Update 17 March 2020
We are living in crazy times. I am sure that you are all sharing my worries about both the present and the future. At the moment we cannot do anything but follow set rules and suggested advice. Let us do our utmost best to support the front-line healthcare worker dealing with the direct effects of the corona virus. One of the best ways to do this is to stay healthy and make sure that you do not do anything that can spread the virus. Keep strong!
Even though it seems that the world is stopping this is luckily not the case, and there is actually interesting news to report from the Dutch healthcare sector:
- Bergman Clinics still open for business. What will happen to the sales process?
- Private equity the key driver for acquisitions in the Dutch healthcare market. Will interest continue to grow?
- Orpea makes new acquisition. Who is now the market leader?
- Key judgement makes provision of long-term care more attractive. Will there be more activity in the sector?
- In our snapshot we provide an overview of the TopzorgGroep, a chain of physiotherapy providers
Bergman Clinics still open for business
In the previous update we explained how Bergman Clinics has closed multi-year contracts with major insurance companies. A quick look at their website shows that Bergman Clinics are still open for business but with restrictions related to certain types of activities and a move away from face-to-face contacts where this is not absolutely required. It has been quiet lately around the sales process, and it is probably quite likely that this will be delayed.
Private equity key driver for acquisition is Dutch healthcare sector
In our previous update we provided data from the Dutch Healthcare Authority (NZa) regarding mergers and acquisitions. A recent report from Deloitte also gives an overview of acquisitions in the healthcare sector. According to their report there were 106 acquisitions in 2018 up from 104 in the previous year. The total value of the transactions was €2.4 billion. There was a strong growth in acquisitions involving international parties. In the previous year 25% of the transactions were international, in 2018 international transactions were 40% of the total number. A key driver of the (international) private-equity driven acquisitions is “buy and build” where bolt-on acquisitions are made to an existing chain.
Given the ongoing turmoil in both real life and the capital markets it will be interesting to see how private equity will look at the (Dutch) healthcare sector. Will it be seen as a safe haven? Will a stable and strong economy with a high spend on healthcare such as the Dutch be extra attractive?
Orpea makes a new acquisition
In our update of 18 February we told you about the recent acquisitions by Korian of a large share of the portfolio of Ontzorgd Wonen (Ex The Blueprint Group). We also asked how Orpea would react to this. It was recently announced that Wonen bij September has acquired the majority of shares in Compartijn. Wonen bij September was acquired by Orpea in 2018.
Wonen bij September has acquired the shares in Compartijn owned by Facilcom and the management. Facilcom is a very large family company focusing on cleaning, catering and security services with 28.000 employees in total. Facilcom has a strategic goal of establishing healthcare as a new core business. It would be interesting to know the reasoning behind Facilcom exiting the nursing home business.
Wonen bij September currently has nine locations, and the ten locations of Compartijn gives it a very strong position in the market. Will the next consolidation move come from Korian?
Key judgement makes offering long-term care more attractive
A challenge facing providers of long-term care in the Dutch market are fairly strict laws protecting rental tenants. One part of these laws forbids a “coupling” of leases with other contracts. A consequence of this law can be that clients living in a long-term care facility can stop the provision (and payment) of care but can refuse to move. This, of course, can play havoc with the financial situation of a given location if base-level staffing is independent of number of clients using the care facilities.
In a recent court case, the judge has decided that when a client has signed a lease where the contract is clearly linked to a contract regarding the provision of care-related services the client cannot only terminate the care-related contract. This judgement assumes that it must have been clear to the client that the two contracts formed an integrated total package when he/she signed the two contracts. While not solving all problems related to this issue, this judgement provides a good step in the right direction.
Snapshot of a Dutch private healthcare operator: TopzorgGroep
What is now the TopzorgGroep was started by Ivo van Loo and his wife Wilma Veerhoek in 2003. Since then they have grown into a chain of 16 locations, all of them in the southwestern part of the Netherlands. The group has contracts with all the Dutch healthcare insurance companies and offer a mixture of standard physiotherapy, specialized services and revalidation care.
The chain has recently been partly acquired by Capital A. Capital A is a Dutch investment company with ABN Amro as a major shareholder. The company has a broad investment portfolio which includes a limited number of healthcare -related investments. The goal of Capital A is to grow the TopzorgGroep into a national chain.