Chris Adamson (CA): I have the pleasure of speaking with Kees van Ophem, Executive Vice President and Global General Counsel for Fresenius Medical Care (‘FMC’), the world’s leading provider of products and services for people with chronic kidney failure and other dialysis and related diseases treatments. And today I would like to explore the impact of COVID-19 on Kees’s role as General Counsel of a major healthcare public multinational, his company, and on the healthcare market in general. Kees, good afternoon.
Kees van Ophem (KVO): Good afternoon Chris. Good to see you.
CA: You have been the General Counsel FMC now for over 5 years. How much more of a challenge has 2020 been for you in your role in the light of COVID-19?
KVO: For a legal team like ours, as decentralised and scattered around the world as it is, flexibility on a day-to-day working basis was always a necessity. Often, even pre-coronavirus, quite a few also worked from home if that was feasible or during their travel. So, while the restrictions of course had a big impact on us, especially given its forced nature, we were never really that bound to any office, and working from home had already proved effective for the global legal team. Thus, in terms of day-to-day working, it turned out to be quite fluid even though we were not allowed to attend our offices for an extended period of time. Naturally, with the technology available nowadays, remote working is quite possible and productive for office workers – I would not like to think of the consequences if this had happened 20 years ago.
Of course, it is better to meet more often in person and certainly, when you are allowed to do so it is always preferable if it adds value. However, on the whole, I think in terms of productivity it has not made any big difference. I would almost say on the contrary: it has benefitted us since there is less time “lost” for commuting or business travel. This has meant many less-productive hours can now be converted into productive hours, so in that sense, it has probably even helped us in terms of productivity. There is a limit to it and it is taking a long time. People are slowly coming back to the office if they need to or where it adds value, which I think is a much better situation and allows you to combine the best of both worlds – the in-person office environment and the virtual home office world.
Moving forward, irrespective of coronavirus and dependent on local preferences, cultures and employees’ home working situations, we will probably continue with some mix of home and office work, which of course means that we will probably need less office space. We are therefore looking at more shared offices and to decrease our office footprint, even while still growing our workforce in line with company growth.
CA: From your own personal perspective, you talked about the team itself being more productive and how you have been able to seamlessly adapt to the situation. But what about from the perspective of your role? As General Counsel, you obviously have a very sizable team. Has it been more of a challenge to interact and communicate with the team that it typically did before COVID-19?
KVO: Of course, I think there is always an advantage if you can work with people directly face-to-face and in an office environment. I previously did a fair amount of travel also to make sure that the local team members saw me at least once a year and then of course this all turned virtual. I certainly miss the day-to-day in-person interaction and contact but, as I said, I think also for me personally it has not made a huge difference in terms of being able to do my work. When working virtually it is even more important to be over-inclusive and over-communicate.
CA: What about in terms of the rest of your team – how have the new working practices impacted upon internal working relationships? Firstly, within the legal team?
KVO: I think we have more interaction, more calls than we would normally do given that we are no longer in the office. Lawyers tend to do a lot of work reviewing and revising documents, and that really has not changed whether in the office or at home. So, in that sense, we have not seen a big impact although, of course, the ways of communication are different and as a result, we need to put more emphasis on more frequent communication. As we are unable to see each other in person anymore on a day-to-day basis, increased communication is thus key.
CA: Similarly, in terms of the relationship between the legal team and stakeholders, how have the new working practices impacted on that side? For an in-house legal team, this is such an important facet of your day-to-day working, is it not?
KVO: Yes, indeed, contact and communication with key stakeholders and internal “customers” remain key. When it comes to internal clients, the same model was applied and that was quite workable, especially for those that are also in an office situation. Of course, we have a fair amount of people that do not work in offices and who need to be in our clinics or on the manufacturing sites, so for them, it was very different. Working virtually certainly creates challenges and necessitates a good Internet connection – very important for example when we had people that became stranded when the lockdown happened in places like holiday islands in the Philippines. Luckily, even from there, they were able to work despite not being in our Manila office or in our clinics but far away on some island.
CA: Moving on to the business as a whole – clearly, this has been a hugely challenging time for businesses across the world and none more so than in the healthcare sector. What have been the key challenges for FMC during this period as a company and how have these been overcome?
KVO: A huge challenge, especially when it happened initially and, for those in non-life saving healthcare, it had an even bigger impact as all the electives were postponed. There were quite a few governments, including even in the likes of Germany and France, that initially started to prevent medical supplies from leaving the country, especially consumables. Think of gloves, mouthpieces, and other consumables we need to operate our clinics – a major issue. Naturally, the issue was resolved quickly with the help of EU regulations, and the governments quickly realising that it was better to cooperate, but for a couple of days, this had a noticeable impact.
