Update 30 May 2023
I am back from a ten-day holiday in Norway. The original plan was to spend some of the days walking in the mountains from cabin to cabin, but this had to be changed due to the massive amounts of snow still remaining in the mountains – spring comes late to Norway. Luckily, we were able to celebrate the Norwegian national day (17 May with lots of people in traditional clothes (bunad) intense flag-waving) and visit family.
There is, of course, news to be described related to the Dutch healthcare sector. In this update we cover:
- Another defeat for ACM (Dutch Competition Authority). What are consequences for their activist approach?
- Another acquisition by Unilabs. Is the diagnostics sector consolidating?
- Tariffs for elderly care to be reduced by 3%. What are the consequences for the sector?
- In a new snapshot we give an overview of Yes We Can Clinics, a provider of mental healthcare to youth
Another defeat for Dutch Competition Authority
In earlier updates we have written about the activist approach the ACM (Dutch Authority for Consumers and Markets) has recently taken in the healthcare sector. The ACM has the right to block acquisitions and mergers it believes will reduce competition and has recently used this in two cases in the healthcare sector. The ACM blocked the acquisition by Mediq of Eurocept Homecare claiming that Mediq would become too powerful in the market for home infusion care. ACM also blocked the acquisition by Bergman Clinics of Mauritsklinieken.
It appears that the ACM has been too eager to ensure sufficient competition in the healthcare sector. In the update of11 April we described how a judge had ruled in favor of Mediq acquiring Eurocept. In another defeat, a judge has recently decided that the ACM ruling against the acquisition of Mauritsklinieken by Bergman was incorrect. The judge ruled that the ACM had not provided sufficient evidence to show that the acquisition would give Bergman too much power in its negotiations with the healthcare insurance companies. Unfortunately, the judge’s verdict (again) does not have any implications for the deal as Mauritsklinieken has been sold to Corius.
The two rulings do seem to indicate that the ACM has been too aggressive in its definition of market power, and it will certainly need to be more careful in dealing with future mergers and acquisitions in the healthcare sector. This is good news for the sector, as there is a clear need for more consolidation, and for Bergman Clinics as this opens the door for it to make more bolt-on acquisitions in the Dutch specialty clinics market.
Another acquisition by Unilabs
In 2018 the acquisition by Unilabs of Medlon was finalized. This was the first international acquisition in the Dutch market of a local provider of diagnostics services. The acquisition was seen as the start of the consolidation phase of an extremely splintered segment of the Dutch healthcare sector. In 2019 Unilabs acquired Saltro, a provider of diagnostics and treatments related to thrombosis with a national footprint.
The consolidation of the diagnostics and laboratory sector is proceeding, but very slowly. Unilabs, however, is doing its part and has again expanded its business in the Netherlands by acquiring Atalmedial. Atalmedial is one of the larger diagnostics companies in the Netherlands with 2021 revenues of €68 million and profits of €4.5 million. There are still many small, local diagnostics companies in the market, and further acquisitions by Unilabs and other international companies can be expected.
Tariffs for elderly care to be reduced by 3%
In the coalition agreement made by the parties participating in the current Dutch government there was an agreement to lessen the pressure on the swiftly rising costs for elderly care by reducing the tariffs paid to elderly care operators. In a recent letter to parliament the minister of health announced that this will be implemented starting in 2024. Due to the complexity of the Dutch financing system for healthcare, this is a multi-step process:
- The first step is for the Dutch Healthcare Authority (NZA) to reduce the maximum tariffs by the agreed percentages
- In the second step the healthcare insurance companies translate the maximum tariffs set by the NZA into the tariffs they will pay operators. These are always lower than the maximum NZA tariffs (typically by 3-4%). The insurance companies have been instructed not to decrease their average discount as this would decrease the effect of the tariff reduction
In 2024 the tariffs will be reduced by 1.2% and the tariff reduction will be increased to 3% by 2026. According to the government the tariff reduction will be balanced by the advantages of multi-year contracts, the effects of a new quality framework (with less stringent demands on operators) and overall opportunities for operators to work more efficiently and thereby reduce costs.
ACTIZ (the Dutch trade organization for companies providing long-term care) has reacted negatively. It claims that the organizations providing elderly care are already facing problems due to inflation, higher energy costs, higher staffing costs (see update on temporary staffing) and already announced increases in the discount-percentage used by the insurance companies. It is clear that the next few years will be challenging for the Dutch elderly care sector as the operators active in this sector need to deal with exploding demand, dramatic changes to their service portfolios (move away from nursing homes to home-based care) and the announced tariff reduction.
Snapshot of Dutch commercial healthcare company: Yes We Can Clinics
Yes We Can Clinics is specialized in providing mental healthcare to youth. The age of clients varies between 13 – 27 years. The clinic provides help for a wide range of psychiatric and psychological issues, addiction-related issues (alcohol, drugs, gaming, sex, etc.) and behavioral issues. The clinic was started by Jan Willem Poot in 2010. Jan Willem Poot does not have a healthcare background but was addicted to cocaine and alcohol and was helped by a clinic in Scotland. He has successfully translated the key dimensions of care that helped him to his own clinic. The method used by the clinic is focused on a short and intensive (seven weeks) in-house treatment in a clinic with room for 160 patients. Care is provided by a wide range of healthcare professionals in both a one-on-one and group setting. The overall program also includes a ten-week after-care program. In addition to the clinic Yes We Can also provides outpatient care in one location (Eindhoven).
In 2021 the foundation with the healthcare related contracts had €22.2 million revenues. 70% of the revenue was paid by healthcare insurance. Most of the remaining revenue is youth care paid for by municipalities. Almost all activities are carried out by a separate company and also all the revenues are paid to the operating company. The clinic has access to 500 healthcare professionals.
In 2021 Holland Capital (Dutch Private Equity focused on healthcare and technology) has invested in Yes We Can.