10
minutes, are extremely happy about the interactive
services and new friends aquired during the project
 As part of the deployment part of the project
Medineuvo has sofar acquired two new customers,
Pyhtää (a small municipality) and the City of Espoo Oy
Copyright by Medineuvo
14.09.10 Kenneth Sandström 9
(2nd largest city)

10. Seniorline™
14.09.10 Kenneth Sandström Copyright by Medineuvo Oy 10

11. Lessons learned on business models
 Unit based business models fits poorly with rigid budgeting requirements
as per municipal law due to unpredictable nature of demand and hence
costs
 Business model needs to be as predictable to public customer as possible,
i.e.
 Fixed cost based
 Outcome based, i.e linked to key performance criteria which have a
clear cost associated to them either as a unit cost or a total budget
 A combination of fixed and outcome based
 Municipal carrot, i.e savings sharing, higher output for same money
 To compensate for the fixed cost or performance based risks the
company needs take on as large a responsibility as possible of the process
and its production assets, to control change levers as well as possible =
outsourcing
 Outcome based earningsmodels will protect against price erosion in
public tenders long term and support continous development
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12. Case Pyhtää
A novel approach in elderly care
(pop 5000)
Goal: To support coping at home with novel approaches that lead to
reduced use of expensive institutionalized care
 The municipality outsources the customers, personnel and budget for 5+ years
3
 The municipality retains its organizing and fiscal responsibilites according to the
law
 Medineuvo invests in the innovative services and technology and manages the
personnel
 The carrot for both the company and the municipality is shared income on 50/ 50
basis from netsavings of reduced institutional care =shared motives, good
cooperation, prevention of sub-optimization
 Changes and outcomes will be measured, researched, new standards will be
developed, tested cost accounted for preparing the municipality for a very
informed public tender process eventually
Result : Faster development of processes, services and testing of
technologies
14.09.10 Kenneth Sandström Copyright by Medineuvo Oy 12

13. Elderly care concept – home
sweet home -Pyhtää
Hospital care PC long term care Nursing home
€/ day He
al
th
€/ visit Li €/ day
24
He ne
Case manager
ne al 24
th
Li
ed ce
e
ic
ne i
rv
rv
s
Se
Se
Services for coping Elderly at 135 customers
at home Home 3 with computers
I nt
n
Se er
io
ni ac 24
at
Medineuvo 24/7 or Pyhtää
Li ti o ne
•Competence ne n rm n
Li Home care team
fo
•Multichannel 24 tio 1Doctor
In
•PMR a
•Monitoring orm 5 nurses
f 2 fysiotherapists
•Logistics In
9 home carers
•70 nurses
14.09.10 Kenneth Sandström 13
Copyright by Medineuvo Oy

14. Earnings logic -
Commitments
 Budget compensation
 Total home care budget moved to company, including personnel and support
services
 Savings compensation
 Calculated on reduced insitutionalized days as measured on a quarterly basis
compared to the last two years (2008-09) average. Net savings are shared 50/50.
This accounts for higher cost of care of more frail elderly at home. This will help
finance development long term
 Commitments
 Caring for 135 customers and moving approx 10 out of 60 institutionalized elderly
into home care
 Investment and development commitments as outlined on next slide
 Other income sources in the future (Private market)
 Commission on services and or products brokered
 Sales of Seniorline client to relatives and friends
 Advertising
14.09.10 Kenneth Sandström Copyright by Medineuvo Oy 14

15. Company investments into the
concept over time
Why? Investments
 Health and wellfare care center 24/ 7
Private investment  Interactive telepresence (video) – Seniorline ™
 Seniorline™health content production
enables development  Field management system
without constraints of 

Specialized doctor in geriatrics
Preventive health coaching of chronic diseases
public tender legislation 

Senior coaching
Discharge team
Investments prioritized  Home hospital activities (remote monitoring,
acute care, laboratory results, medication)
Service integration
based on impact on 
 Regular customer surveys
reduction of 

Continuous education of personnel
Introduction of incentive program for personnel
institutionalized days 
to drive desired changes
Project funding to be applied for jointly
Investments paced over
contract time
14.09.10 Kenneth Sandström Copyright by Medineuvo Oy 15

16. Early results
Effective time of work day spend at the home of the elderly
by the care team increased from approx 35%to 60%in six
months (consolidation of teams, reorganisation of tasks and
routes, 24/ 7 preparedness introduced on the field as well)
A reduction in institutionlized days becoming evident during
the first 6 months particularly in the long term Primary Care
area (almost 20 %reduction at end of the 7 th month)
A new mobile care alarm system introduced and tested with
possibility for two-way calling and GPS location
Budget component needs adjustments to better reflect the
actual prior costs, the original number did not account for all
costs. Good cooperation in the joint finance committee.
14.09.10 Kenneth Sandström Copyright by Medineuvo Oy 16

17. What next?
The concept is innovative in technical, integration,
service development and business model point of
view
Many municipalities very interested in the model
Company is looking for outside investors with
resources and know-how as co-investors in the
concept or for a spin-off . The goal is to position this
very promising business concept for a quantum leap.
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18. Innovation-Investment-
Integration
 Can innovation become part of the mega legacy health or social care
processes?
Innovation
Home Care
Absolutely!
Through the 4Ps Secondary
Public-Private-People- Care
Partnership and development
of the investor toolbox
Primary Care
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14.09.10 Sivu 18

19. Thank you!
Kenneth Sandström
Medinovo Oy
kenneth.b.sandstrom@gmail.com
+358-40-847 7291
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