Update 5 September 2018

All the schools have started up again her in the Netherlands and life (and traffic jams) are starting to go back to normal. In this latest update on private healthcare in the Netherlands we cover:

• Increased revenues and improved profitability for the ten largest Dutch mental healthcare providers. Is the mental healthcare sector becoming attractive for international investors?
• Independent clinics increasing market share in hospital market. When will the first acquisitions by international groups take place?
• In our snapshot we give an overview of Vitadent, a provider of dental care services for the elderly.

Increased revenues and improved profits for large mental healthcare providers

In our update of 14 August 2017, we highlighted the outcomes of a study by Verstegen Accountants that showed that the profitability of the Dutch mental healthcare sector had halved from 2015 to 2016. Adstrat Consulting has recently analyzed the 2017 annual reports of the ten largest Dutch mental healthcare groups. The report shows that these large operators have done well in 2017 with a revenue growth of 3.2% and a 37% growth in net profits (from 1.8% of revenues to 2.4% of revenues).

The high growth in profitability is due to cost management efforts, as the number of employees (FTEs) has been reduced by almost 1% across the ten organizations. Revenues per FTE has increased to €94.100 while costs per FTE has increased to €71.300. This is probably due to a move toward more complex care requiring higher skilled personnel.

It will be interesting to see the development in the rest of the sector in the soon to be released analysis by Verstegen on the whole sector. In 2016 the smaller and more focused mental health organizations were more profitable than the larger organizations. Is this the case in 2107 as well? Orpea has already entered this sector with its acquisition of WoonZorgNet. Will this make other potential acquisition targets in the sector more attractive?

Independent clinics increasing market share in the Dutch hospital market

In 2014 the turnover of independent clinics was 3.4% of the total hospital market. In 2016 this has increased to 3.8% of the total market. However, there are large differences between the individual sectors of the market. In two sectors (ophthalmology and dermatology) the market share of the independent clinics focusing on planned care is approaching 20%. In other sectors such as anesthesiology, revalidation care, and plastic surgery the market share of the independent clinics is around 10%.

In another sign of the growth of independent clinics in the Dutch market, Bergman Clinics recently opened a new location in Hilversum. The location consists of three clinics in one (ophthalmology, cosmetic surgery and specialized healthcare for women). In total the location has six floors and 100 employees.

While changes in the rules for financing specialized medical care has made growth for independent clinics more difficult, it still appears that the market is developing in a healthy fashion. When will the first acquisitions by international companies take place?

Snapshot of a Dutch private sector healthcare operator Vitadent

Vitadent is private company that was started by Rudolf Hoogendoorn and Wim van der Torre. Rudolf Hoogendoorn has a background in elderly care and a management function in the dentistry sector. Wim van der Torre is a dentist who specialized in dental care for the elderly. Seeing the specific dental-care needs for elderly clients they started Vitadent.

Vitadent offers ambulatory dentistry to elderly patients living in nursing homes. The care provided is typically paid for through the Dutch long-term care financing system. Vitadent currently is focused in the area around Rotterdam, has contracts with approximately 60 elderly care organizations and has 65 employees. Vitadent wants to grow and expand to the rest of the Dutch market. The company is in the process of professionalizing through the hiring of a COO and carrying out activities to structure the processes, improve quality, etc.