CASE STUDIES
Starting a new dental clinic
Situation
The owner of a private holding company decided to start and open a dental clinic in Prague.
Solution
An AVILO manager, who has many years of experience with medical facilities and the restructuring of healthcare organizations, was appointed CEO and Vice-Chairman of the Board of Directors of the new company. Over the first two months, he prepared a five-year strategy and set detailed action plans covering the incorporation of the company, the purchase of equipment, the hiring of staff, and issues related to finance, marketing, and operations.
Three months later, dental equipment was installed in the first four dental offices and dentists and nurses were hired. The clinic signed contracts with insurance companies and acquired a full stock of dental materials. Professional stock management was put in place and the clinic started to attract new patients through a marketing and PR campaign.
Result
Through this quick strategic approach, the clinic welcomed its first clients in just six months, and after one year, the successfully running start-up was ready to be handed over to a manager from the holding company. The clinic gained a strong position on the market and based on the good financial results, the owner decided to open more dental offices.
Saving a hospital in crisis
Situation
Due to poor economic performance and a declining level of medical care, the founder and owner of a municipal hospital dismissed the existing management and appointed an AVILO manager as crisis manager. Under his crisis management steps, an immediate in-depth audit confirmed there was in fact a crisis, including, among other things, low liquidity, an increase in outstanding liabilities, and the insufficient renewal of long-term assets, especially medical assets. As a result, the subsequent financial forecasts predicted a significant loss. In terms of human resources, the crisis had resulted in high staff turnover and a lack of healthcare professionals. The hospital lacked both a strategy and goals for ensuring sustainable development.
Solution
Shortly after his appointment, the crisis manager took a series of steps with the aim of restoring the hospital, defining its goals, and fulfilling its mission, which was mainly to provide affordable and quality healthcare while achieving economic stability. A key crisis management step was to create a management team. In terms of human resources, maximum emphasis was placed on stabilizing and rebuilding the staff. The new team prepared a strategic concept for the hospital’s development over the next five years. It was based on the definition of the main pillars of future healthcare corresponding to the size and capabilities of a municipal hospital within a defined area.
Result
Nine months after the crisis manager had started his work, the basic objectives of revitalization were achieved. With regards to HR, a management team was set up with clearly defined rules of communication and process management. The system of work and the remuneration of medical staff were modified in line with the strategy that had been prepared, the manner of providing health care was reorganized, accreditation for medical training was revamped and the number of staff members became stable. Despite additional and unplanned expenses (improvements made to the patient and staff spaces, the commissioning of a new long-term care facility, and extra staff remuneration), the financial results were significantly better than the original modelling showed. The increased stability of the hospital was also positively reflected in cash flow and liquidity. In practice, this led to a significant reduction in outstanding liabilities.
Restructuring of a production company
Situation
A US venture capital fund has acquired 100% of the shares of a traditional dental materials manufacturing company in Eastern Europe. The objective of the restructuring, which began immediately, was to transform the company's focus from a manufacturing-oriented local company to a modern, customer-oriented international company within five years, thereby increasing its competitiveness, performance and ultimately its value and selling price.
Solution
The restructuring was initiated with the appointment of a new, internationally experienced CEO who, in cooperation with the investor, renewed the company's management. The new management's strategy emphasised new product development and international sales and marketing. Therefore, the company gradually opened its own representative offices in most of the capitals of Central and Eastern Europe and built a modern international distribution network. At the same time, new, modern and competitive products were developed in the R&D department, which could be offered to customers at prices generating attractive margins. The company built a modern sales and marketing department as well as a professional logistics department including a robust warehouse management. Thanks to a carefully managed finance department, not only regular and detailed reporting but also strict control mechanisms were put in place. The company's development was soon reflected in the modernisation of the production department and the improvement of conditions for the workers.
Result
The success of the transformed company has not escaped the attention of the market and several global players have expressed interest in acquiring the business. The successful restructuring resulted in the sale of the company to one of the world's largest corporations in the industry at a very attractive price. For the new owner, the transaction was also very advantageous, as the acquisition not only gave him a standard-performing and prosperous subsidiary, but also superior distribution opportunities throughout Central and Eastern Europe for his own products. This restructuring project was named one of the twenty-five most successful in CEE by the International Venture Capital Association.
