PwC Healthcare Roundtable – 1st quarter 2018

DaisY: Setup and operational management of an outpatient surgery center


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The PwC Healthcare Round tables organized quarterly by PwC, are exchange platforms for hospital directors from French-speaking Switzerland. Topics are announced a few weeks in advance and will cover digitalization, outsourcing, the “supply chain” concept, “fee per procedure” payment, coding and pricing, as well as integrated care.

At our Q1 2018 Round table, we were delighted to host Brian Oosterhoff, operations manager of the DaisY outpatient surgery center of the eHnv (Etablissements hospitaliers du Nord vaudois). Mr. Oosterhoff provided the group with his unique insights and lessons learned on the setting up and operational management of an outpatient surgery center.

Quick overview

Ambulatory (outpatient) surgery is suitable for a large number of procedures and is not limited to minor surgery. All types of patients are eligible for this type of procedure and age is not a limiting factor. Indeed it is even recommended to use outpatient surgery for the elderly to avoid the loss of independence and cognitive decline related to hospitalization. In each case, it is imperative to analyze the patient’s context and environment to ensure that someone is available upon the patient’s return home. The evaluation is done by the surgeon and the anesthesiologist before the surgery.

A little less than 10 years after its opening, DaisY treats more than 3’500 cases per year, has an operational staff of around 15 full-time equivalents (without surgeons) and generates an income of CHF 5.6 million with an EBITDA margin of around 6%.

The most important surgeries in terms of volume are related to ophthalmology and orthopedics, far ahead of general surgery and gynecology. The center receives an average of 17 interventions per day, which results in a room occupancy rate of around 70%. The “length of stay” of a patient is on average 3.5 hours.

Success factors

Brian Oosterhoff draws in part on the 10 key recommendations in making day surgery happen published by the European Observatory on Health Systems and Policies in 2007.

By adapting them to the particular context of DaisY, he mentions in particular the following points as success factors:

  • Separate the flows between outpatient and inpatient surgery. The building of separate infrastructures is the best way to do this;
  • Separate the healthcare teams and combine it with a major investment in staff training. Indeed, specific skills are essential. The branch is organized in MOOC (Massive Open Online Courses) and in congress thanks to the International Association for Ambulatory Surgery. The training goals are multiple and cover the particularities of outpatient surgery such as analgesia as well as the follow-up of the patient so as not to make him/her sick thanks to “care maps” which allow the results to be as predictable as possible;
  • Invest in flexible infrastructure. The flexibility of the staff but also of the equipment is essential. The DaisY centre has been equipped with armchairs that can be converted into an operating table; this saves time. The admission and preparation of the patient are also very important. The medical staff takes care of this task but also of more technical work such as operating protocols script/typing as well as post-surgery follow-up of the patient. Always at the infrastructure level, the positioning of a sterilization unit near the operating theater is important (even if a large part of the equipment is for single use) as well as the open architecture that allows optimization of the work of the anesthesiologist. It should also be noted that surgeons dedicate a full day to the center in order to avoid going back and forth between the center and the hospital.

Challenges

Several major challenges hinder the use of outpatient surgery. We can quote, among others:

  • Pricing: considering outpatient surgery as standard and inpatient surgery as an exception comes up against a pricing problem in Switzerland. The new TARMED has a significant negative impact. Based on the type and number of interventions perfomed in the past, DaisY estimates that its revenues may decrease by approximately 20%. However, it is expected that due to the price decrease, a certain compensation through increasing volumes may occur. Therefore, the actual future impact is unclear at the present time;
  • The setting up of follow-up care of the patient: patients safety net and wellbeing are crucial in the field of outpatient surgery. Medical follow-up by a general practitioner at the patient’s home, often cited as an indispensable relay, is really not necessary if the patient is well informed about normal and abnormal situations in which it is imperative to call;
  • The balance between medical and administrative work: The part of the work dedicated to administrative processes such as the collection of statistics or indicators for medical societies takes up a lot of valuable health professionals’ time. The positive effects of simplifying clinical processes should not be offset by making administrative tasks more complex;
  • The alignment of incentives: this should not cost the patient more (which is fortunately not the case in Switzerland) and the hospital should not earn less for outpatient procedures than it would earn for the equivalent procedure if conducted as an in-patient procedure. The current context requires them to offset the deterrent effect of the tariff by reducing operating costs. This is possible in a dedicated center, separate from the hospital complexity and equipped with an efficient and flexible team.

