Update 24 October 2023

As I am writing this, the Indian Summer we have had for the last few weeks is definitely over. It is not yet cold, but there is non-stop rain. This is the true Dutch autumn. In this update we cover the following news from the Dutch healthcare sector:

• New international entrant in the Dutch dentistry sector. Will they be successful?
• Different agreements to reduce the use of temporary staff in the healthcare sector. Will they have an effect?
• Moving activities out of the hospital leads to less investments. Is this the model for the future of Dutch hospitals?
• In a new snapshot we give an overview of Arts en Zorg, a successful provider of commercial primary care services.

New international entrant in the Dutch dental care market

Oral Care is a Swedish dental healthcare group. It claims to be the largest dental care provider in Sweden and also has two locations in Norway. Total revenues are approximately €37 million, and it has more than six hundred employees. Since 2022 Oral Care is owned 92% by Axcel, a Swedish private equity company. Oral Care is following a buy-and-build strategy in Scandinavia and has recently entered the Dutch market by purchasing Tandartspraktijk Kemnerland. Kemnerland is a small chain with five locations in the region of Haarlem (west of Amsterdam). The chain has revenues of approximately €7 million, thirty chairs, and sixty employees. Oral Care says that it will follow an “aggressive” acquisition strategy in the Dutch market.

There is certainly room for more consolidation in the Dutch dental care market with only ten percent of the dental locations currently belonging to (larger) chains. As in other countries, there are demographic and staffing developments driving scale advantages in the sector. However, the market for acquiring dental practices is “hot” with a relatively large number of organizations wanting to acquire and a market where the potential sellers are well-aware of the potential value of their locations. As shown by Curaeos, the combination of paying too much for acquisitions and insufficient focus on integration can lead to major financial headaches.

Government to reduce use of temporary staff in healthcare sector

The high costs of freelance staff (ZZPs in Dutch) is often brought forward as one of the key reasons for the weak financial performance of Dutch healthcare companies. In addition, the large number of freelance staff active in the sector leads to cultural issues as they remain “outsiders”, and often leads to a less attractive work environment for the remaining staff. In addition to this there are also concerns about the growing role of freelance staff in the general economy. These concerns are usually related to contractor-constructs being used to avoid taxes and (obligatory) pension payments, low pay, and high job insecurity for temps, etc. Recently, two broad initiatives have been started to reduce the use of temporary staff. One is focused on the general economy, and one is focused on the healthcare sector.

The main change in the suggested new general rules is that a freelance worker cannot be “imbedded” in the organization (i.e. carries out “regular” tasks and is managed by a unit leader). This essentially means that freelance staff are limited to carrying out specific non-standard tasks and cannot carry out temporary work usually carried out by an employee. This also means that freelance workers carrying out a specific project cannot replace somebody in the organization on a temporary activity as an add-on.

In addition to the general changes the Ministry of Health has suggested specific rules for freelancers working in the healthcare sector. These include:

• Participate in a dispute committee
• Develop and implement professional standards
• Register “incidents” related to their work
• Structurally follow trainings and interventions
• Maximize work for a given organization to 28 hours per week and seven months and 70% of total activities
• Structurally work for more than one organization

A strict interpretation of these two changes will make it almost impossible for most of the freelancers currently active in the healthcare sector to continue in their current roles. The goal of the government is to get them to become “normal” employees of the relevant healthcare organizations. The question is, of course, how many will be willing to give up the freedom and flexibility of freelance work. While it is clear that the use of temporary staff has to be controlled, the two suggested changes have been met with criticism and it will be interesting to see how they will be changed to become more realistic and easier to implement.

Activities moved out of hospitals leads to lower investments

One of the key goals of the ongoing programs to change the Dutch healthcare sector (IZA and WOZO) is to digitize and move activities out of hospitals to a home setting. A challenge is that often the business case for a hospital to move activities to a home setting is negative due to existing real estate that does not have an alternative use. A Dutch hospital (Bravis) has recently published a report outlining how much care has been transferred to a home / digital setting. They also explain how this has enabled the hospital to not expand its oncological department and leave the hospital with sufficient space for the activities that are still carried out in-house. Key examples of digitized activities include:

• 29% of all consultation with a patient now take place by telephone or videocall
• Ten thousand patients currently use the hospital’s digital portal to chat with hospital staff
• General practitioners have used the opportunity to have hospital specialists participate in patient meetings more than a thousand times. In 80% of these cases there was no need for a further on-site consult with the specialist
• Five hospital-run outpatient clinics in remote areas of the catchment area are actively used for noncomplex treatments such as blood tests and dialysis treatments
• 550 patients are currently receiving oncological treatments in a home setting and 900 patients are followed up on vital signs at home through the use of a proprietary app

While 2022 was a reasonably positive financial year for Dutch hospitals it is clear that the sector is facing dramatic changes in the coming years and moving activities out of the current physical locations is one of the changes that they will need to make. The fact that Dutch hospitals are actively working on this and having success is a positive sign.

Snapshot of a Dutch commercial healthcare company: Arts en Zorg

The challenges that the Dutch healthcare sector is facing in providing sufficient primary care to a growing and aging population are clear. Several commercial organizations have tried or are trying to establish chains that can provide more efficient primary care through scale effects and use of digital solutions. These companies have typically not been successful. Key examples include Quin and Co-Med.

It is therefore very nice to be able to provide a snapshot of a commercial and innovative company that is successfully providing primary care services. Arts en Zorg (in Dutch -Doctors and Care) is a spin-off of Independer (a site that provides consumers with comparisons of insurances). The company was financed by NPM (Dutch private equity company) but is currently 100% owned by management and a private investor.

Arts en Zorg currently has two main businesses, both of whom are focused om providing primary care, to a total of more than 200.000 patients. It has long term contracts to provide primary care to specific populations such as all asylum seekers in the Netherlands, all Dutch military personnel, and prisoners in certain jails. In addition, it owns a chain of twenty-one primary-care locations across the Netherlands. These locations are supported by a medical contact center that is available to patients 24/7 and an online app (www.gezond.nl). The twenty-one locations are all well run and there are no complaints concerning the availability of GP-services from the relevant populations.