Update 14 March 2023

Update 14 March 2023

A few weeks back it seemed like spring was in the air, and I have even seen ducklings in the park. Now winter is back with cold weather and snow, hopefully for the last time before spring really comes out of hiding. In this update we cover:

  • High level of M&A activity in the Dutch market in 2022, but focus is on pharma and MedTech. When will consolidation take place in the elderly care sector?
  • Dutch data analytics company acquired by American private equity investor. Who will be next?
  • IZA program is not making initial deadlines. Will it be possible to keep it on track?
  • Overview of promising Dutch healthcare start-up: Pacmed, a developer of AI decision support systems for hospitals

High level of M&A activity in 2022 in Dutch healthcare sector

Deloitte recently published an overview of M&A activities in the Dutch healthcare sector. The total value of deals in 2022 was €2.5 billion, with a focus on deal within the pharma and MedTech sectors. Two thirds of the deals were done directly by private equity or by companies controlled by private equity. Deloitte expects the high level of investments in the Dutch healthcare sector to continue. The investors still have considerable war-chests even with the complications in structuring deal arising from increased interest rates. Investors also see healthcare as a stable sector where profits and cashflows are not very dependent on the overall health of the economy. Finally, the Dutch healthcare sector is highly fragmented with many small companies that can be acquired.

The most fragmented sub-sector of the overall Dutch healthcare market is elderly care. The challenges facing the sector include statements by the Minister that they will not be allowed to expand intramural capacity, that they will need to develop new services and partnerships, that they will need to deal with staff-shortages by making large investments in innovative processes and technology, etc. Successfully meeting all these challenges will be very difficult for the many small non-profit providers of elderly that are currently active in specific geographic markets. It will be interesting to see whether there will be consolidation via mergers or if smaller operators are acquired (maybe even by commercial operators).

Logex acquired by Thoma Bravo

Logex is a Dutch data analytics company specialized in collecting and analyzing hospital data. Based on this the company provides information and recommendations to hospitals and specialists. The data collected includes financial data, operational data, and data on healthcare outcomes.. Based on activity-based-costing concepts and relevant operational data individual services are analyzed. The company claims that 90% of all Dutch hospitals are clients and claims to work with more than “300 international experts”.

Thoma Bravo is a US-based private equity investor focusing on technology and software companies. Thoma Bravo has acquired a “small majority” of the shares. The original shareholders in Logex have kept their investments and the investment from Thoma Bravo will be used to expand Logex’s footprint in Europe.

IZA program is not making key deadlines

As we have written about earlier, IZA is a large program designed to structurally change how cure-related activities are carried out in the Netherlands. The overall goal of IZA is to improve the overall health of the Dutch population and reduce costs by focusing on prevention, improving primary care, and making the overall healthcare system more efficient. The final agreement to conduct IZA was signed in September last year and work started on a tightly managed program with clearly defined milestones. However, several key milestones have not been met:

  • One of the key themes for the program is “appropriate care” to decrease overtreatment and the use of healthcare assets to deal with issues that are essentially social. The first for achieving this is the development of an overall  concept to make the issue more concrete. This should have been finished by 1 January, but the overall status is unclear
  • Another key theme is “right care in the right place” which is essentially about moving activities away from expensive hospitals to primary care. The first milestone for this goal was the development of clear criteria. This should have been finished by the end of last year but was finally reported at the end of January
  • Other milestones that have not been reached include an overall  vision on primary care and the definition of new services and tariffs for GPS, the development of a national framework for the exchange of electronic data, etc.

Many of the more concrete changes that need to be developed are dependent on these broader more conceptual frameworks so there will probably be more delays moving forward.

Snapshot of promising Dutch healthcare start-ups: Pacmed

For our snapshot we look at another data analytics company focused o helping hospitals make better decisions. Pacmed develops AI-decision support systems on clinical data that helps improve the treatment of  acute patients and to reduce the pressure on personnel and capacity. The main product of Pacmed is Pacmed Critical, a decision support system for the ICU that assists clinician make discharge decisions. Pacmed was founded in 2014 and currently has approximately forty employees.