In addition, the development of outpatient surgery must be accompanied by a reduction in inpatient capacity in order to ensure consistency. There are many advantages to reducing the number of beds. It has long been known that hospitals are particularly problematic places in terms of:

  • hospital-acquired infections (“Up to 7% of hospitalized patients will present with a healthcare associated infection during their treatment”);
  • loss of independence for elderly patients (“Loss of self-control, profound isolation, dependence on others, fear of death, and loss of usual frames of reference (during hospitalization for example), are all factors that can affect the patient’s independence”);
  • medication errors.

Perspectives & conclusion

Brian Oosterhoff stresses the importance of continuing the shift to outpatient surgery by increasing the number of surgical procedures performed on an outpatient basis but also by encouraging a transfer to office-based surgery. The participants were in complete agreement on the concept, even if the implementation remains quite different from one structure to another.

The digitalization of the patient’s journey as well as the simplification of processes (standardization of equipment for example) should continue to support the shift to ambulatory care by improving efficiency. This element was very well understood and anticipated by the participants even if the challenges are considerable, mainly in terms of coordination and integration of the different IT systems. Optimizing resources (mainly purchasing) and strengthening the degree of autonomy of all actors are of course crucial in this context.

In conclusion, the potential of outpatient surgery is still under-exploited in Switzerland but a step in the right direction has been taken with the February 2018 decision by the Federal Department of Home Affairs (FDHA) that six groups of interventions would be covered exclusively via outpatient care in the future. This decision aims to create a uniform regulation of these interventions for all insured persons in Switzerland, with an entry into force on 1 January 2019.

Nevertheless, the exclusive nature of the list may slow-down or limit any industry-wide shift towards ambulatory procedures in Switzerland, which until now has been led by a few pioneering centers. To further incentivize the usage of these innovative acts, DRG-type financing, but without its lower limit, could be the key to success.

Quarterly PwC Healthcare Roundtables

Are you interested in participating at our next PwC Healthcare Roundtable on 16 May 2018 in Morges? Do not hesitate to contact us (pascale.boyer.barresi@ch.pwc.com) and we will be happy to keep you informed of the theme as well as of subsequent events in the French-speaking part of Switzerland. We look forward to seeing you there!

Contact Us

Pascale Boyer Barresi, CFA
Senior Manager
Deals | Valuation & Modelling | Healthcare & Life Sciences
+41 58 792 97 42
pascale.boyer.barresi@ch.pwc.com

Don’t be caught out by DAC6

The EU is introducing radical measures to tackle tax abuse and ensure fairer taxation by increasing the level of transparency another notch in order to detect potentially aggressive tax arrangements.

The amendment to Directive 2011/16/EU on administrative cooperation in the field of taxation (DAC6 for short) will have far-reaching consequences for tax advisors, service providers and taxpayers – including organisations and individuals in Switzerland.

DAC6 imposes mandatory disclosure requirements for arrangements with an EU cross-border element where the arrangements fall within certain “hallmarks” mentioned in the directive and in certain instances where the main or expected benefit of the arrangement is a tax advantage. There will be a mandatory automatic exchange of information on such reportable cross-border schemes via the Common Communication Network (CCN) which will be set-up by the EU.

Although the directive is not effective until 1 July 2020, taxpayers and intermediaries need to monitor their cross-border arrangements already as of May 2018. Therefore the time to act is now.

DAC6 in a nutshell

Who? Intermediaries such as tax advisors, accountants, banks and lawyers, who design, market, organise, make available for implementation or manage the implementation of potentially aggressive tax-planning schemes with an EU cross-border element for their clients as well as those who provide assistance and advice

What? Mandatory reporting by tax intermediaries (or taxpayers) and the automatic exchange of information by the tax authorities of EU member states via the Common Communication Network (CCN) for a wide range of cross-border arrangements in relation to individuals and entities.

