Jun18

Update 18 June 2024

Update 18 June 2024

Last week I was in London for the HBI 2024 conference and had the pleasure of meeting many of you. It was three days of interesting presentations and discussions, and good opportunities to catch up with old friends and meet new friends. I am looking forward to Paris in 2025. Back in the Netherlands there is news to report from the Dutch healthcare sector. This update covers the following news items:

  • Co-Med has survived a bankruptcy hearing but is facing new challenges. Will it survive?
  • Further consolidation in the laboratory sector. Who will be next?
  • Compulsory disability insurance for independent workers comes closer. Will other reforms for the occupational healthcare sector be implemented?
  • Potential sale of medical aesthetics company. Another sector that will be consolidated?

Co-Med has survived bankruptcy hearing

In our previous update we wrote about the planned bankruptcy hearing for the main Co-Med company providing primary care and receiving income from the insurance companies. The bankruptcy hearing against Co-Med was called off when, during the hearing itself, the company finally paid the money owed to the suppliers who had called for bankruptcy. However, it appears that Co-Med’s problems are far from over. One of the leading Dutch newspapers has published an in-depth analysis of the company’s working practices. This shows that the company has provided incorrect information to the NZA (Dutch Healthcare Authority) in connection with an acquisition, has had unauthorized staff carry out medical treatments, has used emergency care and ambulances as a replacement for care typically carried out by General Practitioners, and has made mistakes leading to the death of a patient.

Based on the article, the IGJ (Health and Youth Care Inspectorate) has started an investigation. As mentioned in the previous update, the relevant healthcare insurance companies have developed an emergency plan to ensure adequate primary care to the 50.000 patients that Co-Med services. The insurance companies do not seem to have much faith in Co-Med as they have stated that the plan “remains on the desk” and is ready to be implemented.

 

Further consolidation in the laboratory sector

During the past few years we have written extensively about the ongoing consolidation in the Dutch medical laboratory sector. The consolidation is following two paths. One path is the acquisition of local labs by large international companies, such as recent activities by Unilabs. Another path is local companies joining together, such as the recent partnership between two hospitals, municipal health services, and the diagnostic arm of the national blood collection company (Sanquin). As a first step the four companies have agreed to coordinate activities and work with a common brand, but the stated goal was to merge activities at a later stage. This has clearly not yet happened, as one of the hospitals active in the previous example (OLVG) has recently acquired two smaller specialist providers of laboratory-related diagnostics active in the same region as the hospital.

 

Compulsory disability insurance for independent workers comes closer

Occupational healthcare in the Netherlands (and in the rest of Europe) is another sector that is consolidating (as shown by the recent acquisition of Paradigma). One of the attractions of the Dutch occupational healthcare market is that the regulatory situation related to occupational healthcare in the first two years of illness / disability is not expected to change in the near to medium term future. The situation for long-term work-related disability is different.

The current way of dealing with clients with structurally reduced ability to work is seen as being cumbersome, inefficient, unfair, and not aligned to the interests of the weakest participants in the Dutch employment market. A recent study by an independent commission (OCTAS) has highlighted the key issues and suggested a wide range of improvements. One of the changes suggested by the report is to put in place a system for compulsory disability insurance for the 1.2 million independent workers (those without an employer working on projects, short-term contracts, etc.). After years of discussion, a law structuring such a compulsory insurance has been developed.

The new system will provide independent workers with guaranteed payments at the level of Dutch minimum salary after one year of illness / disability. Expected costs will be 6.5% of the earnings of the independent worker, capped at €195/month. Implementation of the new law will take time. There is pressure to get the law through Parliament before Q1 2025 in order to get EU-financing, but whether this will succeed is dependent on the priorities of the new government. After the new law has gone through Parliament it will take another 2-3 years to get the required systems in place at the UWV (national organization responsibility for a wide range of occupational healthcare related activities including payments of benefits) and the tax authority.

There is clear political will to follow up on the other recommendations from the OCTAS report, but implementation of these are also expected to take considerable time as there will have to be agreement of the direction of structural changes to be made, new laws will have to be developed, and new systems will need to be developed.

 

Sales process for leading Dutch medical aesthetics company

Medical aesthetics is an interesting sub-sector of the Dutch healthcare market with a combination of larger players such as Bergman Clinics and a large number of smaller companies providing skin-related services. Cosmetique Totale is a company focusing on non-invasive aesthetics services such as injectables, skincare and laser treatments. Most of its activities are paid out-of-pocket, but 15-20% are paid by healthcare insurance companies. The company was founded in 2004 and has grown through more than twenty acquisitions, including three in the previous year. The company claims to currently be providing services at more than 200 locations (of which eighty-three are own locations, and approximately four hundred ambulatory locations. Since 2020, the company has BB Capital Investments as a major investor and rumors say that the company is now looking for a new investor and is being marketed off an EBITDA €8-11 million.