Update 9 February 2021
Last weekend we actually had a snowstorm and this week really feels like winter (even here in the Netherlands). In this update news about two interesting companies in the e-health space and an initial view on possible cost savings in the Dutch nursing home sector:
- Major Dutch bank invests in e-health company. What are the reasons for an increased focus on the Dutch market?
- Current owner of Bergman Clinics heads up new venture to digitize general practitioners. What are their plans?
- Large benchmarking exercise in nursing home sector by Dutch government. What are initial conclusions?
Rabobank invests in e-health startup
Rabobank is one of the major banks in the Netherlands and it is highly active in the healthcare sector. ZorgDomain is an e-health start-up that positions itself as a facilitator between general practitioners (GPs) and other healthcare providers. The goal of the company is to help the patient and GP make the best choice for next steps in the treatment process and to digitally connect healthcare providers to ensure easy and safe transfer of information.
ZorgDomain is well positioned in the Dutch market with more than 90% of GPs using their services and connections to almost 3.000 healthcare organizations providing secondary care. Company revenues are approximately €20 million, and it has 120 employees. Until recently the main external investor was Levine Leichmann Capital Partners, but they have now sold their shares to Rabobank. The official press release gives the strong impression that the change in external investor also entails an increased focus on the Dutch market.
A possible reason for this is that individual countries are each so specific in laws and regulations, financing forms, and market structure that there is little opportunity for facilitators such as ZorgDomain to transfer skills and experience to other markets. It will be interesting to see whether Rabobank views the company as a stand-alone investment or whether there will be a further integration of activities.
Quin to digitize general practitioners
Bart Malenstein is part-owner and ex-CEO of Bergman Clinics which is now in the process of being sold. Bart Malenstein has moved on and is now busy with his next venture. The goal of Quin is to digitize key parts of the patient journey. Quin has developed a symptom-checker that will advise the patient whether and when he/she should contact a doctor. When contact is required with a GP, the tool will suggest a video-consultation whenever this is appropriate. Independent of the type of consultation the GP will be supported by data and diagnostics tools that will provide input to the decision on whether to send the patient onwards to a specialist and suggest which specialist is the optimal choice. Quin will link to existing IT-systems to allow a total patient profile to be developed.
Due to relatively high resistance from GPs to implement the system, Quin has decided to enter he physical market and has acquired twelve GP-practices in the Netherlands with a total of 50.000 patients. The goal is to acquire additional GP-practices and get to a total population of 200-300.000 patients. Quin is also looking into a franchise model in order to connect more GP-practices.
Initial investments in the company were €10 million and it has recently received another €25 million in funding. The expectation is that another €100 million will be required to fund further developments and international expansion (Germany).
This is certainly an interesting combination of a physical and a digital business model, but probably Quin will at some stage need to make a choice. Is the focus operating GP-practices with an excellent set of digital tools or is the focus providing digital solutions to GP-practices.
Government benchmarking highlights saving potential in Dutch nursing home sector
The NZA (the Dutch Healthcare Authority) has recently published a report highlighting key conclusions from a study they have carried out (Integral Comparison of Nursing Home Care). The ultimate goal of the project is to define new tariffs (level and structure) that guarantee high quality care for the elderly at the lowest possible costs for society. The initial report provides an overview of the process to reach this goal, provides initial benchmarking data and gives an overview of key issues that need to be dealt with to arrive at the new tariffs.
Most of the report is very conceptual, but the benchmarking that has been carried out gives interesting insights into differences in productivity among Dutch nursing home operators. The NZA has collected financial data (revenues and costs) from 286 nursing home operators at the level of six defined product groups. Operators have been allocated to groups based on their product mix. Within each group a limited number of companies have been identified as “peers”. These are operators providing the required quality of services at the lowest costs.
The other operators with the product-mix group have been compared to the relevant “peers”. This benchmarking shows variations in levels of cost ranging up to 25% with an average non-peer operator being 7% less effective than the “peers”. Based on the total of personnel-related and operational costs (real estate and capital costs were not included in the benchmark) of the sector in 2019 this gives a potential cost saving of almost €1 billion.
The overall saving potential should be of interest to the government and policy makers. Given that probably even the “peers” are not top performers in an international comparison, the total potential for savings is probably even higher if an international comparison is made.