Why? The main purpose of DAC6 is to strengthen tax transparency and fight against aggressive tax planning. It broadly reflects the elements of action 12 of the BEPS project on the mandatory disclosure of potentially aggressive tax-planning arrangements.

How? The potentially aggressive tax planning arrangements with a cross-border element need to be reported by the intermediaries to the tax authorities in the country in which they are resident. The EU member states then will share the information with all other member states via the Common Communication Network (CCN) on a quarterly basis.
If the taxpayer develops the arrangement in-house, or is advised by a non-EU adviser, or if legal professional privilege applies, the taxpayer must notify the tax authorities directly.

Penalties will be imposed on intermediaries that do not comply with the transparency measures. EU member states to implement effective, proportionate and dissuasive penalties.

Find out more about DAC6 and if you are affected online and get in contact with our experts.

Contacts

Monica Cohen-Dumani
Partner
+41 58 792 97 18
monica.cohen.dumani@ch.pwc.com

Bruno Hollenstein
Partner
+41 58 792 43 72
bruno.hollenstein@ch.pwc.com

Publishing graphs to present a true and fair view

Graphs are designed to help readers understand what’s going on at a glance. They serve a variety of purposes in reports, statistics and presentations. In a report they illustrate what’s being talked about. In statistics they underscore the details, and in presentations they’re used as a simple and coherent way of getting complex information across. The problem is that you often come across graphs that are inappropriate or even wrong.

The test is quick and easy: Enter the term “2016 annual report” (or “Geschäftsbericht 2016”) in your search engine, download one of the many PDFs that are listed, look through it for graphics, and read the accompanying paragraph of text. The findings are sobering. The publicly accessible annual report of a large cooperative in Switzerland includes the following chart:

At first glance everything seems in order. Net proceeds from sales of goods and services and gross profit are increasing, and are presented graphically. Dark blue is used to indicate the year under review. There’s a brief text introducing the graphs and explaining how the result came about.

Only a closer look through the lens of the International Business Communication Standards (IBCS) reveals that the graphics need correcting. They fail to present the facts accurately in various respects.

  • The figures shown above the bars in the right-hand chart indicate a 19.51% increase in gross profit since 2012. The bars themselves, however, show an increase of around 137%. You can prove this optical misrepresentation by measuring the bars: while CHF 99.4 million in 2012 are represented with 2.4 cm, CHF 118.8 million in 2016 take up a whole 5.7 cm.
  • The scales for the graphs for net proceeds and gross profits aren’t identical.
  • On neither graph does the y-axis begin at zero.

Correcting the charts in accordance with IBCS, a completely different picture emerges.

In these examples the representation errors have been corrected. The following year can likewise be represented in accordance with IBCS (a white bar with a black frame). A dividing line gives a clear visual indication that the future development has to be differentiated from current or previous developments. The correct relationships are clearly visible.

Essentially IBCS requires that the true and fair view principle also be applied to business graphics. This means that colours, symbols and other graphical elements must have a meaning. The representation must be formally correct so that the reader does not draw any wrong conclusions.

IBCS defines a visual language and enables appropriate visual and verbal communication. It also ensures that the same facts are presented uniformly all over the world. For example, the prior year is always grey, the current year black, and forecasts hatched or shaded.

We’d be glad to show you how to design business graphics correctly for meaningful communication.

Contact Us

Michael Gniffke
Director
Leader Business Software Integration, PwC Switzerland
+41 58 792 47 74
michael.gniffke@ch.pwc.com

How much VAT will you pay for 1 franc of turnover in Switzerland?

Be it a necessary evil or smart compliance, VAT is a key topic – and now also concerns companies without a business location in Switzerland, from their very first franc of turnover in Switzerland.

