Update 20 February 2024

It has been quiet in the Dutch healthcare sector the last few weeks, so this update has a focus on changes in the financing of some key services:

• New payment structures for geriatric rehab and short-term stay for the elderly. Will they make these services more attractive for operators
• Disabled care sector wins court case against healthcare insurance companies. Will this help the sector?

New payment structures for geriatric rehab and short-term stay for the elderly

The Dutch market for geriatric rehab and short-term stay for the elderly is approximately €1.3 billion. The market has grown in the last few years and can be expected to continue to grow at least in line with the number of elderly in the Netherlands. Geriatric rehab is a specialized form of rehab for elderly clients that are vulnerable and have difficulties dealing with physical or mental burdens. Geriatric rehab is typically complex because the clients have multi-morbidity that makes it difficult to assess the cause and effect of the issues that the client is facing. In addition, the elderly client typically has reduced learnability and trainability requiring use of specific approaches and more time than required for younger rehab clients. Short-term stay is a service that provides the opportunity for the (elderly) patient to stay in a care setting for a limited time when the patient is not safe in a home setting and specific care (wound care, ventilation, etc.) is required.

Both types of services are primarily financed by the Dutch healthcare insurance system. Both services are currently financed by all-in tariff that include the cost of treatment and costs related to the stay at the location where care is being provided.. Geriatrics rehab is financed through 36 individual services that vary by different combinations of length of stay and number of treatment hours. Short-term stay is financed by three different day-tariffs depending on the complexity of the care provided and one tariff for short-term stay related to palliative care.

Based on complaints from providers that the tariffs have been too low, the Dutch Healthcare Authorities (NZA – see here for an overview of its responsibilities) has looked at changing the payment structures for these services. The main conclusion of the NZA is to move to a modular payment structure where treatments are paid by an hourly tariff (thus separate from the costs of the stay at the location where the care is being provided). The NZA suggests that the new tariff structure should be introduced experimentally for short-term stay from 1 January 2025, and for both services in 2030.

The attractiveness of the new payment structure for providers will primarily depend on the tariff levels. All-in tariffs typically give providers more flexibility in how the services are provided (how many hours of treatment, who provides the treatment, etc.) and the new system will reduce this flexibility by increasing the transparency of the treatments provided (this is seen as a key advantage by the NZA). It will be interesting to see the results of the initial pilot.

Disabled care sector wins court case against healthcare insurance companies

The tariffs paid to Dutch healthcare providers are set in a two-step process. In the first step maximum tariffs for pre-defined services are set by the Dutch Healthcare Authorities (NZA). These maximum tariffs are based on calculations of the average cost of providing the individual service. The average cost is based on data from operators providing the individual services. These cost calculations are time-consuming and are therefore not conducted every year. Maximum tariffs for other years are based on the tariffs for the previous year adjusted for relevant cost increases.

In the second step of the process the healthcare insurance companies decide which percentage of the maximum tariffs will be paid to the operators. The maximum tariff is never paid, but the percentage paid can vary between operators based on quality and commitment to long-term targets. A few months back both elderly care and disabled care providers initiated a court case to force the insurance companies to increase the percentage paid as the providers insisted that the resulting tariffs were too low and resulted in losses. Unfortunately, both court cases were lost.

Both sets of providers have appealed the court’s decision, and the second court case for the disabled care sector concluded with a victory for the disabled care sector. The judge has decided that the insurance companies must recalculate their 2024 tariffs. The new tariffs must ensure that that a minimum operators providing 75% of the services in the sector make profits or at least have a break-even result. In addition, the calculation must include financing costs. The judge also concluded that the insurance companies need to be more transparent about their calculations and that the calculation system and process is known in advance, transparent and auditable.

This is a big victory for the disabled care sector, and it will have a significant impact on the appeal related to the elderly care sector. The outcome will be higher tariffs for 2024 and the following years which is good news for healthcare operators struggling with the effects of higher salaries, increased energy costs, higher interest costs, etc.