Philippe Dehaspe

Financial Director of Saint-Luc University Hospital

 

A high-precision financial mechanism

The financial management of a hospital requires both a rigorous mindset and an in-depth knowledge of Belgium’s healthcare system. It is a challenge that Philippe Dehaspe is happy to take up on a daily basis.
Although today there may be other hospital groups in Belgium with a higher number of beds, Saint-Luc University Hospital remains a colossus for more than one reason: every year, its 1,000 beds accommodate more than 35,000 hospital stays, and together the doctors who work there handle almost 500,000 consultations. “This represents turnover of more than half a billion euros, 300 million of which is devoted to the payment of salaries”, explains Philippe Dehaspe, the hospital’s finance director. “All this is concentrated on a 5-hectare site and, since the start of February, the hospital itself has accounted for 170,000 square metres as we recently opened a new area dedicated to emergency services. We work on 14 levels: as well as the 10 floors above ground we also have 4 underground levels, where our operating theatres, the whole of the medical imaging department and most of the medical technology department are located”.


Complex revenue flows

While the financial management of this small town is, in itself, already a challenge, it also involves many aspects that are hospital-specific. “Revenue flow, for a start: only a very small one-tenth of our revenue comes directly from patients”, points out Philippe. “In fact, nearly 80% of incoming financial flows are from the various mutual insurance companies. In reality, these are the paying agents for the INAMI (Belgian National Institute for Health and Disability Insurance) with regard to anything involving compulsory health and disability insurance, for example healthcare provision, medication, etc. But they also act as receivers of the monies due to us from FPS Health (Belgium’s Federal Public Health Service) under the Financial Resources Budget. It is this budget that sets the amount to which a hospital is entitled each year in order to provide hospital care services. The rest comes from insurance companies, mainly under hospitalisation insurance, and from foreign mutual insurance companies that cover non-residents who are treated here.”


Supervised billing

The second distinct aspect of hospital financing is the billing cycle. “We can’t just bill at any time”, Philippe continues. “Under the regulations, we are only allowed to bill once a month. What’s more, correct billing requires us to put together all the services we’ve provided on a single invoice. For instance, for a hospital stay for an operation, the bill must include the fees of the different doctors involved, the medication administered, any implants inserted during the operation and, of course, the room itself and any extras such as a telephone and television. All these items originate from different sources and have to be brought together in the billing system.”


Additional constraints

All this might describe an everyday experience for many businesses, but the situation at Saint-Luc in fact remains quite different. “Some additional constraints come into play. For example, because we’re a teaching hospital, our doctors are salaried, not self-employed. When you’re self-employed, it’s in your interest to invoice as quickly as possible. However, if you’re salaried, a delay in completing your service sheet has no effect on your income. So we have to be very attentive and diplomatic about this”, says Philippe. “Another example of these constraints is what happens if an incorrect invoice is presented. There’s no question of just sending a simple credit note: even if the error only concerns the INAMI service number given on the bill, the entire invoice can be rejected by the mutual insurance company and we have to wait for the next billing cycle before we can issue a new invoice. What’s more, if the billing batch contains too many incorrect invoices the insurers will reject it en bloc, including the correct invoices. So with each change in the terminology used we find ourselves at additional risk. And when we went over to a new billing system in 2008, there were quite a lot of teething problems to sort out - it took us nearly two years to get the situation under control.”


Essential cash management

In addition to the complexity of the billing cycle there is also the delay in the payment of the operating grants from FPS Health. “Our grants are not paid all at once, but monthly, with a payment period of 4 months as from the time the grant tranche becomes due”, explains Philippe. “As these grants account for a quarter of our revenue, the pressure on the treasury department can be considerable.” The role played by the hospital’s head of treasury, Delphine Misko, is therefore crucial. “Every day, I have to keep abreast of our cash position so that any surplus can be invested at an attractive rate or used to pay off deficits on favourable terms. Historically, Saint-Luc has been more of a borrower than a lender, so I spend a lot of time managing our fixed-term loans.”


