Case

Strategic restructuring in laboratory diagnostics

JBR guided one of the largest laboratory organizations in the Netherlands through a transition by strengthening financial insight, improving operational performance, strategic repositioning, financial restructuring and optimizing governance.

Assignment

The shareholders of a multidisciplinary diagnostics organization, resulting from the merger of several hospitals, asked JBR for support in analyzing the financial situation, drawing up a multi-year estimate including an investment program, and elaborating strategic scenarios. The reason for this issue was the need among several stakeholders of the organization for an independent business review.

Background

The organization provides first- and second-line diagnostics in the fields of Clinical Chemistry and Medical Microbiology, among others, through one integrated organization. In recent years, the more important diagnostic equipment, (LIS) software and staff from multiple hospital departments have been brought together into one organization. This was a complex and multiple carve-out integration issue with associated challenges for the organization and management.

Problem Statement

The organization saw its cost level rise faster than budgeted, due in part to a combination of outdated systems, divergent working methods and required investments in ICT and equipment. At the same time, there was a need for stronger management of staff development and cost control, in part because of the extensive use of temporary staff. This went along with challenges in governance and obtaining coherent financial insight, including in forecasts, liquidity and longer-term financing needs. In this context, the shareholders sought better-founded insights, with an eye for feasible savings opportunities and strategic choices.

Our contribution

JBR implemented an integrated process consisting of:

1. Historical (financial) analysis & multi-year forecast

a. Detailed construction of income statement, balance sheet and cash flows;
b. Validation of forecasts, CAPEX programand working capital development;
c. Definition and review of key KPIs (e.g., rates diagnostics);
d. Integrate medical specialty content scenarios.

2. Liquidity analysis

a. Assessing short and medium term liquidity;
b. Review of covenants from financiers.

3. Scenarios.

a. Integral development of strategic and financial future scenarios;
b. Exploration of optimization and cooperation options, including positioning issues;
c. Insight into possible improvement measures and organizational design;
d. Support in stakeholder dialogues.

The result

JBR delivered the multi-year forecast in report form, including the development of several scenarios that provide insight into the choices to be made for the further design of a single laboratory organization for the first and second line in the field of multiple diagnostic disciplines.