Update 23 January 2024

I hope that you have had a good start to the new year. Welcome back to a (delayed) update on key activities, plans and transactions in the Dutch healthcare sector. In this update we cover:

• New combination to develop one hundred clustered senior living locations. Will they succeed?
• Follow-up on surprising election results. What will be the likely consequences for the Dutch healthcare sector?
• Unclear financing of key aspects of Dutch elderly care. Who will pay?
• In a new snapshot we give an overview of Centrum Oosterwal, a small chain of specialist clinics.

New combination to develop one hundred clustered senior living locations

Assist Zorg is the healthcare division of Vebego, one of the large Dutch cleaning companies. The main activity of Assist is domiciliary home care, but they also provide a range of analytical and advisory services to other healthcare organizations. Estea Zorg is a company focused on healthcare related real estate. Estea has been in news before related to purchase and resale of healthcare related real estate.

The companies have recently launched a new company, Zavier, to develop and run clustered senior living locations. Estea will find and develop physical locations for the new venture, and Assist will have the responsibility for the required healthcare activities. The locations will be small-scale. The first location is planned to open in 2024 and will consist of twenty-eight studio apartments. Clients will need an indication for 24/7 care and will pay rental and service fees to Zavier. Each location will be run by a “healthcare entrepreneur” but it is unclear whether Zavier is a franchise concept.

The overall concept fits well with the growing demand for complex elderly care and the government’s push for extramural solutions where public financing is not used to cover real estate costs. If Zavier reaches its goal of one hundred locations in ten years it will be a major player in the Dutch elderly care sector. However, as the current commercial nursing home care providers active in the Dutch market can confirm, finding one hundred locations and developing / building the required real estate is a challenge in the Dutch market.

Likely consequences of the election results for healthcare

As we wrote about in our last update the Dutch elections in mid-November resulted in a far-right party (PVV) become the largest block in the Parliament and gave many seats to two new parties (BBB and NSC). These three parties have since then been in discussions to form a minority government (with the backing of the previous governing party – VVD). The discussions are going slowly and are expected to take a long time. However, certain aspects related to healthcare are becoming clearer.

Fleur Agema is a long-term member of the PVV and has for many years been their spokesperson for healthcare. In a recent interview she stated that she would very much want to become the Minister of Health in a new government. Her key priorities will be to continue with the IZA program, but lessen its focus on cost reduction, and to reduce bureaucracy in the healthcare sector. She also wants to change the financing of healthcare activities such as emergency care, intensive care, and acute obstetrics from an activity-based system to a fixed fee.

As a minister she would also support moving a major part of elderly care from care financed by the healthcare insurance companies to long-term care by reinstating the financing of less intensive care in the long-term care package. A key point in the election programs of the three large parties currently discussing forming a new government is the abolishment of own risk for patients (currently a minimum of €375/year). Both these decisions would lead to high extra costs. The previous Healthcare Minister (Ernst Kuipers) has warned that abolishing the own risk will lead to €6 billion more healthcare costs per year and that financing this would require increasing the average costs of healthcare insurance by €25 per month (currently approximately €145/month).

Unclear financing of clustered elderly care

In the Dutch market nursing home care can be financed by two main methods. The first (ZIN) is typically used by traditional, non-profit elderly care companies and includes government financing of real estate costs. The second (VPT) is technically provided to clients living “at home”, where the “at home” status is determined by the client having the responsibility for their own accommodations. Almost all nursing home care provided by commercial operators is financed by a combination of VPT (mainly covering healthcare related services) and fees from the client covering rental and service costs.

An organization providing ZIN-financed services will pay for equipment such as patient lifts via the financing from the government. Clients receiving VPT-financed care are technically living “at home”. In a home situation, this type of equipment is normally financed by the municipality (WMO). In a couple of recent cases, the relevant municipality has refused to finance this type of assistance to clients living in a clustered setting where care is combined with the rental of an apartment, claiming that this is nursing home care and therefore not the responsibility of the municipality. In all cases the court has agreed with the municipality.

If the client has to pay for this type of equipment costs can come to €400-800 per month. As all growth in nursing home care in the coming years will come from VPT-financed care the number of clients facing this challenge will grow explosively. Decisions will need to be made by the government on who should pay these costs. The three alternatives are a) the municipalities, b) the client, or c) the organization providing the VPT-financed elderly care services.

Snapshot of a Dutch commercial healthcare company: Centrum Oosterwal

Centrum Oosterwal is a small chain of clinics specializing in dermatology and aesthetics. The company was started in 1989, and currently has three locations and a joint venture with a hospital in Amsterdam. The company is based in Alkmaar and has a close working relationship with the local hospital (the Nordwest Hospital). The company has 120 employees, of which 28 are medical doctors. The company is privately owned and has revenues of approximately €10 million.