Update 30 July 2024

For anybody that missed my update two weeks ago – excuses. It is summer, there has not been a lot of news and I have been busy with other things. This will also be the last update before my own summer vacation. Next week we are off for three weeks in Cambodia and Thailand. I have not been to Asia since 2017 and am very much looking forward to it. Even if it is quiet, there is still news to report. This update covers the following news items:

• Specific financing of complex homecare for the elderly announced. What will this mean for the elderly care sector?
• Improved financial results for the mental healthcare sector in 2023. Is profitability sufficiently high?
• Consolidation in the orthopedics sector. Will it continue?
• Primary care sector. What is happening after Co-Med?

NZA announces specific financing complex elderly care in a home setting

For the Dutch government, a key method for controlling the growth of elderly care is to keep the elderly for as long as possible “at home”. As the healthcare needs for these patients grow and become more complex, care needs to be provided by a wide range of providers (GPs, district nurses, the patient’s own network, and the specialist geriatric care). Currently, it is only possible to invoice the input of the geriatric specialist per hour, making overall coordination of activities difficult.

The Dutch Healthcare Authority (NZA) has recently announced a key step to improve this situation. From next year two new billing items will be available to cover the input of the geriatric specialist. One aims to cover the relatively intense start-up phase for patients requiring complex care in a home setting and allows billing of the geriatric specialist for a three-month period. In the follow-up phase, the geriatric specialist can be billed per month. Initially, the new billing item only covers care financed by the Healthcare Insurance Law (covering cure-related activities), but the NZA will investigate how a similar financing scheme can be developed for homecare financed by the Law for Long Term Care (WLZ).

Providing and coordinating care to home-based patients requiring complex elderly care is difficult and will increasingly require specialist input. Planning and coordinating this input have been a major challenge, and it is highly likely that the new billing items announced by the NZA will be an improvement. As described in earlier updates there is growing pressure on commercial operators to develop in-house geriatric specialist capabilities. These new billing items will probably make it more attractive for commercial providers to have structured access to geriatric specialists. This will be easier for larger operators, and will therefore be another driver for further consolidation in the commercial elderly care sector.

Improved financial results in the mental healthcare sector

A recent report from Kompas in Zorg analyses the financial results of mental healthcare providers that are mainly financed by the Healthcare Insurance Law and have revenues higher than €20 million. In 2023 the thirty-six companies covered by the report had an average profit margin of 1.4% (up from 0.8% in 2022). The revenues have grown by 7.3% from 2022, but major cost items have also had a robust growth. As in other sectors, the mental healthcare providers have had difficulties keeping and hiring permanent staff, leading to a 17% growth in costs for temporary staff. The largest cost item is costs related to own staff (70% of total costs). These grew by 5% from 2022 to 2023.

Even though profit margins have improved, 1.4% is very low. The cost increases have been similar across most healthcare subsectors (inflationary pressure of staffing costs, higher energy costs, etc.). In addition, the mental healthcare sector has been suffering from the consequences of the new payment model implemented in January 2022. The NZA has announced that it will develop new tariff for the sector but these will only be implemented in 2026 (with some adjustments in 2024). Hopefully, the 2024 adjustments will help the sector improve its profitability.

Consolidation in the orthopedics sector

The Dutch market for orthopedic aids is estimated to be approximately €300 million per year. Slightly less than half of the market (€140 million) is orthopedic footwear. The market is currently highly fragmented with dealers often linked to a specific supplier. Eqwal is an international company focused on the development and sales of orthopedic aids with 2.700 employees. It has stated that it wants to achieve a top-3 position in the Dutch orthopedics market and has conducted five acquisitions to achieve this goal. Eqwal wants to grow to a national network of orthopedic centers that are independent of specific suppliers and can provide clients with the best product for their specific needs.

It will be interesting to see how this market develops. As in most subsectors of the healthcare sector consolidation appears to a “law of nature”. Will other parties also try to develop a dominant position by buying up small, local organizations?

Life after Co-Med

The last few months there has not been an update without some news about Co-Med. The dust now seems to be settling around the Co-Med story. Every week there are news items describing how patients from one of the ex-Co-Med locations have found a new primary care provider. There are also articles and opinion pieces being published that highlight how the issues related to Co-Med are (partly) due to structural problems related to primary care such as growing demand for primary care services due to demographics and more elderly clients staying longer at home, less young GPs willing to take on the demands of running a primary care location and often preferring to work part-time, overall challenges in finding and keeping supporting staff, etc.

In addition, there are a growing number of initiatives aimed at changing how primary care is provided in the Dutch market. Less than a year ago we provided a snapshot of Arts en Zorg, a very successful provider of primary care in a mixed model consisting of digital and physical care. We have also described Buurtdokters, an innovative provider of back-office services for independent primary care locations. There are also new commercial players actively working on developing chains of primary care locations such as Doccs (with six locations), Jans (two locations in Rotterdam), and Jutro Medical (who is in the process of developing a first location in the Dutch market).

Another new organization is Dokzo. Dokzo is a cooperative started by a group of GPs in 2022. GPs can become members of the cooperative and choose the areas where they want to be assisted. The possibilities include staffing, IT, financial support, administrative tasks, etc. Dokzo will support the GPs with staff who are experts in their given area. A key area of support is IT, where Dokzo believes that it can help primary care locations with specific advice and support in purchasing processes. Dokzo is in the process of applying for transformation funding from IZA.