Update 7 February 2023
Welcome back to another update on the Dutch healthcare sector. In this update we cover:
- Tariffs for mental healthcare services to be increased in 2026. Is this soon enough?
- Major disabled care provider in financial problems (still). Are the issues temporary or are they structural?
- Government organizations to investigate threats and benefits of commercial providers of primary care. What will happen to innovation in the sector?
- Overview of promising Dutch healthcare start-ups : Thirona, a developer of AI-assisted pulmonary care
Tariffs for mental healthcare to be structurally increased in 2026
In the update of 29 November 2021 we wrote about how the new payment model for mental healthcare that was implemented on January 1 2022 has resulted in a wide range of problems for operators. Key problems include delays in invoicing, loss of revenues, and new tariffs that are too low (and therefore loss-making).
The NZa (the Dutch Healthcare Authority) has the responsibility for setting tariffs and have recently announced that they will carry out an analysis of the typical costs related to provided the mental healthcare services covered by the new financing system. Based on this it will develop new tariffs that will give (efficient) operators a positive margin. The cost analysis will take place in 2024 and the new official tariffs will be in place in 2026. However, the NZa will also consider an intermediate tariff adjustment in 2024. This still means that mental healthcare providers will need to bridge 2023 and the ongoing challenges related to inflation, energy costs and increased personnel costs with the existing tariffs. We should not expect good financial results for the sector in 2023.
Major disabled care provider in financial problems
Pluryn is one of the largest incumbent providers of disabled and youth care in the Netherlands. In 2019, Pluryn was in serious financial problems after having made a loss of €15.6 million in the previous year. The large negative result was due to a combination of lost revenues due to “over-production” (delivering more services than contracted), loss-making tariffs after responsibility for youth care was moved from the central government to municipalities, and high costs. A restructuring program as started that has resulted in lower losses. In 2021 Pluryn posted a profit, but this was due to the one-off benefit of property sales.
In 2022 Pluryn (as most healthcare providers) has faced financial challenges due to high energy tariffs and increased costs for temporary staff. In addition, Pluryn has faced specific issues related to many of its services being moved from a intramural setting to a ambulatory setting. Therefore, the fill-rate of many of Pluryn’s locations has decreased and it is becoming more difficult to cover the fixed costs of the physical locations owned by Pluryn. To solve these issues Pluryn is in discussions with the regional purchasers of youth care services (typically groups of municipalities) to increase tariffs. Not all the regional purchasers are willing to do this, and Pluryn is also looking at closing certain locations.
Pluryn is a “dinosaur”, and its structural problems are the result of large mergers / acquisitions in the period 2015-2017 with insufficient attention to post-merger activities / administrative processes. The company will continue to have problems adapting to the changing healthcare environment. It is, however, interesting to see that the company is proactively negotiating tariffs with the financiers with an implicit threat to stop delivering services if these do not provide a positive margin.
More oversight for commercial providers of primary care
In the update of 10 January 2023 we discuss quality issues related to primary care services provided by Co-Med. The NZa (Dutch Healthcare Authorities) and the IGJ (the Health and Youth Care Inspectorate) have announced a joint study of the commercial chains providing (innovative) GP-services. The NZa and the IGJ recognize that innovative service propositions are crucial for meeting the growing need for primary care in an environment of staff shortages and a need for lower healthcare costs. They also recognize that corona has shown that good primary care can be provided by using digital tools (video conferencing etc.).
However, the IGJ and NZa also believe that the new methods for providing primary care also result in new risks for quality of care, patient safety, accessibility to care, and costs. The goal of the study will be to analyze these potential (negative) effects and suggest way of mitigating the risks. It will be interesting to see how the NZa and IGJ will balance innovation and risks.
Snapshot of promising Dutch healthcare start-ups: Thirona
Thirona was established in 2014 and specializes in the field of AI-assisted medical image analysis. The main focus of the company is pulmonary care with the product LungQ. This product is used in the development of new drugs, by Med-Tech companies and in clinical settings.
The company is a spin-off from the Radboud University Medical Center in Nijmegen and currently employs approximately fifty staff. The company is financed by Startgreen Capital, one of the largest impact-fund managers in the Netherlands.