Update 15 March 2022

Most news here in the Netherlands is focused on the terrible situation happening in Ukraine, so there is not a lot of news from the Dutch healthcare sector.

In this update we cover:

• Contracting between operators and healthcare insurance companies for 2022 still not signed. What are the key reasons?
• In our snapshot we give an overview of Zorggroep De Laren, one of the few remaining independent Dutch commercial nursing home providers.

Complicated contracting process with healthcare insurance companies leads to delays

In the Netherlands we have a compulsory healthcare insurance scheme. All inhabitants must have a basic healthcare insurance with one of the specialized insurance companies (see update 4 May 2021 for an overview of the annual process for buying the healthcare insurance). The basic package is set by the government, covers all cure-related medical activities (ranging from general practitioner to advanced hospital care and mental healthcare but not dentistry for adults) and is the same from all insurance companies. The companies are free to set the price (typically €120/month), but the variation is limited. Insurance companies also offer extra healthcare insurance (voluntary) where the content is decided by the individual company. Typically, these cover dentistry, physiotherapy, and some types of alternative treatments.

The healthcare insurance companies have the responsibility to provide appropriate healthcare services for their clients by contracting with providers. Typically, contracts are for one year and have revenue ceilings. The revenue ceilings sometimes lead to operators refusing new patients from certain insurance companies when the revenue ceiling has been reached.

The annual contracting process is time consuming, complex, and sometimes difficult. Currently there are structural backlogs in the contracting for both the hospital and the mental care sector. In the hospital sector the main issue is related to corona. Dutch healthcare operators were provided a high level of financial support in the worst period of the corona pandemic, but hospitals are now facing extra costs related to carrying out delayed plannable care and want these costs included in the 2022 contracts. The insurance companies, on the other hand, are putting pressure on the hospitals to reduce overall costs to meet long-term agreements with the government.

In the mental healthcare sector, the delays in contracting for 2022 are mainly an issue for the large providers (Parnassia and Pro Persona) that provide a wide range of services. The delay in finalizing the contracts is mainly due to the new model for financing mental healthcare activities that has been implemented as of 1 January 2022.

It is ridiculous that contracts for the current year are still being negotiated, but patients do not notice this as the insurance companies continue to pay operators for activities carried out according to the old contract until new contracts are signed. Happily, there is a movement towards multi-year contract between operators and healthcare insurance companies.

Snapshot of a commercial Dutch healthcare operator: Zorggroep De Laren

In the update of 19 October 2021 I have an overview of the growth and consolidation that is taking place in the Dutch commercial nursing home sector. The analysis highlighted how growth in the sector has mainly come from the large French operators (Korian, Orpea and Domus Vi) and that the remaining Dutch operators have only had minimal growth.

One of the few independent commercial nursing home groups is Zorggroep De Laren. The company was established in 2007 and opened its first location in 2008. Zorggroep De Laren provides hi-end care in comfortable locations. Clients pay approximately €4.000 per month for rent and services. As always, healthcare related costs are paid by the government.

Zorggroep De Laren had a slow growth rate from 2008 to 2018, reaching seven locations with a total of 154 apartments. In the period 2018 to 2021 the company has not grown. The company was owned 100% by Amvest (a Dutch real estate firm with a portfolio of €4.4 billion). Amvest also owned the real estate for six of the seven locations. One of the possible explanations for the slow growth is that De Laren Zorggroep has had a relatively weak financial situation due to Amvest primarily seeing their involvement as a real estate investment and therefore charging high rental fees.

Recently it has been announced that Amvest is taking take a step back. A majority share in the operating company has been purchased in an MBO by the CEO and CFO of the company. Amvest is keeping a minority share in the operating company and will keep the real estate investment. The new owners believe strongly in the advantages of remaining independent and see excellent opportunities to grow the number of locations. Hopefully, they have managed to improve their real estate deal with Amvest.