Update 11 February 2025

The weather here in the Netherlands has been relentlessly cold and gray for the last few weeks. It is not really winter (at least from a Norwegian perspective), but there is no other alternative name for it either. It does appear that everybody has woken up after their two-week Christmas break, and there is a lot of news to report regarding the Dutch healthcare sector:

• Continued tightening of rules and regulations for the healthcare sector. What are the consequences for international investors?
• Healthcare insurance company to help GPs start new practices in areas with insufficient primary care coverage. What are their plans?
• Progress being made in implementing improvements to Dutch system for long-term work-related disabilities. What are the current plans?
• Municipalities reenter process to structurally improve Dutch healthcare. What has happened?
• Dutch competition authority increases focus on healthcare sector. What are ongoing focus areas?

Continuing tightening of rules and regulations for the healthcare sector

It has been a busy few weeks for the Minister of Health (Fleur Agema from PVV, the largest party in the current coalition) as she has sent a new law that structures the financial responsibilities of healthcare providers to the Parliament and has presented new suggestions for tightening regulatory power over mergers and acquisitions in the sector.

In 2019 it was announced that new laws would be developed to limit the opportunities for healthcare operators to make and distribute “excessive profits”. Since then, there has been a lengthy process of ongoing discussions on issues related to these new laws. However, at the end of January a definitive version of the new law (Act on Ethical Business Operations for Healthcare and Youth Care Providers (Wibz)) was sent to Parliament. It covers five key areas:

• Rules for dividend payments – There are no structural changes to what type of companies are allowed to pay dividends. Key changes are that a wide range of financial and operational targets have to be met before dividend payments are allowed. In addition, the rules limit alternative ways of transferring value between associated companies such as excessive payments for services, high interest payments, etc.
• Limitations on taking “irresponsible risks” – This will limit the opportunities for companies to take on elevated levels of debt and/or reduce the equity in the balance sheet
• Limitations on payments between associated companies – Payments to associated companies and family have to be in line with market rates
• Limitations on the sale of real estate – Traditional (non-profit) Dutch healthcare operators selling real estate currently have to get permission from a government agency (Healthcare Institutions Restructuring Board (CSZ). This will no longer be the case, and the government agency will be closed. The new rules will try to ensure that any sale of real estate takes place at market-conform rates
• Tightening of rules related to acquiring permits and increased opportunities to take back permits – As of 2021 all Dutch healthcare providers needed to register. The new law tightens the rules for registration and enables regulators to deregister operators that do not follow the rules and regulations governing the healthcare sector.

All mergers and acquisitions above a current size in the Netherlands must be approved by the Dutch Authority for Consumers and Markets (ACM). There are special rules that the ACM follows for the healthcare sector, and the ACM has been lobbying for these rules to be tightened. In addition to the ACM, the Dutch Healthcare Authority (NZA) also has the right to refuse deals to go through. However, its remit has been limited to process-related issues and it has also lobbied for more power in situations related to M&A. The Minster of Health has recently decided to give the NZA new powers. Within the new rules, the NZA will have the power to refuse permission for deals in all sub-sectors of the healthcare market. In addition, the NZA can refuse permission if the deal will reduce the accessibility of care, if it believes that current quality of provision of care by the parties involved in the deal is insufficient and if a quality-assessment is being carried out on one of the companies in the deal by the Health and Youth Care Inspectorate (IGJ).

As we have stated before, we do not believe that these new rules will have seriously negative consequences for serious international operators and investors interested in the Dutch healthcare sector. Some administrative activities will increase, and it is likely that acquisition processes will take more time. The key challenge will be that it will become more complex to develop strong market positions through a large number of smaller acquisitions (for example in the dental care of primary care sectors) as the ACM and NZA will have more opportunities to refuse permission for small acquisitions.

Healthcare insurance company to help GPs start new practices

Last year we have written extensively about the challenges in the Dutch primary care sector and the bankruptcy of Co-Med. Luckily, there has also been more positive news related to interesting startups developing alternative models for primary care. One of these companies is Buurtdokters. Buurtdokters (Neighborhood Doctor in Dutch) is essentially a service organization (similar to DSOs in the dental care sector) providing independent GPs with key non-medical services. Buurtdokters has already received financing from Buurtzorg, the innovative Dutch provider of home care services.

Recently, the next step in the development of Buurtdokters was announced. VGZ, one of the largest healthcare insurance companies recently announced that it has signed a three-year contract with Buurtdokters. The key goal of the contract is to help GPs start up new primary care practices in areas where there is a shortage of GPs. VGZ will help finance the new locations in the start-up phase where they have relatively few patients, and Buurtdokters will provide access to digital tools, links to best practices, etc. The goal is to start up 5-10 new practices in the first year.

Progress in implementing changes to Dutch system for long-term work-related disabilities

Early last year, an independent commission (OCTAS) published a report outlining the need to change the existing system for long-term work-related disabilities and providing three scenarios for how the system could be changed. Two of these systems would have involved relatively radical changes to the system, while the first scenario suggested a range of improvements to the current system. An early example of such change was the decision to make disability insurance for independent workers compulsory.

The current government seems now to have structurally chosen for the scenario of (only) improving the current system and has promised to come with a range of suggested changes that will simplify the system before the summer. A key example of the suggested changes is to remove the current hard split between employees with a “permanent” disability and those who can improve their ability to work. This split creates a high degree of uncertainty for people with work impairments and also a high degree of extra work for the Employee Insurance Agency (UVW). However, the changes can lead to a less favorable situation for some clients and political discussions have already started. Hopefully a solution will be found that structurally simplifies the system instead of creating new exceptions and more complexity.

Municipalities reenter process to structurally improve Dutch healthcare

At the end of last year we wrote about the challenges facing the IZA program to fundamentally change the Dutch healthcare sector and that the Association of Dutch Municipalities (VNG) announced that it was stopping its participation in the program. This was a major setback, as improving the relationship and cooperation between healthcare and social care provided by municipalities is seen as a key success factor in minimizing the growth of healthcare costs.

Luckily, the VNG has recently announced that it will again participate in the process as it now feels that the municipalities are being treated as “equal partners”. However, it will be critical that financing from central government is arranged and the VNG has threatened to leave the process again if this is not arranged in the budget updates later this year. A rocky road can be expected going forward.

Dutch competition authority increases focus on healthcare sector

The Dutch Authority for Consumers and Markets (ACM) has the responsibility for following up on consumer interests. In addition to its role in permitting mergers and acquisitions (see above) it can also analyze the competitive situation in a given market and provide recommendations on how to improve the competitive situation in a given market. We have written about the increasing interest of private equity in the veterinary sector. The ACM believes that the chains resulting from PE-investments have resulted in higher prices for pet-owners, and plans to conduct a sector wide analysis.

We have recently written about the Dutch EPD market for hospitals that is totally dominated by one company (Chipsoft, with a market share of 80% and a profit margin of 50%). The ACM has recently released a report where is concludes that the Dutch IT healthcare market does not function well and that this leads to less innovation, less room for new suppliers, lower quality care and higher costs. The key reasons are that the current structure of the market leads to vendor lock-in and closed systems. The ACM does not currently have the power to conduct the required changes to the market, but suggests that the government develop obligations to suppliers to open their systems and give increased powers to the ACM to follow up on these obligations. The suggested changes can be included in a new law (WegiZ) that is under development.