Fortunately, on the manufacturing sites, we have always been well distributed. Manufacturing sites actually continued operating even when the crisis started in China and later also in “hotspots” like Italy. This was also supported by the fact that we are in critical life-saving healthcare, meaning that many of the restrictions that were imposed during the lockdown, fortunately, did not apply to us. However, for the people that work on the frontline, as with our clinics, nurses, doctors, and patients, it was a huge challenge. They were not in the luxurious position of being able to carry out their duties or treatments from home, so they had to expose themselves by going to the sites, meaning we had to ensure the necessary precautions were in place, such as protective gear and extra space, all at considerable added expense to the business.
An additional challenge was that we had to implement a process of patient segregation within clinics to contain and slow the spread of the virus. A lot of measures have been taken in our clinics, both the segregations I talked about together with all the extra precautions in terms of hygiene. As we are a critical healthcare company, and unlike industries that were severely hit by this crisis, such as the travel and entertainment sectors, we saw a relatively minor impact, notwithstanding the considerable additional costs incurred resulting from the measures taken. We are in a privileged position in that respect.
CA: Clearly, the protection and wellbeing of your patients, many of whom critically ill, was the top priority in the light of COVID-19 and you obviously took all the precautions and implemented the necessary systems and processes. Do you think this period has strengthened your company’s relationships with its customers given the serious nature of what you have had to deal with?
KVO: We take responsibility for renal patients worldwide. Typically, these are people with multiple diseases, so high-risk patients, which have become even more vulnerable due to the spread of the coronavirus. We take this responsibility seriously at all times, naturally also during this crisis. And we are fortunate to have so many dedicated employees who demonstrate extraordinary commitment. Staff in the U.S., Italy, China, and many other countries have volunteered their services to support severely impacted regions and hospitals.
In China, some of our engineers and nurses have volunteered to help out at local hospitals in Wuhan, working alongside local dialysis nurses. Supply chain colleagues have risen to the challenge of satisfying the increase in demand. Under these difficult circumstances, FMC’s employees around the world not only give their best to ensure that our patients stay safe, they also share their motivation and try to keep each other going. From the feedback we have received, I believe our patients very much appreciate our efforts and reliability during these times.
CA: Any other examples?
KVO: We had several competition law issues to deal with on the services and product sides. In this regard, we have been very transparent with both our customers and governments. An example would be in the US, where we have segregated certain clinics depending on patients infected by the virus and those that were not. Depending on the patients we have done that in collaboration with our competitors for the time of this emergency only, so a careful antitrust analysis was needed. That is something we wanted to clear with the regulator before we did it and, in fairness, I must say that governments have been quite flexible and responsive. Overall, we have seen this situation as a real opportunity to become closer to our main stakeholders, while still aiming to deliver the results that our patients, customers and shareholders expect.
CA: I can imagine for someone in your role as General Counsel that has been no easy task?
KVO: Some extra challenges indeed. For example, we had to hold our annual shareholders meeting in a virtual way for the very first time which was an interesting experience. Of course, other companies have and will be doing likewise but it is something we have worked hard on. A new German emergency legislation has been passed to allow a virtual AGM, so our AGM was held on August 27th with luckily no technical glitches.
CA: Obviously, the whole crisis has changed the way businesses operate. How different will the company look and operate post COVID-19 and is this something that is already taking effect? Do you have a firm idea of how it will look or will it be more of a transitional phase as we return to some form of normality?
KVO: I think it is a bit of both. Yes, we look forward to keeping consistency and continuity as this is critical within our business. The last thing you want to do with patients is take any risks and implement big changes that could impact their health – so their wellbeing and continuous supply with quality services and products remain paramount. I am under the impression that the company will look different and feel a lot more virtual as a result. Despite this, given that we deal directly with patients either at home or in a clinic, much of the same physical care has to continue. Who connects patients to the machines? I do not believe you ever can do so virtually, but we are doing more and more virtually, such as remote monitoring.
CA: You obviously mentioned that clearly, the working environment has changed for you and how you interact internally. Will this change the skillsets you typically look for when hiring new lawyers for FMC?