You operate a shuttle company headquartered abroad and drive passengers to a Swiss airport. Or you are a kitchen manufacturer in the EU and equip houses in Switzerland with the latest designs. Or you are responsible for catering at an event on the Swiss side of the border. These examples have one thing in common: since 1 January 2018 all these companies have been subject to the partially revised Swiss Federal Act on Value Added Tax (VAT Act) – with far-reaching consequences.

New VAT provisions for all companies without a business location in Switzerland

If your company does not have a business location in Switzerland, the revised VAT Act introduces changes to the VAT registration obligation. Your company may be subject to Swiss VAT even if it is not established in Switzerland. The key question is whether your services have a connection to Switzerland. In principle, this is the case if your company generates turnover in Switzerland. This means that Switzerland represents a place of supply for VAT – which you will have to pay.

From the very first franc

Your tax liability in Switzerland is not determined by your turnover in Switzerland, but by your global turnover. If you generate less than CHF 100,000 from your services in Switzerland, but at least CHF 100,000 internationally, from 2018 onwards you are subject to VAT in Switzerland from the very first franc of turnover.

Low-value consignments remain exempt from tax on importation. However, under the new VAT legislation, (online) retailers that generate over CHF 100,000 of turnover per year in Switzerland through the supply of goods will be liable for VAT from 1 January 2019 onwards. In other words, you must charge Swiss VAT on services of this type.

From now on: proceed step by step

You no doubt wish to continue your business operations in Switzerland. To do so, you need an intelligent solution that avoids excessive costs and tedious complexity. We recommend proceeding as follows – if possible very soon, because the revised VAT Act has been in force since the beginning of the year.

  1. Register for Swiss VAT to receive your Swiss VAT number.
  2. Appoint a reliable fiscal representative to deal with the Swiss tax authorities on your behalf.
  3. Register for the electronic filing of quarterly Swiss VAT declarations.
  4. Submit the required quarterly VAT declarations.
  5. Keep an overview of all your correspondence with the tax authorities – including your replies.

Clever solution with Smart VAT

We have developed an online solution that is both simple and fast, and exclusively designed for businesses like yours: Smart VAT. This platform offers a number of advantages at the same time: Your VAT registration only takes a few moments. You can then continue your business activities in Switzerland without any interruptions – and with peace of mind, because you are acting fully in compliance with the law. And last but not least, Smart VAT is as simple and user friendly as online banking. And remember: registration for Smart VAT is free of charge. You simply pay a minimum annual fee for fiscal representation.

Find out more about Smart VAT here.

Contact

Julia Sailer
Director, VAT compliance services leader
+41 58 792 44 57
julia.sailer@ch.pwc.com

Immigration alert: Romanian and Bulgarian nationals: B-type work and residence permit quotas maintained for another year

Background
The Swiss Government decided on 10 May 2017 to use the safeguard clause of the Agreement on Free Movement of Persons (AFMP). This clause enables Switzerland to reintroduce temporary restrictions on the access of Romanian and Bulgarian nationals to the Swiss labour market if the number of new arrivals exceeds a certain threshold. This threshold was exceeded and thus, quotas for long-term work and residence permits (B-type permits) were reintroduced starting from 1 June 2017.

Please note that the above quotas are only relevant for permits related to Swiss employment contracts lasting longer than 364 days or with an indefinite duration and to independent workers. Moreover, short-term work and residence permits (L-type permits) are not affected by this restriction at the moment.

B-type work and residence permit quotas maintained until 31 May 2019
On 18 April 2018, the Swiss Government decided to maintain the B-type permit quotas for another year until 31 May 2019. The Swiss-wide total number of available B-type permits is set at 996 permits, released on a quarterly basis.

Please note that only initial applications are limited by the quota, while extension applications are not subject to these restrictions.

Possible re-introduction of L-type work and residence permit quotas until 31 May 2019
The Swiss Government also decided to re-introduce quotas to limit the issuance of L-type permits if the number of new arrivals exceeds a certain threshold by 31 May 2018. Should this be the case, L-type permits will be limited to 6767 until 31 May 2019. The implementation modalities will likely be set by the Swiss Government by the end of May 2018.

