Dave Shanahan has joined Charter Medical

Dave Shanahan earned his corporate stripes in the multinational sector, but after almost 20 years, felt it was time for a change. Three weeks ago, Shanahan quit his job at one of the world’s largest pharmaceutical companies to take charge at the Charter Medical Group, a privately- owned fledgling healthcare business. As managing director of Pfizer Healthcare Ireland, Shanahan was one of the pharma giant’s most senior employees. He oversaw Pfizer’s Irish operations, which comprised six pharmaceutical plants, three financial services and support centres, and 2300 staff.

However the chance to build something from the ground up proved too strong a temptation to resist. “I could have stayed where I was or I could have moved abroad”. “I had my share options and the career was obviously going well, but I had spent 20 years in the pharma industry and I felt it was time to close that chapter of my life. I also wanted to take a more hands on role in developing a business. Shanahan was brought on board by Paddy Kelly, the multi millionaire property developer. Kelly and John Gallagher, a healthcare entrepreneur, established Charter Medical a year ago. They were looking for someone to take the business on. Kelly knew Shanahan through their involvement in Realta, an Irish charity that helps combat Aids in Africa. They had travelled together to Uganda with Realta on a number of occasions, during which they discussed ways to reform the health service.

“This new job will give me the chance to implement those ideas” said Shanahan.” Like a lot of developers, Paddy Kelly has a “can do” attitude and he could simply not understand why the problems in the health service were not being cracked.

“John Gallagher has established a number of diagnostic imaging businesses in Ireland, Britain and the Benelux countries. Through this, he has an astute insight into healthcare. We will now be pooling our talents”.

The Charter Medical Group consists of one community centre in Smithfield in Dublin city centre. The €20 million centre opened its doors last November and will be used as the template for the group’s expansion across the country. Although privately owned, the centre does not operate in the traditional mould of a private clinic or private hospital. Shanahan said that the vast majority of its clients were public patients, who are referred to the centre by their GP.

The clinic has not yet struck any major agreements with the with the main health insurers such as VHI, Quinn Healthcare and Vivas, although the latter 2 companies provide cover on diagnostics. This is in contract with most other private hospitals and clinics, which have entered into long term agreements with the insurers to cover private patients. As such, Shanahan said the group did not differentiate private from public patients.

“We treat them all the same” he said “If you go with a private model, you are almost saying that you don’t do public patients”. That is not our position. For now, we are just trying to develop the model and work in collaboration with the HSE”. The Smithfield centre operates in four areas: urgent care, diagnostics, rapid access and health and wellness. Shanahan said the aim of the clinic in the four areas was to take out of the public sector people who could be treated elsewhere quicker and more effectively.

The centre recently opened a “walk in” urgent care facility, which is the equivalent to an accident and emergency department at a public hospital. Patients are referred to the urgent care centre by their family doctor and pay a flat fee of €100 for basic treatment. The fee is €120 for those who are not referred. Shanahan said patients were assessed and treated by a Consultant within one hour of arrival.

“The urgent care centre is an experiment to prove our model”, he said “It is staffed by A&E Consultants, who work at the centre outside their core hours”. “In reality only 15-20 % of people who go to A&E really need to be there and they are emergency cases where the individual needs specialised and intensive care. We can cater for the rest”. If the company were to strike a deal with the HSE to cover patient costs, Shanahan said the urgent care facility had the capacity to take 20,000 patients out of the public system each year. The group has already reached such an agreement with HSE officials on its rapid care facility for geriatric patients. The facility caters for patients over 70 years of age who are referred to Smithfield from their local doctor. The rapid care facility treats between 200 and 300 patients a month, of whom 95& return home after treatment, without having to be referred to hospital.

“Overall, with the exception of our health and wellness clinic- where people can make their own appointment – 99% of people who come here are referred by their GP” said Shanahan. If things go to plan, GP’s will soon have a chance to refer their patients to Charter Medical clinics all around the country.

Over the next two to three years, Shanahan said the group planned up to 20 different facilities across Ireland. The majority of these will be complementary care facilities for primary and secondary services, although Shanahan said the group would also look at other healthcare ventures, including health and wellness clinics, nutrition clinics and potentially, surgery services. The group will initially concentrate on developing its presence in Ireland, but Shanahan said it was also possible it could export Charter Medical into the British market.

To help fund this expansion, Shanahan said the group was raising money from outside investors. He said Charter Medical expected to raise between €50 million and €100 million to fund the national plan.

“We are modest people, but we have very high personal ambitions. You can take it that, with the sort of investor profile we want to attract and with the sort of ambition we have, Smithfield forms about 5% of our ambition” he said.

“We will be looking for other people to come on board with this: this will not remain with one or two shareholders for too long. A lot of people want to invest in healthcare. Of course, they want a return, but they also want to sort out some pretty common issues. Shanahan said potential investors should be acutely aware that private healthcare did not represent an immediate cash cow. He said it was a constant challenge to deliver both profits and good healthcare, but it was not impossible.

“You lose money on all these enterprises initially. Healthcare is a bit like flying aeroplanes, the capital costs up front are staggering. You need to have an appetite for investment and be willing to wait until the model is right.” he said.

According to Shanahan, increasing the links between private and public healthcare is just one step to reforming the health service. In addition, he said it was essential the public sector changed its attitudes and embraced change. “A minority element of the health service does not like private medicine. They see it as being profiteering and unethical. Obviously, I don’t agree with that view” said Shanahan.

“We have seen the difficulty of getting things delivered in the public service. The one thing we can say about the private sector is that its ability to execute is phenomenal- we got Smithfield up and running within 11 months”.

Likewise, he said it was crucial that Irish people changed their attitudes to private healthcare. Given the country’s economic prosperity, Shanahan said he found it staggering that Irish people were circumspect about paying to see a doctor or get a prescription. “It mazes me when you look at people investing in overseas property, holiday homes, entertainment. Yet we have great difficulty dealing with our insurance premiums for health” he said.” We have a problem paying our GP €60 and we have great difficulty paying for our medicines. Health is so valuable: it amazes me that people have trouble investing in it. We wait for something to go seriously wrong before we address it. I think that attitude has to change”