Updates
apr04

Update 4 April 2019

Welcome to the latest update on what is happening in the Dutch commercial healthcare sector. In this update we cover:

  • The continuing saga concerning the bankruptcy of the MC Groep. Will the Slotervaart hospital rise from the dead?
  • FortaGroep acquires Pi-Groep. Another step in the consolidation of the Dutch psychiatric care sector?
  • In our snapshot we give an overview of FortaGroep, the growing provider of psychiatric care

The Slotervaart soap opera continues

In a couple of updates last year (30 October and 20 November) I told the story of the bankruptcy of the MC Groep which owned two commercial hospitals in the Netherlands. One of the hospitals (the Ijsselmeer Hospital) was acquired by a hospital from a neighboring town, while the Slotervaart hospital in Amsterdam was to be closed. Since then, there has been an auction of the inventory of the hospital, and the building is now empty.

In a new wrinkle, a couple of weeks ago one of the larger Dutch real estate investors (Zadelhoff) offered to inject €45 million into the holding company for the hospital. This was very attractive for the receiver as it would enable a 100% repayment to all the debtors. The plan was to upgrade the physical location and provide a broad range of healthcare related services with the participation of the previous owner (Loek Winter).

Unfortunately, the participation of Loek Winter raised a lot of concerns at both the national government and the municipality of Amsterdam. The end-result has been that the municipality has used its right to expropriate the grounds and building. The municipality will need to pay compensation for this move and court cases are expected to determine the level of this compensation.

I will keep you updated………..

Consolidation of psychiatric care continues with FortaGroep acquiring Pi-Groep

FortaGroep is a commercial provider of outpatient psychiatric care (see Snapshot for more information). FortaGroep is based in Rotterdam and is now expanding its geographical footprint through the acquisition of the Pi-Groep. The Pi-Groep is based in the northern part of the Netherlands and provided a wide range (both inpatient and outpatient) of psychiatric care related services. Pi-Groep has 150 employees and serves approximately 800 patients. The company has been loss-making since 2016, and the alternative to the acquisition by FortaGroep was a bankruptcy. Part of the deal related to the acquisition was key creditors (including local government) taking large write-downs on debts owned to them.

With the acquisition FortaGroep will grow substantially, expand its geographical footprint, move into the provision of inpatient services that are financed by municipalities and the central government, and carry out a substantial turn-around. This is quite a challenge but fits the ongoing trend towards larger and better-managed operators in the Dutch (psychiatric) healthcare sector.

 

Snapshot of a Dutch private healthcare operator: FortaGroep

FortaGroep was established in 2006 and is currently owned and managed by Johan van Luik. Before the acquisition of Pi-Groep the company had 16 locations and 125 employees. The company has made profits in the range of €0.4 - €0.5 million per year for the last three years. All the current services offered by FortaGroep are covered by Dutch healthcare insurance.

The acquisition of the Pi-Groep will entail a doubling in number of employees, the management of a new set of services (inpatient care) and understanding a new set of payment streams. Hopefully, the management will be up to these challenges.