Jan14

Update 14 January 2025

Update 14 January 2025

I hope that you have had a good start to the new year. Here in the Netherlands the country basically shut down for two weeks from 23 December to 6 January, but there is still news to report from the Dutch healthcare sector.

  • Investments in healthcare real estate increased from 2023 to 2024. What are ongoing challenges?
  • JHB Zorg is allowed to acquire three home care companies. What are further plans?
  • New three-year contract between healthcare insurance company and Equipe. What are the consequences for hospitals?
  • Current financing structures make investments in technology for elderly care difficult. What are the key issues?

Increase in healthcare real estate investments

According to an analysis from Capital Value, a total of €724 million was invested in healthcare related real estate in the Netherlands in 2024. This is an increase of 11% from the level in 2023, but only half the investments in the top year 2022. Private equity and real estate funds stood for approximately half of the total investments (€331 million); this was an increase of €200 million from the level of 2023. Institutional and international investors were more cautious and were, in fact, often on the sell-side.

A large share of total investments was in existing residential care locations and in primary care locations. A worrying trend is that investments in new-build residential care locations decreased from €450 million in 2023 to €270 million in 2024 (from 1.700 units in 2023 to 1.000 units in 2023). This is worrying as it means that it will become increasingly difficult to reach the government’s target of 35.000 new elderly care units, and will lead to increasing shortages in the sector. An additional problem identified by Capital Value is that modernizing the existing stock of elderly care locations is becoming pressing. 58% of the current stock has been built before 1995 and more than six million m2 of the existing stock has an energy label of E or lower. In an earlier study, ABN Amro has estimated that total refurbishment investments will total more than €8 billion.

This should be good news for organizations interested in investing in Dutch elderly care related real estate, but first various challenges making it very difficult to develop new locations will need to be solved. These include issues related to the financing of elderly care, and the complexity of finding and developing locations for new elderly care locations.

JHB Zorg is allowed to acquire three home care companies

In our October update we wrote about JHB acquiring Actief Zorg, a company we have been following for some time. It appears that this was just the starting point for a number of acquisitions in the healthcare sector. It was recently announced that the ACM (Dutch Authority for Consumers and Markets) has given permission for JHB to acquire Actief Zorg and two additional home-care companies. Actief Zorg is the largest of the three companies with activities in more than 150 municipalities. Acare Thuiszorg is active in the central eastern part of the country while TVN Zorgt is active in Nijmegen.

JHB, the new owner, does not have much experience in the healthcare sector, but will hopefully be better at integrating new acquisitions than Actief Zorg has been.

Equipe gets a new three-year contract with a major healthcare insurance company

Equipe is one of the leading Dutch chains of specialized clinics and was acquired by Nordic Capital in 2021. Equipe uses the label Xpert Clinics for its activities that are covered by the Dutch healthcare insurance system. Zilveren Kruis is one of the labels of Achmea, one of the largest healthcare insurance companies with a market share of 30%. Xpert Clinics and Zilveren Kruis recently announced that they have agreed to a three-year contract. In this contract Xpert Clinics has agreed to carry out more hip and knee operations as day treatments and to provide more digital care for its patients.

The most interesting part of the new contract is that it will involve an active transfer of patients requiring plannable care from hospitals to Xpert clinics. Zilveren Kruis will be provided with information about the available capacity at Xpert Clinics and will play an active role in transferring patients on waiting lists at hospitals (presumably insured by Zilveren Kruis) to Xpert Clinics. This highlights the actual total acceptance of commercial specialized care into the overall Dutch healthcare system in spite of ongoing political discussions regarding limiting private equity investments, not allowing payments of dividends, etc.

 

Current financing structure makes investments in technology for elderly care difficult

WOZO is the ongoing program to improve elderly care in the Netherlands. A key component of this program is to increase the use of technology in order to improve quality, reduce the reliance of scarce healthcare personnel and reduce costs. However, the progress towards this goal has been disappointing. A recent report gives various explanations for why elderly care providers have been slow in implementing innovative technologies. Key reasons include:

  • Uncertainties regarding technology and suppliers. The market for relevant technologies is young and there is uncertainty related to the most appropriate technology and which suppliers will survive
  • No national / regional coordination in the development of regional infrastructure
  • Mismatch between costs and reimbursement. This includes effects such as difficulties in making a positive business case due to high upfront costs and low initial volumes, but also that tariffs for digital services are calculated on investment costs ex VAT while suppliers charge VAT and do not include indirect costs (support from IT departments, etc.) in the calculation of tariffs.

A Dutch healthcare professor (Prof. Wim Groot) recently claimed that the healthcare sector is insufficiently entrepreneurial and always wants the government to pay for investments. This could be an example that supports his statements, but it also seems that there are opportunities for ministries and insurance companies to make investments in technology easier.