Interview with Jakob Riis, President and CEO, Falck

28 Nov Interview with Jakob Riis, President and CEO, Falck

Denmark’s universally accessible and publicly financed healthcare system is pivotal for the nation’s well-being. In parallel, the life sciences industry stands as a vital economic driver, contributing over 22% to Danish exports. Collectively, these sectors represent over a third of public research investments, highlighting their crucial role in driving innovation and research priorities. What key factors would you identify as fostering Denmark’s robust life sciences sector, and how would you define its broader economic impact?

When examining the Danish life sciences sector, it is worth noting that several vital companies were founded approximately 100 years ago, with the largest, Novo Nordisk, established in 1923, Lundbeck, the second largest, in 1915, and ALK-Abello in 1923 as well. The strength of life sciences in Denmark stems from a combination of factors. The high educational levels contribute to extensive research, fostering the birth of innovative businesses. Additionally, a unique aspect of Denmark is the involvement of foundations that often step in to maintain ownership of these companies. With a distinct structure involving A and B shares, these companies are shielded from potential takeovers.

The Danish life sciences sector holds a distinctive and robust position that has evolved over the past century. This strength is partly due to the prevention of foreign investors and companies acquiring these entities. Despite some premier companies in the life sciences sector being attractive targets for major US-based companies, it is simply not feasible, regardless of the financial resources involved. The determining shares are owned by foundations, making them immune to purchase. Only the listed B shares are potentially available for acquisition. This is a significant factor allowing the sector to develop strength over a prolonged period without the risk of premature buyouts.

You refer to the Danish Foundation Model, do you concur that this unique corporate structure provides a pathway to longevity for companies active in various sectors in Denmark and the world?

In challenging times, having long-term ownership through the home foundation becomes crucial. Many entities adopt a structure where the majority of votes reside in the foundation while maintaining a company listing. This set-up necessitates navigating between the long-term owner and the quarter-by-quarter market pressures, keeping you on your toes. It is a significant factor.

As an agricultural country with substantial knowledge about biologics and a brewing tradition, our strength in biomanufacturing and fermentation, influenced by the Carlsberg story, has contributed to a robust life sciences sector. There are several reasons for its strength, some of which I cannot fully explain. It is remarkable that within a few years, individuals like those behind Lundbeck, ALK, and Novo started companies still thriving and leading in obesity, diabetes, or neuroscience after 100 years.

I anticipate the foundation model will persist and perhaps regain prominence in the life science sector. Collaboration is increasingly prevalent when examining today’s life science landscape, particularly in advanced research and the development of new medicines and cures. Funding sources are diverse. However, in discussions with those involved in biosciences, the desire for transparency about asset control is growing. There is a heightened concern about geopolitics, ownership, and the potential influence of investors, especially from China. Building intellectual property (IP) is a crucial consideration. Historically, it has been a factor, and looking ahead, the foundation model might offer investors a layer of protection against the risk of losing control.

What is your economic outlook for the future of Denmark’s healthcare sector and the broader industry? What would you highlight as the primary challenges currently confronting the healthcare landscape in the country?

The economic outlook is positive for our healthcare sector, primarily driven by the robust nature of the life sciences industry, encompassing both pharmaceuticals and, to some extent, medical technologies. These sectors have demonstrated resilience against various business cycles. As governments worldwide grapple with funding challenges in healthcare budgets, there will inevitably be pressure on the cost of medicine.

My optimism stems from the current strong performance and the considerable demand for products originating in Denmark. Even if prices face scrutiny, the sheer magnitude of demand mitigates the impact. Take Novo, a premier company treating around 40-50 million patients annually. However, when considering the combined potential for addressing obesity and diabetes, the figure is closer to a billion. Despite being one of the world’s most valuable companies, it is clear there is still room for market expansion. Therefore, price pressures will likely lead to a broader utilization of Danish life sciences products. The outlook remains positive in this context, as the life sciences industry typically displays resilience to business cycles.

While Falck operates in 26 countries, the company’s focus on the American market is particularly noteworthy. In the US, Falck’s ambulance services extend across several states, including California, Colorado, and Oregon, employing over 25,000 highly skilled professionals. What are the distinctive aspects of operating in the US compared to Denmark and other international markets, and what unique challenges and opportunities does Falck encounter in the US market?

California is the primary state, and the rest holds true. The US stands out as the largest privatized market globally, especially for ambulance services outsourced to private companies. There are markets worldwide where outsourcing ambulance services would never be considered due to cultural and traditional reasons. The US, however, has a model that involves counties and local areas outsourcing ambulance services, making it the most significant privatized market adding to its appeal.

Another intriguing aspect is the substantial healthcare spending in the US and the shift towards providing more healthcare services outside the hospital setting. This evolution transforms ambulances from mere transportation services to platforms for diagnostics and on-the-scene treatment. Unlike in the past, where ambulances quickly transported patients, now they often remain on-site for an extended period, focusing on stabilizing, diagnosing, and treating patients before transportation becomes feasible. This changing model is particularly interesting in the US healthcare system, aiming to reduce unnecessary emergency room visits by providing treatment at home or the scene, thereby optimizing resources.

