Update 22 January 2019

I hope that you have all had a great break and an excellent start to the new year. Welcome to the first update for 2019 on what is happening in the Dutch commercial healthcare market. In this update we cover:

  • General Practitioner doctors complain about work they must carry out for patients living in small-scale commercial nursing homes. Will this lead to further consolidation in the sector?
  • Aedifica continues high level of investments in the Dutch market. What will be required to make the Netherlands its second home market?
  • Orpea continues expansion into Dutch healthcare market. Is Orpea expanding its strategic focus to medical home care?
  • In our snapshot we give an overview of Omega Groep, a provider of a broad range of services for clients with development and behavioral issues services.

General Practitioners complaining about extra work related to patients in small-scale commercial nursing homes

In a recent announcement the National Federation of General Practitioners (Landelijke Huisartsen Vereniging (LVH)) state that the growing number of small-scale commercial nursing homes is leading to unacceptable levels of work for local General Practitioners (GPs). This is caused by a combination of the financing form most used by commercial operators and the small-scale operators not having access to doctors specialized in elderly care.

In most commercial nursing homes clients pay rent and service costs. Based on this, the financing of the healthcare services (by the government) is through a system called Volledig Pakket Thuis (VPT). This financing form assumes that the client lives “at home” which again implies that ongoing medical care is the responsibility of the GP. In the short term the advice from the Ministry is that GPs and operators of small-scale nursing homes operating with VPT need to make agreements on how to handle the specific care needs of elderly / dement patients. In the long term the solution will probably be to integrate all responsibility for ongoing medical care into the VPT package.

This is likely to happen from 2022. This will clearly be another driver for consolidation in the commercial nursing home sector as it will be difficult for small-scale operators (mom-and-pop driven single locations, etc.) to have the required know-how and expertise in their organizations.

Aedifica carries out further investments in the Dutch healthcare market

In the last few weeks Aedifica has made further investments in the Dutch market. In Zwolle it has purchased a ground-position for €1 million and has committed to building a new nursing home with twenty-four apartments for an additional investment of €4.5 million. This location will be rented to Stepping Stones Home & Care, a national Dutch operator with more than eleven locations and 240 apartments.

Aedifica has also announced that it has purchased an additional location from The Blueprint Group. Aedifica has paid €11 million for a location with 70 apartments in Franeker (the northern part of the Netherlands). The location will be operated by Ontzorgd Wonen Nederland, one of the Blueprint Group brands, under a 25-year lease.

Aedifica has announced that it sees the Netherlands as its second home market and appears to be rapidly increasing its investment volume.

Orpea expands its Dutch home care business through further acquisitions

As mentioned in earlier updates, Orpea is very active in the Dutch market with its acquisition of two elderly care operators (Dagelijks Leven and September) and its acquisition of a specialized medical home care provider (AllerZorg). AllerZorg has now acquired two additional specialized providers of medical home care. Flexiekids is an organization specializing in care for children with chronic or acute medical care needs. Care for Cancer is an organization providing specific care for clients with cancer.

These acquisitions seem to be bolt-on acquisitions to existing AllerZorg activities but it is interesting to see that Orpea is not only focusing on its traditional elderly-care business in the Netherlands but is also developing other activities such as medical home care and psychiatric care (through its acquisition of WoonZorgNet. Will further acquisitions follow?

Snapshot of a Dutch private healthcare operator: Omega Groep

The Omega Groep is based in Zwolle (middle of the Netherlands) and provides a broad range of services to clients with development and behavioral issues. The group provides a combination of protected living accommodations, ambulatory services for clients living independently, and work-related activities. The financing of the services varies. Most ambulatory services are financed by municipalities, while the clients requiring intense care are financed through the Law for Long-Term Care (WLZ). The company had revenues of €21 million in 2017 and made a small profit of €0.1 million (down from €0.7 million the previous year).

The Group had 462 employees at the end of 2017 (307 FTEs). The group has grown strongly in the last few years and has realized approximately ten new locations in 2018. The group has a pipeline of at least another six locations that will provide room for an additional 128 clients.