Update 18 May 2021

Update 18 May 2021

Here in the Netherlands spring has finally arrived. Temperatures are still low and there is a steady mix of sunshine and rain, but nature has decided that it is time, and everything is green and beautiful.

 In this update we cover:

  • Another French giant enters the Dutch nursing home market. Are there further acquisition targets?
  • New law will make it easier for municipalities to purchase home and youth care. Good or bad news for the sector?
  • Dentist chains gaining market share. Will the trend continue?
  • In our snapshot we give  an overview of OCON a company running two orthopedic clinics

Domus Vi enters Dutch market

Domus Vi is the third largest nursing home operator in Europe with 35 sites and more than 33.000 beds. It is active in France, Spain, Portugal, Ireland, and Latin America. It offers a broad range of services including nursing homes, residential homes, psychiatric clinics, and home care. The company is privately owned.

At the beginning of this year Domus Vi acquired Martha Flora. Martha Flora currently has ten locations in the Netherlands with a total of 245 apartments. The company claims to have an active pipeline consisting of another four locations and has a goal of growing to a national footprint of 25 locations. The focus of Martha Flora is on patients with dementia.

After Orpea and Korian Domus Vi is the third large international nursing home operator to enter the Dutch market. All three companies have entered the market through the acquisition of an existing chain and Korian and Orpea have been active purchasers of additional capacity though the acquisitions of additional operators / chains. Consequently, there is now a limited number of large(ish) nursing home chains available for new international entrants. Any other international operators interested in the Dutch market will need to seek other entry strategies (buy and build of smaller chains, cooperation with non-profit organizations, greenfield entry, etc.).


New law regulating purchasing of social services by municipalities

In the Netherlands municipalities are responsible for providing social care (cleaning services and other non-medical home care) and youth care. Municipalities provide these services by through contracts with providers. Currently municipalities need to go through a structured tendering process where municipalities must choose the provider(s) with the “economically most advantageous offering”.

At the beginning of this month a new law was sent to parliament wherein the requirement to choose the “economically most advantageous offering” is dropped. This will mean that municipalities no longer must go through an official tender process. Another change resulting from the new law is that municipalities must pay providers of youth care a “realistic price” based on cost calculations (this is already the situation for social services).

The new law will definitely be good news for the municipalities as the less complex purchasing process will reduce their costs. It is probably also good news for large, traditional service providers with existing contracts as they will probably get higher (cost-based) tariffs and will be well positioned for getting new contracts in the new, less transparent processes. The new simpler processes might not be good news for new and innovative providers of social and youth care who will be less able to win contracts.

Dentist chains gaining market share

In a new report ABN AMRO give an overview of the Dutch dentistry market. According to ABN AMRO ten percent of the 4.725 dentist practices in the Netherlands are owned by chains. In revenue terms the market share of chains is probably higher as they tend to be larger. ABN AMRO expects the consolidation in the sector to continue but to be focused on specific geographies. Chains will mainly continue to grow in and around the major cities. The key reason for this is that in these areas it is much easier to find staff as young dentists prefer to stay in the cities where they have studied.

ABN AMRO expects that dentist practices will become larger as chains will choose to provide different specializations under one roof. A major challenge for the sector will be recruiting and keeping dentists. Each year 300 dentists retire and only 210 new dentists finish their studies. The shortfall is currently often filled by foreign dentists but the attractiveness of the Netherlands for these dentists will be reduced through changes in tax laws.


Snapshot of a private Dutch healthcare operator : OCON

OCON (Orthopedie Centrum Oost-Nederland BV) is a clinic specialized in orthopedics and sports medicine. The clinic was established in 2010 and currently has two locations in the eastern part of the Netherlands. Both locations are totally integrated into the hospital locations of the Ziekenhuis Groep Twente (ZGT) and the two organizations work closely together. The operating company OCON is 100% owned by a cooperative of the relevant surgeons and other staff (180 employees total). In 2016 (the last year with a published annual report) OCON had revenues of approximately €35 million and had a pre-tax profit of €1.6 million.