Update 16 October 2018
Welcome to the latest update on what is happening in the Dutch commercial healthcare market. In this update we cover:
- Real estate associated with European Care Residences sold to Aedifica. Who is the seller?
- MC Groep 2017 annual report shows another loss. Bad news for private hospitals in the Dutch market?
- In our snapshot we give an overview of the Alexander Monro Hospital, which is totally focused on patients with breast cancer.
If you have any specific questions related to this week’s update do not hesitate to get in touch with me directly.
Aedifica acquires three ECR locations
Aedifica recently announced that they have acquired three new sites in the Netherlands for €35 million. The three locations were part of the European Care Residencies (ECR) portfolio before the acquisition of ECR by The Blueprint Group (TBG). Aedifica has agreed to invest in renovations and expansions in the three locations. The location in Leiden now has 79 apartments. This will be increased to 108 apartments after the planned renovations which are to be finished at the end of 2019.
All three locations will provide a mix of assisted living and intensive 24/7 nursing care for the elderly. The name of the sellers was not provided in the information provided by Aedifica. It is likely that these physical properties were kept out of the sale of ECR to TBG for €1 and that the seller is the previous owner of ECR. TBG is still the operator for these units, and it is interesting to see that TBG appears to be continuing the ECR strategy of offering a broad range of services to the elderly instead of focusing on high-care clients who provide more revenues.
MC Groep publishes 2017 annual report
As mentioned in the update of 27 July 2018 the two hospitals (MC Groep and Slotervaart) owned by the DC Groep (Loek Winter) finally published their 2016 annual reports that showed losses and a negative equity for the MC Groep.
The MC Groep has now published its 2017 accounts. As already reported at the presentation of the 2016 annual report it has also made a loss in 2017. The losses have been reduced from €3.7 million in 2016 to €`1.0 million in 2017. As the MC Groep has relatively little influence on its revenues, it has announced a number of actions to reduce costs, including outsourcing activities, bundling activities in one the three locations that the MC Groep has, and improving the cooperation with primary care providers. In addition, the MC Groep is looking into a sale-and-leaseback construction for its site in Emmeloord.
The publication of the 2017 annual report for the Slotervaart hospital is expected at the end of October.
As mentioned in the update of 27 July both hospitals certainly have challenges and need to adapt to a changing market. Due to the inherent power of medical doctors and specialists in the Dutch hospital system it can be very difficult to carry out strategic and systematic change. However, both hospitals play important roles in their regions and will most probably continue to be supported by the healthcare insurance companies.
Snapshot of a Dutch private sector healthcare operator: Alexander Monro Hospital
The Alexander Monro Hospital was established five years ago by Jan van Bodegom as a hospital focusing only on helping patients with breast cancer. All processes were planned around the needs of the patient, resulting in improved and faster diagnostics through a multi-disciplinary approach, improved results and higher patient satisfaction.
Unfortunately, the hospital had a difficult start-up due to high investments, nearby hospitals refusing to cooperate, and no contracts with many of the Dutch healthcare insurance companies. This led to losses totaling €5.9 million in 2013 and 2014 and the hospital being very close to a bankruptcy in 2015. The hospital was saved by Breast Care Nederland (BCN), a company started by a surgeon specialized in breast cancer (Marjolein de Jong) and a lawyer (Mieke van Schuppen) with several other private investors. The original plans of BCN had been to also start a hospital focused on breast cancer but instead it was decided to support Alexander Monro. Jan van Bodegam was forced to leave the company and is currently working on a new project focused on prostate cancer.
The Alexander Monro Hospital is currently well positioned with contracts with all the insurance companies, integrated processes with nearby hospitals, excellent quality and very satisfied patients.