What is next?
Under the current legal provisions, this quota extension should be the last one. Indeed, the safeguard clause in the AFMP is only valid until 31 May 2019. Passed this date, the Swiss Government is not entitled to reintroduce quotas for Romanian and Bulgarian nationals, as per current legislation.

PwC will continue to closely monitor the Swiss immigration authorities’ practice at the federal and cantonal levels and will advise all clients about any upcoming changes.

Contact Us

Mirela Stoia
Director Immigration Services
+41 58 792 91 16
mirela.stoia@ch.pwc.com

AI will transform project management. Are you ready?

Around 200 years ago the industrial revolution changed society in unimaginable ways for the time. Today another revolution is under way, with even farther-reaching consequences. Artificial Intelligence (AI), experts are predicting, will change everything about the way we produce, manufacture and deliver.

In this article, we will explain how AI is set to change project management practice, what obstacles need to be overcome, and how project managers can prepare themselves to stay relevant in a fully integrated, automated and predictive project management world.

Read more about AI

Contacts

Marc Lahmann
Assurance Director
+41 58 792 27 99
marc.lahmann@ch.pwc.com

Manuel Probst
Assurance Senior Manager
+41 58 792 27 62
manuel.probst@ch.pwc.com

21st CEO Survey: Key findings from the Insurance industry

Maintaining optimism while grappling with transformational changes

According to PwC’s 21st CEO Survey, insurance CEOs continue to report that theirs is one of the most disrupted industries. However, their outlook is increasingly positive. Half of insurance CEOs say that they believe global economic growth will improve over the next 12 months, up from only 19% in 2017. And more than 90% report that they are confident about their own organisations’ revenue prospects over the next three years (43% are very confident and 49% are somewhat confident).

Among the many reasons for the positive outlook is that the anticipated disruption from incoming competitors (e.g. InsurTech and digital platform players) hasn’t materialised to the extent that was feared. Indeed, partnership with new entrants rather than rivalry is the order of the day. Moreover, new risk mitigation opportunities – sensors and cyber assessments, for instance – are opening up.

But, having perhaps overestimated the impact of outside threats and short-term disruption in the past, could insurers now be underestimating the urgent need to become digitally-enabled, customer-focused organizations with flexible business and operating models?

Read the full study

 

Contacts

Immy Pandor
Insurance Sector Leader
PwC Switzerland
immy.pandor@ch.pwc.com

Patrick Maeder
Financial Services Leader
PwC Switzerland
maeder.patrick@ch.pwc.com

Jan Ellerbrock
Head of Insurance Management Consulting
PwC Switzerland
jan.ellerbrock@ch.pwc.com

Attention to new sanctions related to Russia

The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctions Russian oligarchs, officials and entities.

OFAC has designated seven Russian oligarchs and 12 companies they own or control, 17 senior Russian government officials and a state-owned Russian weapons trading company and its subsidiary, a Russian bank.

What does this regulation mean for U.S. persons?

U.S. persons are generally prohibited from dealings with designated individuals and entities subject to U.S. jurisdiction. This prohibition also applies to employees and board members of designated entities if they are subject to U.S. jurisdiction.

OFAC has issued General License 12, which authorises a time-limited maintenance or wind-down of operations, contracts or other agreements (e.g. authorising the transfer of shares) that were in effect prior to 6 April 2018. Furthermore, General License 13 authorises U.S. persons with shares in a designated entity or blocked entity (50% OFAC rule) to divest or transfer these shares to a non-U.S. person, or to facilitate the transfer by a non-U.S. person to another non-U.S. person of debt, equity or other holdings in the blocked entities listed in this General License.

What does this regulation mean for companies owned or controlled by designated individuals or entities?

Property and interests in property of entities of which 50% or more is directly or indirectly owned by one or more designated individual(s) or entity(ies) are considered as blocked regardless of whether such entities appear on the OFAC’s Specially Designated Nationals and Blocked Persons List (SDN List).

