Update 4 June 2024
Another update on the Dutch healthcare sector after another wonderful weekend. This time the trip went to Trieste and Istria. Beautiful countryside, good food and wonderful wines with good friends. Back in the Netherlands there is news to report from the Dutch healthcare sector. This update covers the following news items:
- Co-Med is approaching bankruptcy. What are the consequences for Dutch primary healthcare?
- More power to the Dutch competition authority and limitations on new contracts from insurance companies. Is the Netherlands becoming less favorable for companies investing in healthcare?
- Ongoing move toward multi-year contracts with the insurance companies. Is this good news?
Co-Med approaching bankruptcy
In our April update we wrote about the bankruptcy of a Co-Med subsidiary providing call-center services to the Co-Med primary care locations. Suppliers owed money due to the provision of temporary staff to the Co-Med primary care locations have now set their eyes on the core Co-Med company providing primary care and receiving income from the insurance companies.
The bankruptcy hearings are taking place today (Tuesday 4 June), so the outcome is still unclear. The company running the primary care locations was profitable in 2022 and it claims to have received new capital from the current owner and a German investor. The healthcare insurance companies have the obligation to ensure sufficient care for their clients. As a consequence, if Co-Med goes bankrupt, the insurance companies must provide alternative primary care to the 50.000 patients registered with the twelve Co-Med locations. The responsibility for providing alternative care falls to the insurance company with the most clients as patients, in this case CZ. CZ claims to have an emergency plan in place for each of the twelve Co-Med locations to ensure that patients will get the care that they require.
It is important to note that the problems related to Co-Med are not specific to the company, but also reflect more general issues related to the provision of primary care in the Netherlands. As reported in an earlier update the IGJ (The Health and Youth Care Inspectorate) has been looking at issues related to primary care and were relatively positive to the effects of commercial chains providing innovative care. In a recent press release the IGJ report that complaints about primary care providers / GPs have grown dramatically. The number of complaints grew by 25% from 2022 to 2023 and the number of complaints in Q1 2024 is 50% higher than the same period in 2023. Most of the complaints concern accessibility and availability. While complaints related to Co-Med explain a part of the growth, it is clear that access to primary care is becoming increasing difficult for many people in the Netherlands.
More power to the Dutch competition authority and limitations on new contracts from insurance companies
In the update in February we described how the ACM (Dutch Authority for Consumers and Markets) wants more influence on mergers and acquisitions in the healthcare sector. Recently two parties in the Dutch Parliament suggested amendments to current laws with the goal of providing the ACM more power to block “unwanted” acquisitions in the healthcare sector. There will almost certainly be a majority in Parliament for the suggested changes as there currently is a broad majority with negative opinions about “commercial investors” in the healthcare sector.
In a similar move one of the largest healthcare insurance companies (Zilveren Kruis) has announced that they will limit the growth of (new) specialized clinics in geographical areas where they feel that hospitals and existing clinics provide sufficient care. The main argument for this is limiting the pressure on scarce staff resources. Zilveren Kruis claims that if too many people work in a specialized clinic there will not be sufficient staff for intensive and emergency care in the regional hospitals.
Do these changes mean unwelcome news for commercial healthcare providers in the Netherlands? Probably not. All healthcare in the Netherlands is provided by independent entities. Most are non-profit foundations, but many (including primary care providers / GPs) are in principal commercial. The healthcare minister has also reported to the Parliament that discriminating against certain types of owners of healthcare providers would not be possible with current laws. Zilveren Kruis also states that they are positive to specialized clinics and view Bergman Clinics as a “strategic partner.” Therefore, while their new plans might be negative for new entrants it will probably strengthen the position of established players such as Bergman and Equipe.
Ongoing move towards multi-year contracts
At the end of each year we have described some of the stranger consequences of the typical one year contract term between healthcare insurance companies and healthcare providers. Luckily, there is an ongoing trend towards multi-year contracts. Zilveren Kruis (see above) has recently announced that it wants multi-year contracts with all hospitals and the larger mental healthcare and elderly care providers. The key reason for the change is that implementing multi-year contracts will allow value-based contracting. Ensuring that only appropriate care is provided leads to savings of 5-10% in both required staff and costs. Typical KPIs that are part of multi-year contracts include 25% of care being provided digitally and moving operations to day-care.
While Zilveren Kruis has positive experience with these types of contracts with twenty-six hospitals, it sees challenges in developing similar contracts with mental healthcare providers. The key bottleneck in the mental healthcare sector is the limited visibility that insurance companies have in waiting lists and quality of care provided. These are sensitive subjects within the mental healthcare sector, and it will be interesting to see how the sector responds to the plans.