Update 12 May 2020
Here in the Netherlands Corona-restrictions are now starting to be eased. Among other things we are now allowed to fix our corona-hair and from 1 June cafes will be allowed to serve customers on terraces (let us hope that the nice weather stays). Another sign of the changing times is that it is getting easier to find news that is not corona-related:
- Yet another hospital merger is called off. Will this trend towards smaller, regionally based organizations continue?
- A new long-term contract between healthcare insurer and mental healthcare provider. What will be the next step in changing the financing of psychiatric care in the Netherlands?
- Dutch healthcare organizations will be compensated for corona-related losses but are still deeply worried about their financial situation. What are consequences for investments?
Another hospital merger bites the dust
In recent months, a surprising number of planned mergers between hospitals in the Netherlands have been stopped. In January it was announced that the merger between three hospitals in the western part of the country was being stopped, and in February a merger of two hospitals in the south was stopped. This time it is the turn of a planned merger between Streekziekenhuis Koningin Beatrix (SKB) and the Slingeland Hospital (both general hospitals in smaller towns in the relatively sparsely populated eastern part of the country).
As in the earlier cases the reasons for stopping the merger process is a combination of politics (a merger would lead to each hospital closing certain departments as activities were bundled) and a growing belief that it is better to work closely with other local / regional healthcare providers than trying to get economies of scale through a merger with another hospital.
It will be interesting to see how this trend continues. If it continues then the number of hospitals in the Netherlands will not decrease through mergers but rather through processes where individual hospitals evolve into the next stage of optimal healthcare provision in cooperation with other organizations.
Long-term contract signed between insurance company and psychiatric care provider
In the Netherlands there has been a trend of moving away from one-year contracts between insurance companies and healthcare providers. Recent examples include multi-year contracts for hospitals (usually linked to goals of reducing overall revenues / costs by moving activities away from hospitals, recent multi-year contracts for Buurtzorg, and multi-year contracts for Bergman Clinics.
Recently CZ, one of the largest health insurance companies, announced their intention to sign a multi-year contract with Mentaal Beter. Mentaal Beter is a commercial medium-sized operator providing ambulatory psychiatric healthcare to patients with less complex issues throughout the country. The expected duration of the new contract is five years and a key focus will be to provide as much care as possibly digitally and to jointly work on projects to reduce waiting lists, measurably improve clinical results and reduce costs.
Financing of mental healthcare is in a period of transition in the Netherlands. According to plans announced earlier the financing of long-term mental healthcare will move away from municipalities and back to the central government in 2021. As announced last year financing of cure-related psychiatric activities will be moved away from the system used in hospitals to a system based on the specific activities carried out for individual patients. Back in 2018, another large insurance company (Menzis) announced that it had agreed with 18 operators to make part of the payments of activities related to the treatment of non-chronic depression dependent on quality criteria.
These are interesting times in the mental health sector through the combination of new financing methods and the Corona-inspired move towards digital solutions. We will keep you updated.
High levels of compensation but operators still worried about financial effects of Corona
In the update of 1 April we covered the plans announced by the government and banks to help healthcare organizations deal with financial problems related to the corona-crisis. Recently the Dutch insurance companies have announced their plans to support healthcare organizations that have lost revenues due to corona. The general plans cover all providers with revenues up to €10 million. Larger organizations will get tailor-made solutions.
The so-called continuation payments are based on sector-specific calculations of the fixed costs of typical operators in each sector. For example, physiotherapists and dentists will be paid 80% of their overall costs, and clinics (such as Bergman) will get paid 75% of their overall costs. These payments do not haver to be repaid, and when providers open again, they will be paid 100% of the relevant tariffs for ongoing activities. Extra revenues that are assumed to be due to “catching up” of activities not carried out during the lockdown will be paid at a rate that “mirrors” the continuation payments made during the lockdown. If an operator was paid 85% of costs during the lockdown, he will be paid 45% of the normal tariff for the extra activities.
The process suggested by the insurance companies appears to be quite fair, and should limit the direct financial consequences of the corona crisis for healthcare operators. However, it appears that the organizations themselves do not see it this way and they remain quite worried about their financial future. In a follow-up survey to one carried out one month ago, more than 50% of organizations expect a large decrease in revenues and financial results in the coming months.
Suppliers to the healthcare sector, such as IT companies, are noticing the follow-up effects of these worries as organizations are putting ongoing projects on hold or are not starting new projects (even those with ironclad business cases such as IT-solutions enabling digital healthcare). Hopefully, the worries of the operators are misplaced, and investments will be started up again.