Such participations could lead to significant difficulties not only with U.S. persons and entities, but also with non-U.S. persons (if applicable under the specific regulation) and persons who are risk-averse in the fairly long-term. Furthermore, this scenario could also result in reputational damage.

Will foreign persons (non-U.S. persons) be subject to sanctions for doing business with designated individuals or entities?

Foreign persons (non-U.S. persons) could also be subject to sanctions for doing business with designated individuals, entities and blocked entities (50% OFAC rule) for knowingly facilitating significant transactions, including deceptive or structured transactions, for or on behalf of any person subject to U.S. sanctions with respect to the Russian Federation or their children, spouses, parents, or siblings.

Broad factors for “significant transaction” and “significant financial transaction” include the size, number and frequency of the transaction(s), the nature of the transaction(s) or the level of awareness of management and whether the transaction(s) are part of a pattern of conduct.

You can count on us

Would you like to ensure compliance with sanctions regulations, review or expand your existing sanctions compliance system, or do you have any specific questions about sanctions regulations? We will be happy to actively support you as your partner:

  • We can help you carry out health checks and ensure compliance with your obligations in accordance with the specific OFAC regulation on designated individuals, entities or blocked entities.
  • Furthermore, we can help you carry out health checks and ensure compliance with your obligations in accordance with local (e.g. SECO, UNO) and EU sanctions regulations in general, including a comprehensive report with clear guidance on the next steps you need to take.
  • We can provide you with a memorandum on specific questions with regard to your business model or project.
  • We can offer support with the practical implementation of an adequate compliance management system.
  • We can assist you with the development, improvement and implementation of your organisation, policies, guidelines, procedures, training and controls.

Contact us

Susanne Hofmann
Director
Leader Legal Compliance, PwC Switzerland
Direct: +41 58 792 17 12
susanne.hofmann@ch.pwc.com

Simeon Probst
Partner
Leader Customs & Trade, PwC Switzerland
Direct: +41 58 792 53 51
simeon.probst@ch.pwc.com

Gianfranco Mautone
Partner
Leader Forensic Services and Financial Crime, PwC Switzerland
Direct: +41 58 792 17 60
gianfranco.mautone@ch.pwc.com

Désirée Bysäth (Author)
Assistant Manager
Legal Compliance, PwC Switzerland
Direct: +41 58 792 40 03
desiree.bysaeth@ch.pwc.com

Swiss bond trading report 2018

Regulation of bond trading: Setting the scene

The following chapter will provide an overview of the key regulatory requirements for trading professionally in securities in the form of a bond in Switzerland.

A bond in the form of a «security» in the sense of Art. 2 para. 1 lit. b FinfraG/FMIA is offered at uniform conditions to multiple parties. Securities are, in other words, standardised, certificated and uncertificated financial instruments suitable for mass trading. They are thus either offered publicly in a similar structure and denomination or placed with more than 20 clients, unless they are being created specifically for individual counterparties.

A security in the form of a bond can trigger multiple legal consequences when being traded. These consequences are:

  • Persons professionally trading in securities will potentially have to apply for a licence as a securities dealer (the Swiss equivalent of an investment firm or broker/dealer).
  • Facilities allowing for the multilateral trading of securities require a licence as a stock exchange or multilateral trading facility (MTF).
  • Facilities allowing for the bilateral trading of securities must be operated by a duly licensed operator (the Swiss bilateral version of an OTF,which replaces the Systematic Internaliser in the EU).
  • The public offering of securities requires a prospectus. The listing of securities on a trading venue (stock exchange and MTF) also requires the filing of a listing application and the creation of an accompanying prospectus.

Read the full report

Contact Us

Martin Liebi
Director, PwC Legal Switzerland
Tel: +41 58 792 28 86
martin.liebi@ch.pwc.com

Russian Football Premier League: A comprehensive study of the economics of Russian football

Regular football fans – and football industry insiders – have plenty to look forward to in Russia. In the run-up to the 2018 FIFA World Cup in Russia this summer, our colleagues of the Sports Consulting Practice at PwC Russia has joined forces with the Russian Football Premier League to survey the country’s top league. In the report they explore areas such as infrastructure, commercial deals, attendance and fan engagement – and benchmark the finances of the cream of Russian clubs against their counterparts in the leading European leagues.

