Update 20 September 2022
The first signs of autumn are appearing. The days are getting shorter and there is a certain crispness to the air. As much as I enjoy summer (when it is not too hot) I also quite like the changing seasons. I hope that you are also enjoying the new season.
There are many things happening in the Dutch healthcare sector. In this update we cover:
- Issues in the homecare sector. How does this fit with the Government’s plans to restructure healthcare?
- 2021 was a good financial year for the healthcare sector. Will this continue?
- Planned restructuring of Dutch healthcare sector meets resistance. What will be the next steps?
Issues in the homecare sector
The homecare sector in the Netherlands consists of three sub-sectors:
- Social care / cleaning services – this is financed by the municipalities and is increasingly provided by the subsidiaries of cleaning companies (see here for a snapshot of one of the leading companies in the sector)
- Medical homecare – this is financed by the healthcare insurance companies and is provided by operators ranging from small local companies to large and integrated providers of a wide range of healthcare services
- Nursing home care at home (VPT) – this is long-term care (typically for elderly care) but provided in a home setting (see here for more details). “Home” is defined as the client playing rental costs, and this financing form is often used by commercial nursing-home providers.
The importance of homecare will expand due to demographics and the government push to keep the elderly out of expensive nursing homes for as long as possible (see overview of government program for transforming elderly care).
A group of nineteen providers of (medical) homecare (typically large integrates traditional operators) have recently sent a letter to the Government saying that the healthcare insurance companies must increase the tariffs and invest more in the sector. The letter claims that the current tariffs do not cover the costs and that the insurance companies structurally under-finance the sector by imposing tight revenue ceilings on contracts (supported by the fact that the insurance companies typically have not spent the budgets allocated to medical homecare).
The nineteen providers paint a grim picture of the consequences of not meeting their demands. They claim to not be able to pays competitive salaries, leading to an exodus of skilled employees. This will mean that the companies are not able to meet any increase in demand for their services. As homecare is a cornerstone of the government plans to restructure the overall healthcare sector (see following article) it will be interesting to see how these issues are resolved.
2021 was a good financial year for the healthcare sector
Two recently released reports look at the financial performance of the Dutch healthcare sector in 2021. A report by EY has analyzed the annual reports of 764 organizations across all sub-sectors of the market. A report by Verstegen Accountants has looked at 269 operators active in the mental healthcare sector.
Both reports provide a positive picture for 2021. According to EY, the overall profitability of the healthcare sector has improved from 1.6% (ROS) in 2020 to 1.9% (ROS) in 2021. The Verstegen report highlights that the overall profits of the mental healthcare sector has doubled from 2020 to 2021. However, both reports temper any optimism as the improved results are almost exclusively due to corona-support from the government, one-off profits from sale of real estate and low interest rates. As all these aspects have changed in 2022 it is highly unlikely that the trend of improved profitability will continue.
In addition, both reports highlight the operational challenges the sector faces related to staffing. This includes high and increasing sick leave (more than 7% in 2021), substantial number of employees changing jobs (or leaving the sector) (15% in 2021), and increasing difficulties in filling vacant positions (one in twenty-five positions open).
Planned restructuring of Dutch healthcare sector meets resistance
In the update of 19 July 2022 we gave an overview of the main programs initiated by the government to restructure the overall healthcare sector (IZA and WOZO). The focus of the article was to explain how WOZO will have a significant impact on the strategies of all types of organizations active in the elderly care sector.
IZA is a more general program that is being developed in cooperation between the Ministry of Health and forty-eight organizations from the broader healthcare sector. The overall goal of IZA is to improve the overall health of the Dutch population and reduce costs by focusing on prevention, improving primary care, and making the overall healthcare system more efficient. In principle, IZA covers the whole healthcare sector, but the primary focus is cure (financed by healthcare insurance). To reach these goals IZA has seven main themes:
- More regional cooperation and concentration of operators
- More cooperation between social care (municipalities) and primary care for mental healthcare patients
- Consolidation in the homecare sector by making it more complicated for patients / clients to use non-contracted providers
- More focus on prevention and life-style improvements
- More focus on appropriate care (from the viewpoint of the patient)
- Focus on eHealth and digital transfer of data
- Making the healthcare sector more attractive for (new) staff and improving retention
A first draft of the IZA program was published in August. In response to a wide range of comments, an amended version was made public last week. The current report has developed concrete recommendations in several areas:
- The mental healthcare sector must reduce the annual number of clients by 50.000. This should be achieved by increased cooperation with homecare providers and (to be developed) regional support centers. Care for patients in the system must be improved by speeding up the overall process and reducing waiting lines
- Hospital care will be focused and concentrated by increasing the minimal volumes of operations conducted in a year required for contracting by the insurance companies
- Keep the number of employees in the sector stable
- Reduce the coverage of the compulsory healthcare package
The plan was that all the parties involved would sign-off on the overall recommendations so that this version of the report could be used as a starting point for the next round of government budgeting. Unfortunately, many of the parties involved in the process refused to sign-off on the published version. Key holdouts included:
- The largest union for healthcare workers claimed that the plan is too focused on financial targets and does not do enough to improve the overall working conditions of healthcare staff
- The national organization for General Practitioners (GPs) demanded more concrete information from the healthcare insurance companies on how the GPs will get more time per patient and how tariffs will be increased
- ACTIZ, the national organization for elderly care companies wanted more guarantees on which changes will be implemented and how elderly care companies will be compensated for negative effects.
The issues raised were a combination of the challenges of “polderen” (the Dutch method of getting broad consensus by involving all parties) and the difficulties of developing concrete change in a complex environment. However, “polderen” has worked again. The dissenting parties have all had (some of) their demands met and have signed on in time for the presentation of the new government budgets today (Tuesday 20 September). Now comes the hard part of making the suggested changes more concrete and implementing real change.