Oct01

Update 1 October 2024

Update 1 October 2024

Here in the Netherlands, autumn has arrived in full force. It is raining cats & dogs, temperatures are falling and it is almost time to start up the central heating again. But, as always, there is news to report from the Dutch healthcare sector. This update covers the following news items:

  • Co-Med sold. Who is the buyer?
  • Pension company for healthcare staff to invest in innovative healthcare. What are the plans?
  • Hospitals face capacity problems due to revenue ceilings at elderly care operators. What is happening?
  • Update on Ksyos – the digital hospital

Co-Med sold

One month ago we reported that the receivers expected to sell Co-Med “within weeks” but we raised doubts over who the potential buyers could be. According to the receivers there were three serious parties interested in most or all of the Co-Med locations. However, finally only a bid of €1 million from the healthcare insurance companies was acceptable. The €1 million price is split €800.000 for the locations and €250.000 for inventory. The major debtors (including the tax authorities, employee insurance agency, and investors) will be disappointed as total debts are a minimum of €3 million.

It will be interesting to see what the insurance companies will do with the locations they have acquired. Will they now become a (commercial) owner of a chain of primary care locations? Will they work on finding primary care doctors who want to acquire the locations? If yes, how will they be able to make this attractive? Are there other creative solutions possible? It is clear that the Dutch primary care market will continue to be turbulent for the next few coming years.

Pension company to invest in innovative healthcare

PGGM is the pension manager for the pension fund for all Dutch healthcare staff (Pensionfonds Zorg en Welzijn). It is the second largest Dutch pension fund and has €240 billion funds invested. Healthcare staff have stated that they want their pension reserves to be invested in their own sector (healthcare). PGGM has therefore decided to invest between €50-100 million in new healthcare related technology companies. The idea is to make relatively small deals to finance young companies. PGGM believes that there will be approximately 20 possible deals per year.

The first investment from PGGM is in Momo Medical. The company has developed a sensor that can be placed under the mattress of nursing home clients. The sensor enables staff to monitor whether clients are sleeping quietly or require attention. Use of the sensors gives a saving of 4.5 hours per ninety clients per days and giving a 25% reduction in fall-related accidents.

Hospitals face capacity issues due to revenue ceilings at elderly care operators.

As we have written about earlier the annual contracts between healthcare insurance companies and operators have revenue ceilings specified for the individual services that are contracted. This often leads to operators towards the end of the year refusing clients from a specific healthcare insurance company because they will not get paid for the services provided. In Amsterdam revenue ceilings for specific services at elderly care companies is now leading to patients occupying expensive hospital beds instead of moving on to geriatric rehab facilities.

The elderly care operators claim that they have capacity for treating these patients and room in their overall contracts with the healthcare insurance companies, but not for geriatric rehab services as there has been more demand for these services this year than expected. The suggested solution from the operators is that the insurance companies should be more flexible in the revenue ceilings by agreeing these for total production instead of for each specific service. The insurance companies, on the other hand, claim that ceilings per service are required to manage overall capacity. Furthermore, they claim that there is sufficient capacity for geriatric rehab in the Amsterdam area and the issues are due to the hospitals having strong preferences for where they want to send the patients.

Variants of these discussions pop up every year and are due to the key position of the healthcare insurance companies in the Dutch system. They are responsible not only for purchasing the appropriate healthcare services, but also for ensuring that quality is high, costs are low, and long-term availability of services is enabled. The last point can lead to situations where the insurance companies keep volumes away from the optimal provider (based on costs and quality) in order to support weaker organizations. A key example of this is the balancing act between regional hospitals and specialist clinics where volumes are kept at hospitals in order to support their overall viability.

 

Update on Ksyos

In February last year we wrote a snapshot on Ksyos. The company will soon be celebrating its twenty fifth birthday and has made considerable progress in the last eighteen months. The company describes itself as a “digital hospital”. It has 160 employees, provides services in twenty “care paths” and works with 4.500 medical specialists and 7.000 primary care doctors.

A typical cooperating primary care doctor will forward 98% of his patients requiring further care to a physical hospital and 2% to Ksyos. Ksyos claims not to provide different care, but to provide the care through innovative digital processes with an active role for the patient. This can include the patient taking photos with his/her own digital camera, or the patient carrying out his/her own electrocardiogram.

The company wants to continue growing and to expand its services to one hundred “care paths”. However, the path to twenty “care paths” has been difficult and the company expects similar challenges for its future growth,. Key challenges include:

Companies such as Ksyos can play a key role in keeping healthcare affordable and available and hopefully they will be able to expand their service offering and continue their growth pad.