In this blog post we introduce a few of the key findings by way of a taster. The authors − Oleg Malyshev, Aleksander Kardash and Anastasia Shalimova at PwC Russia – report that top Russian football is making up ground, both in sporting and business terms, on the leading leagues in Europe. The four most promising developments are as follows:

State-of-the-art infrastructure and technology boosting fan enjoyment and revenues
Currently in its sixteenth season, the Russian Football Premier league has formulated a strategy designed to maximise commercial revenue over the next few years. By providing better insights into the economics of the Russian game, the first survey of the league, conducted by PwC and entitled Russian Football Premier League: a comprehensive study of the economics of Russian football, is an important stepping stone towards this goal.

Obviously the upcoming FIFA World Cup, to be held in Russia this summer, is generating a great deal of excitement. But the league – and its member clubs – are determined to actively leverage the effects. The World Cup is giving clubs a great tool to attract people to watch the game, both regular fans and VIPs. Many of the stadiums built for the World Cup will debut this season. The new Saint Petersburg Stadium is already breaking match-day attendance records, new arenas are due to open in Ekaterinburg and Rostov-on-Don, and Dynamo Stadium in Moscow will soon reopen after a massive overhaul. The RFPL is also spearheading the adoption of new technology, with a new fan identification system about to be launched and video assistant referee systems currently being installed in stadiums.

Economic innovation also kicking off in Russian football
Technological innovation is being accompanied by the adoption of state-of-the-art business approaches. Russian football is becoming increasingly popular abroad, watched by fans in more than fifty countries and regions including Europe, Central and South America, Israel, China and the UAE. Twenty companies have purchased broadcasting rights to RFPL matches.

This growing popularity is one of the reasons sponsors are becoming more interested in top Russian football. Alongside increases in match-day revenue we’re seeing sponsors pay more attention both to the league and the clubs. The league’s title sponsor is Rosgosstrakh, and other important sponsors include Nike and Liga Stavok, a sports book.

New venues and technology-enabled means of direct-to-consumer sponsorship activation (such as social media, email, SMS and chatbots) are making it more interesting for FMSG companies to invest in advertisement in football.

Online no longer a mere sideline
Online sales are a big deal across the entire league. Most clubs now have online ticketing and merchandise stores, building up a strong presence on social media. As a result, some clubs now generate up to 80 percent of their regular ticket sales via online channels – their own website and mobile apps or third parties such as online ticketing aggregators. Even the average club already generates around 40% of total sales online.

Clubs are also pretty savvy when it comes to driving attendance by using promotions or offering free tickets or discounts. While only a third of RFPL clubs already use customer relationship management (CRM) systems to provide personalised service and boost fan loyalty, nearly half of all clubs plan on adopting CRM systems during the season.

UEFA penalties forcing more prudent financial management
Because of UEFA Financial Fair Play rules designed to help clubs achieve financial sustainability by striking a balance between their income and expenditure, clubs are required to be more prudent in terms of what they spend, and look for more and more ways to boost commercial revenues.

This vigilance is bearing fruit. Having paid UEFA penalties under the current rules, the financial activities of several clubs continue to be monitored. But there were no fines for violating financial fair play rules in 2016-17. These financial improvements are resulting in healthier competition on and off the field, and more attention paid to young local talent.

Conclusion: plenty to get excited about in Russia, both on and off the field
While there are still areas for improvement, in this World Cup year there’s plenty to get excited about in Russian football, with promising new developments both on and off the field. Clubs have increasing financial incentives to improve their sporting performance, build the loyalty and engagement of their fans, and modernise the way they go about their business. And they’re increasingly harnessing this potential by adopting smart technology and business approaches.

If you’d like to find out more, check out the report − Russian Football Premier League: a comprehensive study of the economics of Russian football  – or get in touch with me to discuss the opportunities in football and other sports in Russia.