Updates
mrt03

Update 3 March 2020

Yesterday in the morning we actually had some snow, but it disappeared quite quickly. Was this the winter of 19/20? In this update there is news on a broad range of items:

  • Little news about the sales process for Bergman Clinics in the last few weeks, but their Dutch business is doing well. Good news for the sales process?
  • Background for stopped hospital merger explained. What is the future hold for the Langeland hospital?
  • The Dutch Healthcare Authority provides overview of recent merger and acquisitions in the Dutch healthcare sector. Will their wish for an expanded role have consequences?

Bergman Clinics get contract for three years with major insurance company

In the previous update we provided an overview of the sales process related to Bergman Clinics. Since then there has been little news and it appears that everybody is waiting for the official process to start in April.

Recently Bergman Clinics and Zilveren Kruis (one of the largest health insurance companies) announced that they have closed a contract for three years. The contract covers all the Bergman clinics in the Netherlands. This news certainly underlines the strong position that Bergman has in the Dutch market.

 

Hospital merger stopped due to disappointing results

In the update of 21 January we told you that a merger between three hospitals in the western part of the Netherlands was being stopped and that this could mean the closure of the hospital in Zoetermeer. In a recent interview the CEO of the Reinier Haga Group (Martijn van Rijn, ex-Minister of Health) explained the key reasons for stopping the merger:

  • He believes that it is becoming more important to improve cooperation in your own region rather than trying to get economies of scale from geographic expansion. This is the same reason as was given for stopping the merger of two hospitals in the southern part of the country a few weeks back (see update of 4 February)
  • Three years of intense discussions have provided too few concrete joint improvements

In spite of Menzis (one of the large insurance companies) claiming that they would not support the Langeland Hospital, Martijn van Rijn claims that the major insurance companies are actively helping to keep the Langeland hospital afloat by increasing tariffs and closing multi-year contracts. Long-term contracts will be crucial as the Langeland hospital needs major investments to upgrade its main location.

It will be interesting to see how this plays out. Will this opportunity be used to turn Langeland into a Hospital 2.0 with a major reduction in the scope of activities carried out? Will it be managed in such a manner that there is no political “noise” similar to what we had with the public meltdown of the hospitals belonging to the MC Group?

The Dutch Healthcare Authority wants to expand its remit as related to mergers & acquisitions

The Dutch Healthcare Authority (Nederlandse Zorg Authoriteit – NZA) is an autonomous administrative authority falling under the Ministry of Health. The overall responsibility of the NZA is to ensure that the healthcare sector meets the interests of society / patients / clients. The NZA does this by deciding the coverage of the basic obligatory healthcare insurance, deciding maximum tariffs for a number of services, and monitoring that the insurance companies and healthcare providers comply with relevant regulations. The NZA also has to give permission for mergers and acquisitions in the healthcare sector if one of the parties involved has more than 50 employees.

In a recent report they have given an overview of M&A activities in the period January 2018 to July 2019 and have also given their view on how their responsibilities regarding M&A activities in the healthcare sector should be increased. Key data on mergers and acquisitions in the 18-month period are:

  • A total of 285 “concentrations” took place
  • No information is given on the size of the deals, but most are fairly small as only 34 needed to be analyzed by the Authority for Consumer and Markets (the overall watchdog for anti-competitive activities)
  • The highest number of mergers and acquisitions was in the dentistry sector (114). The vast majority of these were private equity owned chains buying smaller dentists
  • The second most active sector was long-term care with 51 “concentrations”, with only twelve involving private equity (directly or indirectly)

The NZA states that it is worried about the growing influence of private equity and foreign-owned parties in the healthcare sector and believe that this can have negative effects on quality and costs. Currently the remit of the NZA is limited to controlling whether the process related to the merger / acquisition has been carried out correctly and it cannot stop a merger if it believes that it will have a negative effect on the quality and costs of healthcare. In 2020 the NZA wants to focus on these issues. However, it is unclear whether they actually have a mandate to stop a deal on this type of criteria.