Restructuring of a state hospital
Situation
Due to poor economic results, insufficient internal processes and non-standard external personal ties, the Minister of Health terminated the current director of a large state-owned hospital and appointed a new director with years of experience in managing companies in the health sector. The audit carried out under his leadership confirmed not only the deep underinvestment, the absence of an investment policy and statutory and internal audit, but above all the removal of two key functions, the finance department and the purchasing department, from the hospital to subsidiaries outside the strict regime of state administration.
Solution
Fundamental steps to improve the dismal economic situation were firstly the establishment of an internal finance department and a purchasing department. Subsequently, a gradual transfer of the relevant activities from both subsidiaries was initiated, without the slightest compromise to medical processes and superior patient care. This was followed by the closure of both subsidiaries. The individual steps made it possible to gradually repay the high historical fines and the entire high bank loan. The ongoing financial stabilisation was reflected not only in the opportunities for new investments in modern medical equipment, but also in the hospital's profitability.
Result
At the end of four years of unprecedented restructuring, there was a standard functioning finance department and purchasing department, independence from external financing, standard investment planning, financial stabilization and the best financial result in the hospital's 30-year history.
Revitalizing a healthcare distributor
Situation
The loss-making distributor of medical equipment and special medical supplies was struggling with high operating costs, especially for services such as factoring and renting space, and for staff and promotion. The company had a critical level of overdue payables and high receivables with slow turnover. The company's largest and most stable clients were mainly state-owned hospitals, but they had very long repayment terms due to the system of financing the Czech healthcare system through health insurance companies. The company's acute problem was financing working capital for the purchase of goods.
Solution
AVILO's crisis management team implemented a series of budget measures to optimize inventories, manage consignment stock more tightly and reduce operating expenses. In marketing and sales, the interim management focused on eliminating loss-making products, reducing the number of low-margin products and strengthening profit-oriented products. Despite late payments, hospitals remained the main customers because their outstanding claims were fully credible and risk-free due to the government guarantee. A new incentive and reward system was set up for sales representatives. For the upcoming calendar year period, a comprehensive Plan was developed, defining specific actions in the areas of sales and marketing, service, quality, human resources and finance. At the same time, a summary of recommendations for the company's management for the medium term was developed.
Result
The steps set out by the crisis management team led to an agreement with the company's largest creditor on resolving the debt and to an agreement with the bank on continued financing. Strict cost control, together with the restructuring of the product portfolio and the discontinuation of low-margin products, resulted in the company's return to profitability within a few months. The long-term sustainability of the profitability trend was supported by the introduction of a new incentive system for sales representatives.
Revitalizing a travel agency
Situation
A travel agency, focused mainly on selling flight tickets to companies and individuals and on commission sales of tours, faced a drop in revenues. This was due to a significant decline in sales of tickets for corporate clients, which formed a major part of its product portfolio. Ticket sales were also becoming less profitable.
Solution
The main goal of AVILO's interim management team was to innovate and expand the product range and to focus sales on higher-end, more profitable products. This also necessitated a change in the approach of the staff, in particular a focus on a proactive approach to corporate customers, proactive communication with VIP clients and active search for and approach to new customers. The product offering was refocused on packages with higher margin products such as travel insurance, accommodation and custom tours. Very important changes took place in the area of human resources management. The sales department was strengthened and a new system of employee evaluation and motivation based on personal goals and bonuses was introduced. The changes also included setting up a systematic reporting that allowed for operational monitoring of sales, costs and margins and optimizing them in real time. Other key changes concerned the monitoring and handling of claims and the systematization of the company's internal rules into organizational directives.
Result
Thanks to increased employee motivation and initiative, the company soon confirmed its high growth potential. By focusing on promising and profitable products, the share of non flight ticket products increased substantially within one year and became of key importance in the company's total sales. The increase was mainly due to sales of its own holiday packages. At the same time, the company succeeded in significantly increasing its flight ticket revenues. By changing the company's management organization, the company laid the foundations for a quality management system.