An online tool

“In this respect, the online management tool ING provides via Telelink Online is really very useful”, continues Delphine Misko. “All I have to do is log on, enter an amount and a duration, and ING offers me a rate straight away. If this suits me, I can sign the application online and the funds arrive directly in the hospital’s account! Incidentally, I was one of the first people to use this system as I took part in the test phase. I love new technology and have an excellent relationship with the ING Business Branch. When they asked whether I’d like to be part of the test phase for this new product, I agreed immediately.”


A very useful Business Branch

Delphine is also in daily contact with Geoffray Moreau from ING’s Business Branch Institutionals. “Because of what we do, it’s not unusual for us to have to make international payments to countries outside the European Union, either because we have to reimburse an unused element of an advance payment made by a foreign patient, or because such a patient has overpaid. Getting the bank details we need to fill in the bank transfer form correctly is not always easy and ING really is a terrific help with this.”


Financing through invitation to tender

Philippe Dehaspe, who manages the institution’s long-term financing, points to the restrictive legal framework in which he has to operate. “For a start, it’s worth remembering that hospitals now have to systematically use an invitation to tender system”, he explains. This situation has been to ING’s advantage in recent years because of its very competitive offers. But Philippe is also appreciative of ING’s reactivity and creativity and its extensive knowledge of the hospital sector and its specific nature. Anne-Christelle Barbette, a Relationship Manager at ING, is able to count on the support of Olivier Helbot, an experienced National Manager specialising in hospital financing. “When putting together a financing offer, I can count on his knowledge of the sector. Because of this, ING was able to make Saint-Luc an offer that matched their financing needs for the construction of their new emergency department.”


A set pace

“In fact, we depend on grants to repay the financing we took out for our construction works”, explains Philippe. “However, the liquidation flows of these grants are based on the traditional amortisation period, which is 33 years. Unfortunately, this is difficult to reconcile with the usual outlook taken by the banks. Yet ING came up with a creative solution that has allowed us to obtain an adequate match between the grants received and our payments, without committing for 33 years.”


Flexibility and creativity

“In addition, ING showed itself to be very flexible when delays in the construction works came close to jeopardising the financing”, adds Philippe. “The plan was that work would end in December, which would have allowed us to benefit from grants in 2014 as they are not paid until the year following acceptance of the works. This on-site delay came close to having serious consequences as it prevented us from honouring our commitments. Fortunately, ING was soon able to find a solution to allow us to move our first payment forward by a year.”


Hospitals at the crossroads

Philippe Dehaspe believes that creativity and reactivity will definitely be needed in the future. “Hospital financing is going to become a regional responsibility”, he explains. “While we already know that pre-existing commitments will be honoured, we don’t, however, know what form regional support for our infrastructure projects will take. This is a particularly crucial issue as many hospitals will be committing to substantial spending during the decades to come in order to bring all their facilities together on a single site, the idea being to benefit from economies of scale on fixed costs. The amount of financing needed will no doubt be very considerable and it’s hard to imagine that it can be arranged as things stand now. The authorities and the banks will have to show some creativity in order to meet this need.”


From consumer goods to healthcare

Director of Finance at Saint-Luc since June 2008, Philippe Dehaspe arrived here from a radically different background, having used his skills in a large multinational in the consumer goods industry. “I worked there for more than 20 years. I left Belgium for a time as I’d reached a level of responsibility that made it necessary for me to pursue my career abroad”, he recalls. “But my family became tired of this nomadic existence and expressed a desire to return to Belgium. Even if it meant re-launching my career, I had decided to set myself a challenge: to move to a non-commercial financial post. And from this point of view, Saint-Luc has not disappointed: the financial management of a hospital is significantly more complex than that of the majority of the companies I’ve known. So, I’m truly grateful to have been chosen to take up this responsibility.”