Update 6 February 2024

Update 6 February 2024

February has had a strange start as it sometimes feels like spring is in the air. However, colder weather is expected later in the month, and, as always, the Dutch are dreaming about another “elf steden tocht”. This is a 200 km ice skating event in Friesland that requires an extended period of fairly intense freezing weather to get ice that is sufficiently thick to carry the load of participants and viewers. The last one was held in 1997, but even with global warming the Dutch are hopeful every winter.

From the Dutch healthcare sector there is news about:

  • Regional hospitals have their own brand to compete against commercial clinics. Are they succeeding?
  • The Dutch Authority for Consumers and Markets (ACM) wants more power. What will be the consequences for “buy and build” strategies?
  • Study looking at effects of private equity on the healthcare sector. Will private equity investments be forbidden?

Regional hospital with new brand to compete against commercial clinics

Rijnstate is the local hospital in Arnhem (where I am based). In response to increased competition from commercial specialist clinics, the hospital has decided to implement a separate brand (Rijnstate Clinics) with the goal of providing patients for plannable care with the same service that they receive from commercial operators. This entails an initial meeting with the patient within two days and a planned operation within ten days.

They claim that “service is the nr. 1 priority” and have changed processes and ways of working in key areas in order to meet this goal. Key examples include prebooking operations theaters, minimizing hospital stay, and forcing staff to work overtime if this is required for helping patients. Rijnstate Clinics started with 10% of the total hospital activities focusing on orthopedic procedures, urology, and cataract surgery. Rijnstate claims that all the activities conducted by Clinics are profitable. The complexity of the care provided by the new brand has grown and next year Clinics will cover 15% of the total revenues of the hospital.

It will be interesting to see how this develops. It seems that the Clinic is an excellent tool for introducing new processes and skills into the system, but I am curious about the challenges of running an overlapping organization with two different business models (complexity of care provided, key focus of activities, etc.)


The ACM continues its quest for more power

In November we described how the Dutch Authority for Consumers and Markets (ACM) wanted more influence over mergers and acquisitions in the healthcare sector. In earlier updates we have also written about how the ACM has had setbacks when judges have reversed their decisions concerning healthcare acquisitions. In the recently published Plan for 2024, the ACM further describes its wishes for more influence in the healthcare sector. It wants to have more power in situations where only two organizations work in a limited geographical market, and without proactively colluding, decrease competition by following each other’s market activities. The ACM also wants to be able to make a judgement in cases where companies are following a “buy and build” strategy and conducting multiple small acquisitions. Currently, each of the small acquisitions typically falls below the threshold for judgments from the ACM, but the ACM believes that the cumulative effect of these acquisitions can limit competition.

Each of these changes would have negative consequences for commercial companies active in the Dutch healthcare sector. The primary target is most probably the chains developing in the primary care sector, but it would also make acquisitions in the dental care or veterinary care sector more difficult. Implementing these changes will require amending laws, so it will take time before any changes are active.

Study looking at effects of private equity on the healthcare sector

In another case of potential unwelcome news for commercial healthcare the Minster of Health (Conny Helder) recently announced that she is awaiting the results of a study on the effects of private equity on the healthcare sector before deciding whether PE-owned companies should be allowed to acquire further primary case practices. This study was announced in September last year, and the results are expected sometime in Q1. It will be interesting to see whether the results are different from the study by the Dutch Healthcare Authorities (NZA) in 2021 which were largely positive.

A piece of good news is that the Minster understands that it will be difficult to structure a ban on investments from only private equity parties. All provision of healthcare in the Netherlands is conducted by private entities, and these entities are free to finance themselves as they see fit. It seems that the Minister understands that a ban would therefore be against entrepreneurial freedom, property rights and the free movement of capital.