Update 1 April 2020
Since my last update the world has more or less stopped and there is no news to report from the Netherlands that is not Corona-related:
- Bergman Clinics have closed all non-critical activities. What will happen to the sales process?
- The Government and banks will provide financial support to the Dutch healthcare sector. How will organizations cope?
- Report highlights secondary effects of Corona crisis. What will be the effects on healthcare organizations and patients?
Bergman Clinics stops non-essential activities
Bergman Clinics have now cancelled all activities in its clinics except for emergencies and urgent follow-up to previous work. The clinics have also provided regular hospitals with Corona patients all available material that can be of help (protection gear, respirators, etc.).
Closing down the clinics will certainly put a big dent in short-term profitability and cash flow, but most probably Bergman will be covered by support to be provided by the Dutch government (see next story). The Corona crisis will certainly make the future more uncertain for everybody and make it more difficult to put a valuation on Bergman. Nothing has been announced but it would be surprising if the sales process has not been put on hold. I will keep you updated.
Dutch healthcare sector will be supported by government and banks
The Dutch Ministry of Health has announced that it will put in place a plan to save healthcare organizations from financial problems caused by the Corona crisis. The exact details have not yet been announced but the key idea will be to provide one-off and/or continuous payments to operators facing financial problems. The calculation period for payments will start on 1 March and will run until at least 1 June. The initial focus was organizations having contracts with the health insurance companies (such as Bergman Clinics), but this was later expanded to also cover organizations working without contracts. Organizations providing home and youth care will be supported by municipalities.
In a separate statement the big Dutch banks have announced that they will also help healthcare operators with financial problems by offering the possibility of delaying repayments on loans and expanding loan facilities.
The Corona-crisis will have major consequences for the Dutch healthcare sector (see next story) but is appears that the longer-term financial consequences will not be large. It will be interesting to see what the consequences will be for key processes and organizational structures.
Secondary effects of Corona crisis will be large
The focus of most discussions here in the Netherlands the last few weeks has been the number of Corona infections and how to quickly create sufficient intensive care capacity. However, the crisis also has other effects. Gupta Strategists have recently published a report (in Dutch) looking at the effects of the Corona crisis on the “standard” (i.e. not Corona-related) Dutch healthcare sector. Their conclusions:
- Overall reduction of 40% in activities in the sector
- 3.5 million patient contacts per week are not taking place
- 90.000 healthcare professionals are not working
- €400 million in lost revenues per week
Their analysis also looks at specific sectors and the effects range from 95% reduction of activities in sectors such as dentistry and day care, 40% in hospitals and 15% in medicalized homecare.
The ongoing reduction of activities will lead to a backlog of €3 billion of activities that have not been carried out (assuming that life goes back to normal in June). Some of these activities can and must be carried out at a later stage (delayed operations, etc.), but at least €2 billion of the backlog represents activities that are “lost”. Examples of such activities include day-care, periodic controls by dentists, etc. As mentioned in the previous story much of the financial pain will be covered, but there are also issues related to healthcare effects on patients and clients (worsened health due to delayed operations, effects of patients not receiving counselling, etc.).
It will be interesting to see how the different sectors change working practices to reduce the buildup of the backlog (by providing services remotely instead of face-to-face) and catch up on backlogged activities once the situation is normalized again.