Update 30 January 2018

2018 has had a relatively quiet start in the Dutch healthcare sector, therefore this is the first update in the new year. In this update we cover:

• Ongoing discussion related to growing use of non-contracted healthcare services. Will this make it more difficult for innovative new healthcare organizations?
• Private Clinic bankrupt for the second time in three years. Carelessness or structural problems?
• Average stay in Dutch nursing homes is stable. Good news for nursing home operators?
• In our snapshot we give an overview of Martha Flora, an organization focusing on long term care for elderly patients with dementia.

Ongoing discussion concerning growing use of non-contracted healthcare services

Many healthcare services, both in the cure and in the care, are financed by the mandatory Dutch healthcare insurance system. The insurance companies have the responsibility of contracting enough services for their clients. However, Dutch patients have the right to freely choose their healthcare provider (with exceptions depending on the exact insurance contract they have chosen). This means that the insurance companies also must pay for services provided by organizations they do not have a contract with. This happens a lot in psychiatric care and in home-care.

A recent analysis carried out by consultancy Arteria suggests that the non-contracted care is twice as expensive as the contracted care (based on hours per client). This is probably caused by non-contracted providers segmenting and focusing on clients with a larger need for care, but this needs to be analyzed.

As a response, certain insurance companies are making it more difficult to use non-contracted suppliers by forcing clients to pre-pay invoices, etc. This will make it more difficult for innovative start-ups that are not able to get contracts with the major insurance companies. First of all marketing will become more complex, as the process for new clients will become more difficult. Secondly, cash flow might take a hit, as service providers might be forced to wait for payments from their clients until these have been paid by the insurance companies.

Private clinic bankrupt for the second time in three years

Medisch Centrum Breda took over the activities of Medisch Centrum De Baronie when this went bankrupt in 2014. Medisch Centrum Breda had three clinics with thirteen employees and offered a broad range of services within orthopedics, urology, gastroenterology, plastic surgery, etc.

According to the curator the clinic had not been profitable since the restart in 2014 and the shareholders have decided not to finance the losses any further. This highlights that profitably running a clinic is not easy and that offering a very broad range of services does not make it any easier.

Average stay in Dutch nursing homes is stable

Up until a few years ago Dutch nursing-home care consisted of “verzorgingshuizen” for elderly with a relatively light care needs, and “verpleeghuizen” for elderly with severe dementia and/or physical problems. Since the beginning of 2015, long term indications for light care needs are not given anymore and elderly are expected to remain at home for as long as possible. Due to this, “verzorgingshuizen” have disappeared, and the average severity that new nursing home clients have has increased.

Based on this it was expected that the average stay of elderly clients in the nursing homes would be reduced. A recent study carried out by one of the Dutch healthcare insurance companies (CZ) shows that there was a reduction in average stay in the period before 2015 but that the average stay has remained stable at around 1.9 years since then. This is good news for nursing home operators as a longer average stay results in higher occupancy rates.

Snapshot of a Dutch private sector healthcare operator: Martha Flora

Martha Flora was started in 2013 by Marco Ouwehand based on the needs of his mother who suffered from dementia. Martha Flora now has eight locations in the Netherlands, has seven more in development, and is in discussions about opening a location in Germany. The goal of Martha Flora is to roll-out 25 locations in the next 4-5 years.

Martha Flora is totally focused on providing optimal care to clients with different types of dementia and has developed a unique training program for its employees. A key goal is to provide residents with as much freedom as possible and keep close contacts with family.

Martha Flora is part-owned by CZ (one of the Dutch healthcare insurance companies) and has recently sold parts of its real estate to Aedifica.