KVO: We have always, at least in the legal team, tried to hire the best available talent no matter where candidates were situated. As long as we have the right candidate not too far from of any of our offices around the globe (we are active in around 150 countries), I think this trend will only strengthen further and will allow for even greater diversity in the company. So, depending on the role, we are going to be even more flexible than we have been in the past to ensure we hire the best available talent wherever the candidate is located. So I believe this will represent an opportunity for new people coming in and for the new generation of our workforce: even for a global position, you do not always necessarily need to be based at headquarters as one can perform a global role from almost anywhere. Of course, that will be more difficult if you are in a regional or local role, especially if not in the same time-zone. For example, I do not believe you can be local counsel for our business in Chile whilst residing in India. However, for global or specialised roles that is certainly a possibility. We have already a few positions like that and that trend will probably increase and likely will not be confined to legal only, rather also for other functions like marketing or where it is possible to do most of the work if not all from home or a local office.
CA: Do you see this change requiring a different mindset among the sort of people you recruit?
KVO: There will be even more emphasis on communication, flexibility, and situational leadership while maintaining the requirement to fit with the company’s values. As opposed to when you are in an office environment and seeing people face-to-face, you cannot walk the hallways anymore, which I love to do when I am in the office and so ‘management by walking’ is going to reduce obviously. I think in terms of skillset, clearly, people with good IT skills have an advantage, even though in my personal situation as I am from the previous century, it is quite a challenge but I must say technology has developed such that even people like me can fairly easily use it. Since I started in the telecoms industry and when the first mobile phone was rolled out in the mid-90s and the Internet arrived on the scene in the late 90s, things have improved significantly in terms of ease of use. You know the technology initially was quite complex and you almost needed an IT person to use those tools. Nowadays it is so intuitive and visual that everybody can use it without too much effort.
We have always been quite decentralized, but searches for key roles were often headquarter centric, whether it was for regional or global headquarters and I think that will be different, which will require a different mindset and way of working. Those people that are very adept in office work, sitting next to each other and used to hierarchy and in-office communication, will need to adopt a new skill set and mindset in this new virtual world governed by remote working and managing. For example, you cannot be as direct as in an office or face-to-face setting. I think people will need to undertake far more situational leadership and virtual leadership – new terms to use and certainly a different skillset to office leadership.
CA: Finally, a couple of personal questions – what has COVID-19 taught you about yourself personally, if anything?
KVO: I think for me it is the classical black swan situation where hopefully for most of us, if not all of us, this is a once-in-a-lifetime type of situation. I think we were all quite used to crisis situations happening but not this kind of ‘out of the box’ type of crisis, even though certain very bright people had already predicted something like this happening. Even though the pandemic had a significant impact we were able to manage around it. Nonetheless, it is clearly a real privilege to be in an industry like ours with life-saving healthcare: colleagues in the elective healthcare industry were impacted more fundamentally because they went from healthy sales to no sales within no time. Similarly, this was even worse for certain other industries. I was trained in lean thinking and optimal supply chains, but in those optimised environments the best risk management is more redundant systems. With COVID-19 that has proven to be true. You need far more redundancy to withstand this kind of Black Swan event and it makes you think what else is out there that we do not know and cannot foresee but that could hit us in such a dramatic way.
CA: Lastly, you have been a lawyer for many years and your advice to young aspiring lawyers I am sure would be invaluable. What advice would you give any lawyer moving into their first in-house position?
KVO: I do not think that it has really changed at its core. Of course, people need to be more flexible, but young lawyers tend to be flexible. You must be a lot more flexible than in the old days where you just went to the office and back and, so, the ability to work virtually is a clear demand. I think the most important point I always say to young lawyers is to look at how the Legal Department is positioned, to whom it reports, to whom you are reporting and what is the budget – because these are all a reflection of how serious it is taken and how impactful it can be. As you know I was never a fan of legal departments that were viewed as more administrative. For example, in continental Europe, Asia-Pacific, and Latin America where in the old days and it still happens that the reporting line is into finance, which is probably not the best environment to start. Start your career in a company where legal is part of the Global Management leadership team and reports into the CEO with access to the Supervisory Board.
Alternatively, I think that positioning continues to be very important for you to ensure you have a learning curve. In other words, where lawyers are viewed as business-enablers and guardians of the long-term sustainability of the company and are expected to put in preventive systems and processes. It is important that you understand the management and company culture from the outset: is it empowering or micro-management? Is it more top-down or more bottom-up? Are values and long-term outlook important or just the next quarter’s bottom line? Clearly you will have far more opportunities if the culture is bottom-up. And thirdly, the industry. How future proof is that industry? If a Black Swan event happens, you may want to look at the industry and really test that from a business model perspective and whether if such an event happens it still has viability. Of course, it could also be that people will specifically go to an industry that just happens to be available or they prefer, such as working in the airline industry, obviously. That is the risk you take, but I think it is good to know that upfront and diversify your skillset.