Update 26 November 2019

Welcome back to another update on what is going on in the Dutch healthcare sector. In this update we cover:

• Dutch healthcare sector expected to continue strong growth
• Dokter Bosman saved. Investor and creditors have reached a deal
• In our snapshot we give an overview of a large but unknown dentistry chain (Rietrae Group).

Dutch healthcare market will continue to show strong growth

A recent report from the Dutch Central Statistics Bureau (CBS) shows that overall spend on healthcare in the Netherlands will grow by an average of 4.2% nominal in the period up to 2025. Total spend in the sector will grow from €83 billion in 2021 to €98 billion in 2025.

The main driver for the expected growth will be long-term care with an average growth of 5.1% per year. Cure (all spend financed via the healthcare insurance companies) will grow at an average of 3.8% per year while youth-care and care financed by the municipalities will grow by 4.1% per year. The main driver for the expected growth is demographics (primarily growing number of elderly people driving the need for more long-term care). Other factors include growth in disposable income, and higher costs for the sector (primarily driven by the need to increase salaries in order to attract more workers).

Dokter Bosman saved

In my previous update I talked about the financial issues facing Dokter Bosman and the ongoing discussions between a potential investor and large creditors (including insurance companies and municipalities). Last week it was announced that a deal has been reached between the investment company(DRB) and the key creditors.

According to Hein Roover (the new CEO), DRB has invested a “few” million and the other parties have accepted cuts in their claims. According to Hein Roover the financial problems were caused by strong growth in number of patients and treatments and weak internal controls. This led to overproduction and over-invoicing and the need to repay substantial amounts to municipalities and insurance companies.

As mentioned in the previous update the investment company believes that Dokter Bosman can become a profitable company. A significant part of the investments from DRB are earmarked for the development of new E-health services that are expected to reduce costs. Other cost reduction plans include improvements to the intake process and overall increased efficiency (better planning and less down time for healthcare professionals).

This all makes sense as the Dutch system of revenue-ceilings in many contracts makes strong control of growth a key success-factor. Within the given revenue-ceilings costs then need to be optimized.

Snapshot of a Dutch healthcare operator: Rietrae Group

This snapshot focuses on an informal group of dentistry locations owned and managed by Thomas Rietrae. The group consists of eleven locations (of which eight are in Amsterdam). The eleven locations have a total turnover of €25 million and 400 employees. The group appears to be highly profitable.

The chain was started by Thomas Rietrae in 2009 when he acquired his first dentistry practice. The chain has grown since then by acquisition. After an acquisition the acquired practice is typically moved to a new physical location where the lay-out is closely linked to the activities and processes carried out

Four of the locations are branded as a group (Lassus), but the other locations are individually branded. This has meant that the Rietrae Group has until now not appeared on any lists of major Dutch dentistry chains. This is yet another example of consolidation in the sector, which can only be expected to continue.