Are there new technologies inside the ambulances to treat the patient, potentially eliminating the need for them to go to the emergency room?

There is a general trend of incorporating more technologies as medical equipment becomes more miniaturized. Equipment that occupied a lot of space a decade ago can now be held in your hand. With telemedicine, we can perform extensive diagnostics and provide medical advice rather than transport the patient to the doctor. This trend will persist.

The US market is intriguing because there is substantial potential to provide more healthcare with fewer resources. Private players, including insurance companies, are open to discussing delivering better care to insured patients at a lower cost.

Is it somewhat of a pilot program or test, or have you been implementing this in other territories?

It is a significant pilot initiative that we are rolling out globally. However, when considering the Danish system, the incentive to change and seek improvements for patients while reducing costs is less intense in a collective taxpayer system compared to the US-based system. In the US, conversations with insurance companies like Kaiser Permanente or Blue Cross Blue Shield are more receptive to innovative models.

For us, the US represents a substantial and vital market. We will likely increasingly witness the US market influencing global practices. While we currently import technologies and approaches from other regions to the US, there will be a balance where the US becomes an exporter of new and smarter methodologies over time.

Falck exhibited impressive financial performance in 2024, exceeding expectations with revenues of $1.729million and showcasing robust 3.9% organic revenue growth across key business areas in Europe, the US, and Latin America. Could you provide insights into your strategic vision and outline your priorities in steering the company forward?

We hold three main positions: in Europe, where we complement the taxpayer system; in the US, where we operate out-of-hospital services in a system seeking smarter approaches; and in Latin America, where we are the primary provider directly offering a combination of family practitioner services, doctors’ home visits, and ambulance services under a flat fee subscription of $15 per month.

In these three distinctive positions, where, over the past five years, our development division has consistently moved toward offering more healthcare directly to our customers while using fewer resources through technology and new approaches, the vision is to expand these three strongholds further. This ensures the required growth while we enhance our scale advantages through increased digitization and a hybrid approach blending personal delivery and digital services. Our growth is not just aimed at improving margin levels.

Over time, this will provide the financial strength to invest increasingly in innovative technologies, moving beyond simply doing more. We are on a journey from being a predominantly analogue, proficient operator with extensive knowledge of running emergency and healthcare at scale to becoming a digitally enabled healthcare company at an elevated level. The vision is to continue this journey, focusing not only on growing volume but on volume that increasingly emphasizes smarter ways of delivering healthcare.

And making healthcare more accessible to everybody?

This is a crucial factor for us because inequality is one of the significant issues in healthcare, and we have observed its growth. Every time we introduce something new or launch new services, our motivation is to reduce inequality in healthcare rather than contribute to it. Despite being a private company and receiving payments, we are vigilant about avoiding the risk of catering only to those with financial means, thereby exacerbating inequality. We are committed to ensuring the opposite. Some of the technologies we are working with have the potential to democratize access to quality medical information and guidance.

We must mention AI, a technology that will play a role in various fields. In healthcare, where we operate and face chronic understaffing, AI offers an opportunity for robust medical advice overseen by humans. Although medical expertise is in short supply, AI allows us to deliver effective and productive services with the reassurance of human oversight to reach a broader audience.

In the past, the best physicians in the US market were often reserved for those who could afford top-tier services. Now, with AI drawing on collective medical knowledge globally, it selects from the top shelf because the information is published and available worldwide. AI, for us, is a tool to democratize good medical guidance.

Returning to Denmark, our home base, it holds a unique position with a highly organized structure, high trust, and a history of effectively implementing new technologies accepted by society. We aim to leverage new tools like AI and telemedicine to maintain the trust of Falck’s customers and users. We prioritize proper implementation, data protection, and transparency, ensuring that AI is a support tool, not a decision-making tool.

Falck’s recent acquisition of Hejdoktor marks a pivotal moment in the company’s digital health progression, fortifying its telemedicine standing and aligning with a comprehensive strategy to prevent hospitalizations and enhance healthcare access. In light of this milestone, what are the primary factors propelling the growth of the telehealth sector for both Falck and other healthcare providers?

The acquisition of the Danish-based Hejdoktor allows us to leverage technology built over the last ten years, providing robust capabilities. This acquisition accelerates our ability to apply this technology globally. Telemedicine and telehealth have been significant trends for a while, and they are poised to accelerate further. This positions us to integrate these technologies into our global operations, anticipating that they will be the backbone of our new services, driving growth for Falck and other healthcare providers.

Falck has been actively involved in various collaborations, including partnerships with the Swedish Transportation Authority for drones and, notably, California’s Jump Aero for the eVTOL (electric Vertical Take-Off and Landing) JA1 Pulse aircraft. Could you elaborate on the significance of these partnerships in Falck’s broader strategy to revolutionize healthcare and emergency services through aeronautical advancements?

