Update 1 September 2022

From the automatic replies I see that many of you were still on vacation when I sent out my previous update. I assume that now schools have started and that most of you will be back in the office and ready for new challenges. Here in the Netherlands most people are now back from holidays and there is news from the healthcare sector. In this update we cover:

• Another hospitals with financial problems. Will this be a repeat of the hospital bankruptcies of 2018?
• Sanquin sells another subsidiary. What will be next piece of family silver to be sold?
• Personal budgets can still be used for the provision of live-in care. Why is this important?
• Technology update – Old technologies refuse to die

Another hospital in financial crisis

In 2018 the Netherlands was surprised by the bankruptcy of two hospitals (Slotervaart in Amsterdam and Ijsselmeer in Lelystad). The Netherlands has too many regional hospitals with 25% of the current number (approximately twenty-five of the one hundred hospitals) needing to close or (more probably) redefine and change their key activities in the next 10-15 years. In 2018 the bankruptcy process was severely mismanaged by the healthcare insurance companies and the healthcare ministry leading to a public outcry and high-level political blowback. Since then, there have been cases of hospitals in financial problems and hospital groups wanting to close one or more physical locations, but there have not been any further bankruptcies or closures.

Ikazia is a mid-sized hospital located in the southern part of Rotterdam. It has been structurally loss-making for the last few years and is expecting a considerable loss in 2022. It is now facing a liquidity crisis and its main bank has decided to freeze any further financing. Discussions are ongoing with healthcare insurance companies and banks to improve the short-term liquidity of the hospital and increase the longer-term viability by increasing contracted volumes and tariffs.

There is almost certainly sufficient hospital capacity in Rotterdam so that a closure would have minimal long-term consequences for healthcare in the region. However,   it is also certain that the Ikazia hospital will not be allowed to go bankrupt / close. Questions are already being raised in parliament and a solution is sure to be found. Part of the solution might be closing loss-making departments such as emergency care.

Gilde Healthcare acquires Sanquin Reagents

Sanquin is the Dutch non-profit organization responsible for a safe and efficient blood-supply in the Netherlands (see update 20 October 2020 for more details). In addition to its public responsibilities Sanquin has developed commercial businesses. One of these, Sanquin Plasma Products, was sold to a group of investors is 2020. It was recently announced that another commercial subsidiary, Sanquin Reagents, is being sold to Gilde Healthcare (Dutch private equity focusing on the healthcare sector).

Sanquin Reagents develops and produces diagnostic tests for professional use in the healthcare sector and has revenues of approximately €25 million. As in the sale of Sanquin Plasma Products, the reason is probably limited opportunities to conduct the investments required for scaling the business to meet increased competition. In Sanquin Health Solutions, the organization still has various for-profit activities. Which will be the next to be sold?

Personal budgets still to be allowed for financing of live-in care

Personal budgets are an important part of the Dutch healthcare sector. 135.000 clients choose to finance their care through personal budgets. Total spend through personal budgets in 2020 was €3.2 billion (3.6% of total spend) and 160.000 staff provide personal budgets. In 2017 we wrote an overview of how Personal Budgets (PGBs in Dutch) work. The government and the insurance companies have always had an ambivalent relationship to Personal Budgets as they feel that it gives too much power and responsibility to the clients and is more open to fraud than contracted care.

As part of the ongoing process to restructure certain parts of the healthcare sector it was suggested to limit Personal Budgets to personal care (i.e. when a client buys specific hours of care that invoiced directly to the care providers) and  disallow this financing form to be used for live-in care where the client pays a lump-sum for care provided in a group setting in a given month.

It was recently announced that this change will not be implemented. This is very good news for many existing (commercial) providers of live-in care that use Personal Budgets as they would otherwise have to go through a long and complicated once-a-year process to try to get contracts with one or more healthcare insurance companies. It is also good news for anybody planning to start providing new and innovative live-in solutions, as getting a contract for a new business without existing clients  is almost impossible. Stopping the use of Personal Budgets for live-in services would therefore put a brake on innovation in this type of services.

Technology Update

In the update of 12 April we wrote about a Dutch hospital that had decided to stop the use of fax-machines for communication with other parties. Unfortunately, it seems that the fax is deeply imbedded in many other Dutch healthcare operators. A new program has been announced (FAEXIT) with the goal of weaning healthcare organizations off the fax in the coming two years. Apparently, many organizations and users still find the fax more attractive than other technologies. This maybe says something about the advantages of other technologies, but let us hope that FAEXIT is a success.