Update 29 April 2020
The world is still in the grips of the Corona virus, but it appears that in many countries (including the Netherlands) the worst has passed. However, there are still reasons to be cautious and the economic consequences will be very large. Maybe it is a sign of the times that while Corona still dominates the news, I have actually managed to find two news items that are not Corona-related:
- High mortality rates in Dutch nursing homes confirmed. What will be the financial consequences for the sector?
- Overall Dutch economy in steep decline, but major bank believes that the healthcare sector will grow. Is this good news?
- Unilabs acquisition of Saltro completed. Will there be more consolidation in the diagnostics sector?
- Supplier of mobility aids is bankrupt. Bankruptcy not due to Corona
High mortality rates in Dutch nursing homes confirmed
In the previous update we talked about the large number of Corona-related deaths in Dutch nursing homes that were not being included in the official statistics. This has now been confirmed in a recent report by Statistics Netherlands (the central Dutch office for statistics – CBS). Statistics Netherlands has compared the number of deaths in nursing homes and other long term institutions in recent weeks to the number in earlier weeks in the year and concluded that the number of reported deaths has almost doubled from an average of 797 weekly deaths to 1485 weekly deaths.
Discussions I have had with directors of nursing homes confirm that the sector is already feeling economic pain due to decreased occupancy rates coming from higher mortality levels and reduced intakes and I expect that will continue for some time.
Healthcare sector expected to grow in 2020
ABN Amro has analyzed the expected effects of the Corona-crisis on the Dutch economy. Based on a two-month lockdown their overall conclusion is that the Dutch economy will shrink by 3.8% in 2020. However, they expect that the overall healthcare sector will grow by 3% in 2020 and 3.5% in 2021.
ABN Amro also gives an overview of the changes that the sector will have to make. Given that all of these will (certainly in the short term) result in higher costs it is not clear that the overall growth will result in positive financial results (see previous update for expectations of senior financial people in the sector).
Unilabs acquisition of Saltro completed
Saltro is a non-profit provider of diagnostics services and thrombosis treatments in the eastern part of the Netherlands. In the update of 12 November 2019 we explained how Unilabs had agreed to acquire the activities of Saltro. This acquisition has now been cleared by both the Dutch Healthcare Authorities (NZA) and the Authority for Consumers & Markets (ACM). In a statement the companies explain that even in the current hectic environment they are planning for the future and expect that the merger will result in an improvement of diagnostics in the Dutch market.
It is good to see that some “normal” activities are still moving forward, and it will be interesting to see whether this will be the start of further consolidation in the (very) splintered Dutch diagnostics market.
Supplier of mobility aids goes bankrupt
Hulpmiddelcentralen is a suppler of wheelchairs and mobility scooters with ten locations, five stores, 400 employees and 50.000 clients. It has been the prime supplier to more than 100 Dutch municipalities and has also served home nursing companies, insurance companies, and other care-related organizations.
The company has gone bankrupt due to spiraling issues related to an inability to pay suppliers on time which resulted in many of them refusing to deliver products which again resulted in unhappy customers that reduced their use of the company’s services. The “last straw” was the municipality of Utrecht stopping their use of the company’s services after months of unhappiness regarding deliveries and repairs. The curator has made an explicit statement that the bankruptcy is totally independent of the Corona crisis and would have happened in any case.