Updates
Apr15

Update 15 April 2020

All news still seems to be about Corona, and worldwide the number of people struggling with the consequences of the disease and the number of deaths related to Corona is still increasing. The only “good” news seems to be that in the countries that were the early targets of the virus the worst seems to have passed and society is slowly being opened up.

Here in the Netherlands the number of people being admitted to hospitals due to Corona seems to have peaked and discussions have started up concerning how the country can be “opened up” again.  Key news that will have long-term consequences for the (commercial) healthcare sector are:

  • Hidden disaster in nursing homes as Corona-related deaths increase. What will be the long-term consequences for the sector?
  • Financial directors in the healthcare sector expect hard times. Will important investments be delayed?

Large number of Corona-related deaths in nursing homes

The Dutch government recognized the fragility of people living in nursing homes early in the ongoing contagion and closed all nursing homes for external visitors on 14 March. Unfortunately, this appears to have been “too little too late” as the number of Corona-related deaths in Dutch nursing homes has exploded in the last few weeks. Key reasons for this are most probably very limited testing of nursing home patients and employees and low priority given to providing nursing home employees with protective gear.

Recent analysis based on reporting from nursing home Electronic Health Records show many thousands of infected patients and at least 300 corona-related deaths in nursing homes. These numbers are in addition to those reported daily by the Ministry of Health. The current assumption is that 900 of the approximately 2.400 nursing homes in the Netherlands have Corona infections. Even as there are signs that the pandemic is coming under control in the rest of society, it is almost certain that the number of Corona-related deaths in Dutch nursing homes will continue to increase.

It will be very interesting to see what the longer-term consequences will be for the Dutch nursing home sector. Short-to-medium term financial consequences will certainly be negative as revenues decrease due to early deaths and difficulties in getting new patients combined with higher costs due to increased precautions and new ways of working. Even more worrying will be long-term consequences if demand is structurally reduced as potential clients choose to stay (longer) at home if nursing homes are perceived to be structurally unsafe.

 

Financials Directors in Dutch healthcare sector expect difficult times ahead

A recent survey held among senior finance employees in the Dutch healthcare sector highlights uncertainties and worries. 90% of the respondents expect their organizations to generate lower revenues than planned and 40% expect “significant lower” profits. Especially in sectors such as mental healthcare that work with low margins in the best case, losses are expected.

As explained in the previous update the Dutch government, the insurance companies and banks have all announced that they will help organizations in the sector deal with issues related to decreased demand and higher costs. In spite of this, the sector expects that organizations will have cash-flow problems and will not be able to meet balance sheet constraints agreed with banks.

A first step already taken by many organizations is to freeze investments in IT projects and real estate. While totally understandable, this is bad news for both the country and the sector. While the current situation might reduce short-term demand for nursing home care, the huge demographic wave of elderly people requiring intensive care will not decrease. Large investments in new nursing home capacity still remains crucial for meeting this growing demand (see update of 8 January 2020).