Update 7 November 2023

Here in the Netherlands the elections are getting closer, and television is filled with debates between the political parties and politicians presenting their viewpoints on talk shows. As we will touch on below, there are also potential effects on the Dutch healthcare sector of the various promises being made by the political parties. In addition, there is also other news from the Dutch healthcare sector:

• Orpea is working on public image. Will charm offensive work?
• Operators in the mental healthcare sector are facing financial challenges. Will their situation improve?
• Election-related promises to increase healthcare costs. When will politicians dare to present the bad news?
• In a new snapshot we give an overview of Keizer Kliniek, a mid-sized chain of specialist clinics.

Orpea pro-actively working on public image

As we showed in our bottom-up analysis of the main Dutch commercial nursing home chains in May Orpea is the largest commercial provider of nursing homes in the Dutch market. However, Orpea and its many sub-brands have not been very interested in promoting themselves publicly except through very focused advertising campaigns. This now appears to be changing. Orpea has hired a new CEO for the overall Dutch organization (Anton van Mansum) with a background from traditional Dutch healthcare organizations. The new CEO is also presenting Orpea’s position in the market and future plans at conferences. At a recent conference he also countered the idea that clients only stay at Orpea locations until the care they require becomes complex at which time they are passed on to traditional healthcare organizations. He claimed that at Orpea only 0.5% of clients are required to leave Orpea locations due to the increasing complexity of required care.

In addition, Dagelijks Leven has been the focus of a large article in a local newspaper in the eastern part of the country. Dagelijks Leven is the largest Orpea brand in the Netherlands with almost 100 locations. The article includes an interview with the CEO of Dagelijks Leven (who also has a background from a traditional elderly care company), interviews with clients and fairly detailed financial information about the company. Current revenues are approximately €180 million, and the company made a profit of €13 million in 2022. Revenues are expected to grow to €200 million in 2024. The article also explains why Dagelijks Leven is able to make profits while traditional operators struggle financially. Key differences include:

• Focus only on patients with dementia, enabling more efficient processes and lower overhead
• New build locations with 22 clients and a standard lay-out
• “Smart” use of rules related to night-time care

It is a good sign that the Dutch commercial nursing home providers are becoming more proactive in their overall marketing and PR as this enables both the general public to get a more nuanced picture of the sector and (hopefully) gives the traditional, non-profits organizations ideas about how they can improve their own operations.

2022 difficult year for mental healthcare providers

A recent analysis by Verstegen Accountants of the 2022 annual reports of 166 operators active in the Dutch mental healthcare sector highlights that 2022 was a difficult year. Key highlights from the report include:

• Total profit in the sector was reduced from €213 million in 2021 to €66 million in 2022
• One third of the operators in the sector made a loss in 2022
• The larger operators had the largest financial problems with the average margin going from 4.4% in 2021 to 0.7% in 2022

Key reasons for the financial difficulties are similar to those faced by other sub-sectors of the Dutch healthcare market and include higher personnel-related costs, high level of absence from work due to illness (average of 8.1% across the sector), high use of temporary staff, and high energy costs.

Key organization in the sector recently brought the healthcare insurance companies to court to force them to revise their tariffs in order to align them to higher costs. The mental healthcare providers lost the court case, so it is probably realistic to expect that the sector will continue to face financial challenges in the coming years.

Election-related promises will increase healthcare related costs

As we have written about in an earlier update there are elections later in November for Parliament. Our conclusion was that the elections would not have important consequences for the Dutch healthcare sector. However, Gupta Strategies have analyzed the cost consequences of the healthcare related changes suggested by the different political parties and added up the financial consequences of the suggestions that are likely to have a majority of votes in the new Parliament. As mentioned in our analysis, no political party wants to suggest bad news before the elections so there are no suggestions that will lead to lower costs. The extra costs of the suggested changes with an expected majority add up to more than €11 billion per year. This is an additional 1.1% of GDP above and beyond the expected increase in healthcare costs. Key changes that will have a major impact include:

• Abolishing the current own risk in the mandatory healthcare insurance (€5.3 billion)
• Increased salaries for healthcare staff (€4.1 billion)
• Including dental care in the mandatory healthcare insurance (€1.5 billion)
• Increased nursing home capacity (€1.0 billion)

It is still very uncertain what the final results will be of the upcoming election. It is also very likely that plans will be tempered when they meet the harsh realities of a difficult economic environment and the need for balanced budgets.

Snapshot of a Dutch commercial healthcare company: Keizer Kliniek

Keizer Kliniek is a chain of four specialized clinics that was started in 2005. The chain is specialized in gastrointestinal diseases, uro-gynecological disorders, vascular diseases, wound care, and treatment of hernias. Keizer Kliniek is also a core partner in the national population study for colon cancer. In 2021 the company had revenues of approximately €11 million. The company has more than forty employees.