Update 6 December 2018

Welcome to the latest update on what is happening in the Dutch commercial healthcare market. Yesterday was Sinterklaas so all the Dutch children have received presents and are very happy. In this update we cover:

  • American real estate management company to acquire real estate of De Leyhoeve. Is this good news for the sector?
  • Large waiting lists for specialized mental care. Is this area an opportunity for international players?
  • In our snapshot we give an overview of De Leyhoeve, a provider of a broad range of assisted living and nursing home care.

Real estate of De Leyhoeve acquired by Heitman Capital Management

De Leyhoeve is a provider of upmarket rental apartments for the elderly with two large locations in the Netherlands and extensive expansion plans (see snapshot for more information). Heitman is an American real estate investor based in Chicago but active all over the world. Heitman has more than $43 billion in real estate investments. Heitman has been active in the Dutch market with a portfolio of residential apartments in a joint venture with Orange Capital Partners.

De Leyhoeve and heitman recently announced that Heitman will acquire the Leyhoeve location in Groningen, and that discussions are continuing regarding the Tilburg location. This is the first investment by Heitman in the Dutch healthcare sector. If it decides to make more investments it provides the sector with a new and very large player that can provide considerable capital. Good news to operators, but maybe less good news to other real estate investors?

Long waiting lists for specialized mental health care

The Dutch mental healthcare market is divided between long-term care (financed by the central government and municipalities) and cure-related activities (financed by the mandatory healthcare insurance scheme). The total spend on cure-related mental healthcare in the Netherlands is more than €2.6 billion. The cure-related activities are again divided into basic mental care (covering issues that are relatively simple and can be “cured” in 8-10 sessions) and specialized mental care (covering psychiatric issues that are severe and/or complex and require treatment lasting between 6-12 months).

Specialized mental healthcare is provided by a mixture of large non-profit organizations, smaller commercial organizations, and single practitioners. The large non-profit organizations are typically members of a national lobbying organization GGZ Nederland. A recent report from GGZ Nederland highlights that there are 35.000 people on waiting lists for specialized mental health care among their members (who have 80% of the market). Key drivers for the waiting lists are continuing strong demand, the time spent on administrative tasks (33% of time spent) and shortages of key personnel. In addition, there are challenges related to outflow of patients to long-term care provided by the municipalities.

While some of the challenges faced by the sector are structural, there is clearly a need for more capacity and an opportunity to modernize treatment methodologies and decrease time spent on administration. Orpea has already entered the market to provide long-term mental care. Who will be the first international entrant in the cure-focused mental healthcare sector?

Snapshot of a Dutch private healthcare operator: De Leyhoeve

De Leyhoeve was started by Hendrik Roozen when his building company had empty order books and he saw the need for a new type of living accommodations for the elderly. The first Leyhoeve was opened in Tilburg (a medium-sized town in the southern part of the Netherlands) in 2016 and provided a unique mix of apartments for the elderly (55 plus) with a hotel-ambiance (swimming pool, beauty salon, restaurant, etc.) A second location has been opened in Groningen (in the north of the Netherlands in 2018, and there are advanced plans for another 2-3 locations. The goal is to have ten locations throughout the Netherlands.

Each location is very big typically consisting of 200 apartments and 60-70 nursing homes beds. Apartments can be rented without any obligation to use healthcare-related services, but these are available if required. In the normal apartments clients pay rental costs and low (€80-100 per month) service fee for the general facilities. Usage of specific facilities such as the restaurant are paid directly. All-in rental and service costs for the nursing home facilities are €1.550/month. In addition, the organization receives healthcare-related fees from the healthcare insurance companies.

The company claims that there is a long waiting list for the location in Tilburg and that the location in Groningen is almost full. This shows that there is clearly a demand for comfortable living focusing on the requirements of an elderly population with light care available on demand and the opportunity to receive nursing home care without moving (which can be very attractive for couples where one partner requires more care).