Falck actively pursues partnerships to exchange information and perspectives, enabling us to enhance our capabilities by collaborating with companies focused on different aspects of our industry. Our collaboration with the California-based company Jump Aero is particularly notable in the aerospace domain. This partnership aims to leverage cutting-edge technology to transport paramedics swiftly, especially in remote or less accessible areas. We can significantly reduce response times by utilizing eVTOL aircraft, potentially saving lives in critical situations.

For instance, in cardiac emergencies, where every minute counts, even a few minutes can substantially affect survival rates. The goal is to deploy this technology in areas where a faster response time can significantly increase the chances of survival. We are committed to this vision by signing agreements and pre-booking these aircraft, anticipating their operational deployment pending regulatory approval. While the technology is not ready for immediate use, we believe it will be a game-changer when approved, improving our emergency response capabilities, and positively impacting patient outcomes.

So, you are positioning yourself at the forefront, preparing to be pioneers with partnerships in this sector? 

Indeed, we are. The emergency response sector is an ideal environment for advancing this technology. While the military space is another realm for such innovations, emergency response is an attractive sector for maturing these advancements. Integrating drones into airspace necessitates societal acceptance, considering factors like visual pollution, noise, and airspace reservation for emergency flights.

Societal consensus is crucial. Knowing that a drone is on its way to save a life will likely garner approval while differing opinions might arise if it is perceived as a means to avoid traffic. We consider this a potentially lifesaving initiative and a pertinent space for the eVTOL industry to lead the way.

Your industry employs more than 49,000 people and is supported by the Danish government’s ambitious Life Sciences strategy to advance human capital. This initiative aims to attract top global talent to Denmark and nurture a highly skilled workforce. How is the company strategically acquiring and retaining skilled professionals, and what investments are being made to train tomorrow’s industry leaders?

To attract talent, we articulate our purpose of advancing sustainable healthcare, making us an appealing choice for those passionate about transforming the industry. However, attracting alone is insufficient; we emphasize providing training. Our focus extends beyond just leading within Falck; we prepare our colleagues to lead in any professional environment.

This “Dare to Care” initiative underscores the significance of compassionate and forward-thinking leadership. We invest significantly in this program as effective leadership is crucial. Moreover, Falck presents an opportunity to be an excellent training ground for future leaders. Operating at a high level of innovation and academic rigor, combined with a culture valuing day-to-day leadership, provides a unique experience.

In the US, our EMTs often start their careers with us, entering comprehensive training. We have established our academy in California, taking pride in being the first employer for many young professionals. We aim to be not just an employer but a valuable starting point for their careers – organized, meaningful, and with clear expectations. Our vision is for individuals to look back in 5-10 years, proudly stating they gained invaluable experience at Falck.

Our unique position allows us to expose leaders to real-world scenarios, teaching them to manage stress and make quick decisions. Looking ahead, we focus on understanding and adapting to the evolving workforce, considering the communication dynamics of different generations. From immediate on-the-scene solutions to sophisticated long-term planning, Falck provides a comprehensive leadership experience.

Would you like to add anything more regarding the Danish Foundation Model in the healthcare sector?

Founded in 1906, we proudly stand at 118 years old. We are under the ownership of the Lundbeck Foundation, a Danish enterprise foundation which operates with long-term perspectives and its financial returns are solely used to consolidate ownership companies and support philanthropic activities. The Lundbeck Foundation is dedicated to investing in neuroscience and brain diseases. This ownership model provides us with robust support and a long-term vision. It instils a sense of pride in our Falck colleagues. When we achieve profitability, those gains are directed towards brain research, benefitting society.

This aspect holds significance not just for us but also for our customers. It is crucial in our introduction, especially in cities like San Diego, which has a robust biotechnology industry. Clients who engage Falck for ambulance services can rest assured, knowing our owners possess a forward-looking perspective. In unforeseen circumstances, they are committed to stepping in; short-term gains do not drive us. Profits generated contribute to brain research globally, addressing challenges like dementia and Alzheimer’s. It stands as a pivotal asset for us.

In a world of uncertainty and concerns about stability, it is genuinely remarkable to communicate to our customers that we have substantial backing. While it is unrealistic to promise that we will never face challenges, our track record in successfully navigating through the difficulties of the COVID-19 era attests to our resilience. We guarantee our customers not only seamless service but also the assurance of ownership that stands ready to support us through any turbulent times that may arise.

Is there anything close to your heart that you would like to share or a final message for the readers of USA Today?

We are particularly thrilled about our expanding presence in the US, introducing services to treat a broader spectrum of patients in the comfort of their homes, thereby reducing the need for emergency room visits. Recognizing this as a significant requirement in the US healthcare landscape, we eagerly anticipate the launch of this service. The insights gained from this venture will benefit our operations in the US and contribute to refining our approach in Europe.

The dynamics are somewhat slower in Europe, where the systems are political and funded by taxes. Our enthusiasm extends beyond the success of our US business; we are hopeful that the US can become a source of innovative healthcare delivery methods that the rest of the world can adopt and benefit from.