Update 28 September 2018

It has been relatively quiet here in the Netherlands the last few weeks, but as always, there are interesting things going on. In this latest update on private healthcare in the Netherlands we cover:

• Hot off the press: Orpea buys two more companies in the Netherlands
• Little news related to the healthcare sector in the latest budget presentation by the government. Is this good or bad news?
• The disabled care sector has done well in 2017. Are there opportunities for international investors?
• In our snapshot we give an overview of Annotommie, a chain of independent clinics focusing on orthopedic care.

Orpea buys two more healthcare companies in the Netherlands

Just announced today that Orpea is in the process of buying AllerZorg and Wonen bij September. AllerZorg provides specialized (medical) homecare services throughout the whole country. Wonen bij September is a commercial provider of nursing homes with a focus on clients with dementia. They currently have nine locations with a total of 168 apartments and claim to have another 8 locations in the pipeline. Wonen bij September has worked with AllerZorg in the last few years so the combined deal probably makes sense. Wonen bij September has a similar market positioning as that of Dagelijks Leven, with both companies offering services that are positioned at the lower end of the market.

The combination of Wonen bij September and Dagelijks Leven will give Orpea 38 locations in the Dutch market with a total of 748 apartments. In addition, the two companies have a total of another 15 locations in the pipeline. This makes Orpea the largest commercial operator in the Dutch market with a market share of approximately 10%. Orpea has clearly decided to go “all-in” into the Dutch market. When will the other international parties follow and who will be the next Dutch organization to “bite the dust”?

“Boring” budget presentation for the healthcare sector

Last week Tuesday the government presented its plans and budgets for 2019 (Prinsjesdag). The budget presentation had little surprising news for the healthcare sector. Overall spend in the sector will increase by €5 billion to €71 billion (an increase of 7%). Excluding the effects of higher salaries and expenses, the real growth in spend will be 3.5%. A large part of the growth in spend is earmarked for the elderly care sector (€1.8 billion).

The 2019 budget presentation confirms the statements made by the new government in its coalition manifesto (see update 12 October 2017) that it does not plan to initiate any major reforms to the Dutch healthcare system. This must be seen as good news for international investors as it highlights the Netherlands as a stable market with very limited political risk.

Disabled care sector has done well in 2017

Verstegen Accountants has recently published its analysis of the annual reports of all Dutch organizations (mainly) active in the disabled care sector. Overall revenues in the sector increased by 2.2% to €8.7 billion. This was to a large extent driven by an increase in the number of clients by 1.4%. This combined with a very small reduction in overall capacity has given the sector a capacity utilization for the year of 91.6%.

Profits in the sector increased by €55 million to €198 million (2.3% of revenues). Profitability was mixed across the sector, with 20% of the relevant organizations making losses in 2017, and the profitability of the mid-size organizations (revenues between €10 million and €300 million) trailing the profitability of the small and large organizations. Especially the small (and focused) organizations (revenues less than €10 million) did very well in 2017 with an average return on sales of 5.4%. Are there pearls to be found in this group that could serve as a market entry for an international operator?

Snapshot of a Dutch private sector healthcare operator Vitadent

Annotommie was started in 2003 by Derk Rietveld, an orthopedic surgeon. Annotommie now has five clinics in the Netherlands where they offer a one-stop shop on all issues related to improving patient’s movements. The company prides itself on offering a “one-stop shop” where the initial consultation, diagnostics and the development of a treatment plan is done in one visit. The locations also have long opening hours and are also open on Saturday.

Annotommie has contracts with all the Dutch healthcare insurance companies. In 2017 Annotommie had 17.600 patients and realized a revenue of €14.3 million. The company has approximately 230 employees (141 FTEs). The company is currently managed (and partly owned) by Irene Groenink. The other shares are owned by a varied group of private individuals. It does not appear that Derk Rietveld currently has any role in the company.