Update 24 April 2018
For those of you who were in London at the HBI conference: I hope you had a great time and wish that I could have attended. In this update on private healthcare in the Netherlands we cover:
- Orpea enters Dutch elderly care market through acquisition of Dagelijks Leven, a chain of 29 elderly care locations with 580 beds. Will other international elderly care companies now also enter this market?
- Government clarifies requirements for promised extra financing of nursing homes. Will the requirements stifle innovation in the sector?
- In our snapshot we give an overview of Dagelijks Leven, the elderly care chain acquired by Orpea.
In a separate email I am attaching the presentation I have made for my roundtable discussion on investment opportunities in the Dutch healthcare market at the HBI conference last week in London. Please take a look. If you have any specific questions related to the presentation or this week’s update do not hesitate to get in touch with me directly.
Orpea enters Dutch elderly care market
As reported earlier, Orpea is already present in the Dutch market through its acquisition of WoonZorgNet (a provider of long-term care to people with a broad range of psychiatric issues). While Orpea has been very quiet about their first Dutch acquisition, earlier this week it was publicly announced that they have acquired Dagelijks Leven. See snapshot for more information on this organization.
With this acquisition Orpea gets a large and growing footprint in the Dutch elderly care market. It will be interesting to see how Orpea will further develop its Dutch business. Will this be the start sign for other international elderly care companies to also enter the Dutch market? Who will be the next chain to be acquired?
Government clarifies requirements for extra financing of nursing homes
As announced earlier, the Government has promised to increase the financing of nursing homes by €2 bln over the next few years. The background for the new financing was a grass-root movement demanding higher quality in nursing homes through more employees (two employees per group of 6-8 clients). As mentioned in the update of 19 February, the government did not seem to be moving in the direction of making absolute demands on numbers of employees or qualifications.
In a publication a few days ago (Thuis in het Verpleeghuis – waardigheid en trots op elke locatie) the government clarified its plans around the financing. Key elements are:
- Extra financing will not be provided through a general increase tariffs, but rather based on specific plans presented by individual organizations for individual locations
- 85% of financing must be used for hiring and providing more front-line staff. “Unnecessary overhead” will not be financed
- 15% of the extra financing can be used for “other investments”
- The plans will be followed up and financing that has been used incorrectly must be repaid
This appears to give operators flexibility in whether they want the new financing, but limitations in what they can do with the extra money. Negative comments in the press have focused on the limitations that this new financing sets on using technology to provide better service in nursing homes
Snapshot of a Dutch private sector healthcare operator: Dagelijks Leven
Dagelijks Leven was established in 2014 by three entrepreneurs (including the current CEO – Han Schelleken). The three founders have a background in a traditional healthcare organization and in parallel set up a number of own companies. Due to several cases of giving contracts to their own companies an investigation was started but no wrong-doing was proven.
Dagelijks Leven has grown very quickly since 2014 and how consists of 29 operational locations and another seven locations that will be operational by the end of 2018. Each location has twenty apartments. With 720 beds by the end of the year Dagelijks Leven is most probably the largest commercial provider of elderly care in the Dutch market. The strong growth of Dagelijks Leven was financed by NPM Capital and Amvest (who owns all real estate).
Dagelijks Leven focuses on clients with dementia and claim that their service offering is affordable on a Dutch minimum pension.