Update 15 May 2017

Welcome to the newest update on private healthcare in The Netherlands. In this newsletter we cover the following news and issues:

  • The first large international healthcare group has entered the Dutch market. Will Acibadem be the first of many?
  • In spite of very high financing levels, the quality of care for the elderly is perceived as being low. Can this be improved by smart HR-concepts focused on hiring and retaining high-quality personnel?
  • Increasing number of Dutch healthcare providers in financial problems. Does this provide an investment opportunity for international companies interested in entering the Dutch healthcare market?
  • In our Snapshot we give an overview of Domus Magnus, a high-end provider of elderly care

First international hospital chain enters Dutch market

The Acibadem Healthcare Group has opened its new hospital in Amsterdam. Acibadem is a Turkish healthcare company operating 22 hospitals and 19 medical centers in five countries and has 17.000 employees. Acibadem is listed on the Istanbul stock exchange and has IFF Healthcare as its largest shareholder.

While the new hospital in Amsterdam is not the first privately-owned hospital in The Netherlands, it is the first time an international hospital group has entered the market. The new hospital has 5.000 m2 and offers outpatient clinical services and day-treatments within 11 medical specialties. A key goal is to get patients their appointments within 48 hours.

The new hospital does not currently have contracts with the Dutch healthcare insurance companies, but claims to have “agreements” so that treatments will be covered by the mandatory Dutch healthcare insurance. Acibadem expects to have contracts in place with the healthcare insurance companies for 2018.

According to the Dutch Healthcare Inspectorate (IGZ), there are no specific demands (licenses, etc.) for starting a hospital or other healthcare organization in The Netherlands. Control is focused on the quality of the healthcare being offered, and that it is delivered by qualified staff.

Low quality of care in Dutch elderly care due to staffing HR strategy

In the ongoing discussions about the quality of the care being offered to the elderly in The Netherlands a key demand has been more employees “by the bed”. A recent study carried out on behalf of the Dutch Ministry of Health, Welfare, and Sport (VWS) has highlighted that the actual reasons for the big differences in the quality of care being offered by different institutions is not due to the number of employees, but rather the quality of the employees.

The key result of the study was that the institutions with low quality of care make use of five times as many temporary staff as the organizations offering high quality of care. In addition, the low-quality organizations make much more use of employees on short-term contracts that tend not to be renewed than the high-quality organizations. Due to the stress created by high turnover, the low-quality organizations also have a much higher absenteeism.

Increased number of healthcare operators with financial problems

The Dutch Guarantee Fund for the Healthcare (WFZ) sector provides guarantees for loans made to Dutch healthcare organizations. At the end of 2016 the WFZ had outstanding guarantees totaling €7.9 billion to a very wide range of Dutch healthcare organizations. In total 295 healthcare organizations have one or more loans guaranteed by the WFZ.

In their annual report for 2016, the WFZ reports that an increasing number of healthcare organizations are under increased monitoring due to a weak financial situations. Currently 18% of the organizations with loan guarantees (53 in total) are under monitoring. Monitoring is typically due to a mixture of liquidity problems, ongoing losses, and a weak or negative equity situation. The mental health sector is the weakest sector, with 43% of the participating organizations being monitored.

Snapshot of Dutch private sector healthcare operator: Domus Magnus

Domus Magnus was one of the first operators to offer private elderly care in The Netherlands. Domus Magnus was started in 2004 by Erwin Miedema, who, inspired by the chateau that he lived in as an MBA-student in Fontainebleau, developed a high-quality care concept for the elderly.

Domus Magnus currently consists of 12 small-scale locations in castles and country-homes through-out The Netherlands and has approximately 600 employees. Four new locations are close to being opened. Domus Magnus clients pay a fixed fee that covers the rental of a private apartment, all living expenses (food, etc.), and the general staff that are present. These fees are €3-4000,- per month. In addition clients need a care-indication that has been changed into a personal care budget (PGB) which is used to pay for the care services provided by Domus Magnus.

Domus Magnus is owned for 75% by Navitas Capital and 25% by Erwin Miedema.