Oct15

Update 15 October 2024

Update 15 October 2024

This update covers the following news items:

  • Continuing financial problems in the youth care. What are the consequences for the commercial providers of youth care?
  • Parliament vs healthcare insurance companies. What will happen to smaller regional hospitals?
  • In a snapshot we give an overview of Performation, a company providing IT solutions to hospitals

Continuing financial problems in youth care

The Youth Authority is a government body responsible for ensuring continuity in the youth care sector, signaling key problems in the sector, and helping to solve these issues. Recently, the Director of the Youth Authority has raised the alarm as eighteen large youth care providers are in serious financial problems. In a previous update we have written about the financial issues faced by the providers of the most complex types of (closed) youth care. The eighteen companies mentioned in the Youth Authority alarm are among the largest providers (30% of total revenues in the sector) and are typically providers of complex care.

According to the Director of the Youth Authority, the companies have already used short-term solutions such as selling real estate and now have to focus on structurally improving efficiency. Primarily this should happen through an improved focus on effective interventions. Currently, much of the focus of the companies is on the treatment of less-complex issues and the use of non-proven interventions.

There are several commercial companies providing youth care in the Dutch market (Mentaal Beter, Yes We Can, Dr Bosman, etc.). These companies tend to focus on providing less complex care in an outpatient setting and are therefore not directly impacted by the problems outlined by the Youth Authority. However, a follow-up action can be a further rebalancing of tariffs where tariffs for complex care is increased, and this is financed by a lowering of tariffs for less-complex / outpatient care. This would have a direct impact on the longer-term financial position of the commercial providers.

Regional hospitals - Parliament vs healthcare insurance companies

The Netherlands has three types of hospitals: general hospitals, top-clinical hospitals (typically providing more specialized care and fulfilling a coordinating role between general hospitals in a region), and university medical centers (providing the most complex and specialized care and having the responsibility for educating new doctors). The Netherlands is a relatively small country, and with approximately seventy hospitals it is safe to say that there are too many hospitals. As with all healthcare provision in the Dutch market, the all the hospitals are owned by private organizations (typically non-profit foundations).

There are a number of processes by which hospital care is being reorganized. An example is the movement of standardized plannable care away from hospitals to specialized clinics such as Bergman and Equipe (but also the counter-movement of hospitals setting up specialized units to provide the same care). Hospitals have also tried to increase their bargaining power towards the healthcare insurance companies by merging into bigger organizations consisting of several hospitals. Many of these mergers have not been successful and this trend seems to be waning.

A method for merged hospitals to deal with staff shortages and increase efficiency is to focus certain types of care at one location. An example of this is currently taking place in the southern part of the country (Limburg) where a regional hospital wants to concentrate intensive and emergency care in one of its two locations. A consequence will be that travel time for these types of care will increase for patients in one of the cities (Heerlen), but still be within safe limits. This has resulted in emotional discussions in Parliament and a majority motion saying that the Government must stop this process. As Parliament and other parts of the government have little to no say in the matter their influence is limited, but there is clearly a political will to keep regional hospitals with a broad range of services.

However, a parallel move that is being driven by the healthcare insurance companies and the IZA program will have large negative consequences for the smaller regional hospitals. As part of an ongoing process to improve the quality of care, insurance companies have been moving toward only contracting complex care with hospitals conducting a minimum number of operations per year. These limitations have been further developed for ten oncological and cardiovascular treatments as part of the IZA program. A recent analysis has shown that many smaller, regional hospitals will not meet the minimum requirements for most of the treatments. This will result in these hospitals losing the right to conduct these treatments. As a consequence, they will lose revenues and probably become less popular with key medical staff.

It is clear that the role of regional hospitals in the Netherlands will change in the coming years and this will require political willingness to resist populistic demands regarding types and volumes of care to be provided in a local setting, the ability of management to make optimal decisions and the willingness of hospital organizations to carry out the required changes.

Snapshot of a Dutch commercial healthcare company: Performation

Performation is a Dutch healthcare IT company. Performation primarily helps hospitals collect, analyze, and make decisions based on data. More than twenty-five years ago the company started out with a focus on consulting services, but now provides a set of services based on in-house IT solutions combined with advisory work. The company provides solutions in the following areas:

  • Real world monitoring
  • Healthcare registration
  • Capacity management
  • Patient pathways
  • Scheduling for physicians
  • Software to help doctors and patients make optimal treatment-related choices

The company revenues have grown by 15% from 2022 to 2023 through a combination of acquisitions and organic growth. The company has 141 employees (FTEs). Half of the employees work on technical solutions, 30% on consulting, and 20% provide back-office support. The CEO is Huub Deterd who has been with a company since early 2021. Gilde, a leading Dutch private equity company is a major investor in the company since 2017.