Jul02

Update 2 July 2024

Update 2 July 2024

Finally, summer has arrived here in the Netherlands. We have had a number of (very) hot days and the beach, lakes, parks and outdoor cafes have been packed with people catching the rays and enjoying the nice weather. The news relating to the Dutch healthcare sector the last few weeks has mainly been about Co-Med, but there is also other news. This update covers the following news items:

  • Further consolidation in the occupational healthcare sector. Who will be next?
  • Growth in healthcare-related acquisition involving private equity. Will the trend continue?
  • Co-Med has announced that it is entering voluntary bankruptcy. What are the consequences for primary care in the Netherlands?

New acquisition in the occupational healthcare sector

Zorg van de Zaak is one of the largest companies active in the Dutch occupational healthcare sector. While the company also has subsidiaries providing other healthcare services such as maternity care, addiction care and mental healthcare, its main focus is occupational healthcare. In 2022 Zorg van de Zaak was acquired by Parcom, a Dutch private equity company focusing on medium sized companies. Since the acquisition Zorg van de Zaak has disposed of some activities (including the Rode Kruis Hospital), and has carried out some smaller acquisitions in the occupational healthcare sector.

Last week it was announced that Zorg van de Zaak has acquired Falke & Verbaan. The company has one hundred consultants and provides traditional occupational healthcare services, but focuses on helping employers deal with absenteeism through organizational analysis, advice and training modules for managers. The deal highlights two ongoing trends in the occupational healthcare sector. The first is the ongoing consolidation of the sector with the larger companies steadily acquiring smaller players. The second is the ongoing move away from services focusing on absent employees to providing employers with pro-active services (consulting, etc.)helping them to structurally reduce absenteeism. This will certainly not be the last acquisition in the sector.

 

Growth in healthcare related acquisitions involving private equity

All healthcare-related mergers and acquisitions have to be approved by the Dutch Healthcare Authorities (NZA) if the merger / acquisition involves more than 50 employees. Currently the remit of the NZA is limited to controlling whether the process related to the merger / acquisition has been carried out correctly and it cannot stop a merger if it believes that it will have a negative effect on the quality and costs of healthcare. The NZA is relatively positive to commercial healthcare providers and the influence of private equity, but (together with the ACM – the Dutch Competition Authority) wants more power to block smaller acquisitions that can have a negative effect.

The NZA have recently released a report giving an overview of the 295 healthcare related acquisitions they have assessed in the period July 2022 to December 2023. Key points from the report are:

  • The NZA assessed a total of 295 acquisitions and approved almost all of them (two were declined)
  • Private equity was involved in 59% of the approved acquisitions (up from 50% last year). “Private equity” has been defined as all companies where one or more private equity companies have a controlling interest
  • Dental care has been the sub-sector with the most acquisitions, although the number is lower than last year. 68% of these acquisition were PE-related
  • Acquisition in primary care only represent 4% of the total number of acquisitions and none of these were PE-related
  • The number of acquisition in the mental health sector has declined from previous periods. A possible explanation is the new financing model implemented by the healthcare insurance companies that has resulted in uncertainties related to revenues and optimal use of different types of healthcare staff

 

The Co-Med saga appears to be over

We have written extensively about the evolving saga of Co-Med during the last few months. A few weeks ago it appeared that Co-Med has survived a major crisis as it averted bankruptcy. The bankruptcy court on Tuesday two weeks ago turned out to be the start of a terrible week for Co-Med. The next day, the healthcare insurance companies declared that C0-Med was in breach of their contracts due to unsafe working practices, insufficient availability of key healthcare personnel, etc. The next day, this was followed by the insurance companies suspending their contracts with Co-Med and stopping all payments to the company. This was followed a few days later by the contracts being definitely ended and Co-Med deciding to enter into voluntary bankruptcy.

As a consequence of these actions all Co-Med locations have been closed and the 50.000 patients that Co-Med served have had to find alternative primary care providers. This has appeared to have gone relatively smoothly, as the insurance company had already developed emergency plans before the bankruptcy hearing. Most of the Co-Med patients have been transferred to Arene, an online provider of primary care services. Arene has a business model based close cooperation with local general practitioners (GPs). Arene believes that 85% of all GP-patient interactions can be dealt with digitally. This care is provided by Arene’s own doctors (forty, some living abroad). The remaining 15% of cases are passed on to local GPs. Arene does not provide services in geographic areas where it does not have contracts with local GPs. In October last year Arene had approximately 10.000 patients of which half were Ukrainian refugees and another large part were migrant workers. Taking on 50.000 patients from Co-Med will mean a major scale-up of their activities.

It will be interesting to see what the consequences will be for Dutch primary care. Hopefully, it will give a kick-start to moving more primary care to digital platforms. It will be very interesting to see what happens to the other providers of commercial primary care in the Netherlands. So far all attention has been focused on Co-Med and Arts en Zorg (20 locations) and Centric Health (9 locations) have not been highlighted as having insufficient availability and/or providing low quality care. Both companies have a focus on providing digital health where possible and appear to be well positioned for further growth. However, overall sentiments towards commercial primary care chains are very negative, and it will probably be very difficult to grow in the short to medium term through acquisitions.