Update 10 December 2019
Welcome back to another update on what is going on in the Dutch healthcare sector. In this update we cover:
- Growing waiting lists for nursing homes. Who will build and operate the required new capacity?
- Continuing bad press for Ontzorgd Wonen. Bad luck or structural problems?
- Court cases and closures. Are traditional operators becoming more business-oriented?
- In our snapshot we give an overview of Ontzorgd Wonen a large supplier of nursing homes that we have written about extensively in the past
Waiting lists for places in nursing homes are growing
As highlighted in our update of 1 July 2019 the number of people on a waiting lists for a place in a nursing home grew from 9.000 to 15.000 in the previous twelve months. A recent report from Zorginstituut Nederland shows that the average net growth in the waiting list has now increased from an additional 270 elderly clients per month to more than 500 additional clients per month. The Ministry of Health finally appears to be taking the issue seriously and has asked a task force to translate the growing demand into a regional overview of required investments in new locations. It will be interesting to see if the task force will provide any ideas on how the new locations are to be financed. I will keep you updated.
Continuing bad press for Ontzorgd Wonen
We have written about Ontzorgd Wonen (or The Blueprint Group as they were called earlier) a number of times, most recently this summer when they received an investment of €8 million in order to finance an acute liquidity crisis. In the same update we also reported that they have rebranded as the Ontzorgd Wonen Groep (Unburdened Living Group)
Last week a report on the group was the main item in a television program related to consumer protection (Radar) as elderly clients at one of its sites had been told that they had to find new accommodations. A deeper dive into the story reveals that the closure of the location is due to non-payment of rental fees by Ontzorgd Wonen to the new owner of the location (who has purchased the location from one of the investors in July).
Ontzorgd Wonen has grown extremely quickly (see snapshot) through acquisitions but is has now managed to make enemies within its employees (through late payments of salaries), key real estate partners, key opinion leaders, and key politicians. How long will they be able to keep the ball rolling and who would be willing to pick up the pieces if they have to stop operations?
Traditional Dutch healthcare operators show teeth when tariffs are too low
The Dutch healthcare market is a hybrid system where all services are provided by private organizations (mostly non-profit foundations). These organizations “sell” their services through contracts with either health insurance companies (for cure-related activities), municipalities for social-care related activities, or “care-offices” (allied to health insurance companies) who have the responsibility for ensuring that there is sufficient supply of different types of long-term care.
Typically, healthcare organizations have little choice but to accept the suggested fees and other limitations imposed by the buying organizations. However, in the last few weeks we have seen interesting examples of (traditional) operators either taking the government to court to get higher fees (two operators providing forensic care) or operators stopping the provision of certain types of care and closing locations (Pluryn closing down one of its loss-making subsidiaries providing youth care).
Are these desperate actions from operators unable to keep subsidizing loss-making activities or are traditional operators starting to understand that being in a market requires making sometime difficult (and certainly unpopular) choices related to their service portfolio?
Snapshot of a Dutch healthcare operator: Ontzorgd Wonen Groep
What is now the Ontzorgd Wonen Groep was started in 2014 by three entrepreneurs (Joris van Wijk, Timothy Kapiteijn and Mattijs Wolters). Since this summer the company is also part-owned by a Dutch investment company (Value8). The three founding partners started out with the development of SAOW which at the end of 2017 consisted of four locations with a total of 197 apartments. SAOW focused on the provision of real estate while all healthcare related activities were carried out by another subsidiary (Ontzorgd Wonen). In 2018 and 2019 the company carried out several acquisitions. The biggest of these was ECR which it saved from going bankrupt. At the time ECR consisted of nine locations with 458 apartments and 100 short-stay studios. ECR was in bad shape and a few international operators had looked at it but declined.
Another fairly large acquisition was 50% of Zorghuis Nederland in five locations in the southern part of the Netherlands. Rumors on the street say that the founder of Zorghuis Nederland and owner of the other 50% of the shares has sold these to Ontzorgd Wonen after disagreements regarding quality of healthcare being provided and the further development of the group.
Ontzorgd Wonen has also acquired several other smaller chains and now consists of 16 nursing homes and three locations offering rehabilitation-care. Until recently the locations kept their original names, but it now appears that branding is being consolidated into one name “Ontzorgd Wonen”.
No annual reports have been deposited for 2017 or 2018 so no details are available on the company’s financial status. However, recent events do not inspire confidence.