Update 8 August 2023

This will be the last update before our summer vacation. First stop will be Copenhagen for the wedding of a friend, and then we go on Poland. Our chosen travel modus takes me back in time. Last time was many, many years ago, but we will be going on Interrail and will be seeing Eastern Europe by train. The last few weeks have been very wet here in the Netherlands, so I hope that the weather improves.

Even though it is summer, there is still news to report from the Dutch healthcare sector. In this update we cover:

• Further reductions in the rights of patients and clients in the Netherlands. What effects can be expected for innovative new providers?
• Buurtzorg to enter commercial market for General Practitioners. Will they be more successful than key competitors?
• Elderly care operators expect to become structurally loss-making. Will the government step in?
• Finally some good news –absence from work due to illness in the healthcare sector declining. Will it continue?

Rights of Dutch patients to be further reduced

In the previous update we wrote about how the rights for elderly clients to get intramural care will be reduced as part of the restructuring of the elderly care sector. Another fundamental right that Dutch patients have is the “free choice of doctor”. This basically means that the healthcare insurance companies cannot refuse to pay for healthcare activities carried out by organizations that they have not contracted. Insurance companies have wished for this right to be restricted for a long time, and it has also been discussed in Parliament a number of times, but without major change being implemented. Currently, if a patient uses a non-contracted provider he/she will usually need to pay the invoice from the provider and will get compensation from the insurance company that is typically set at 70-80% of the average fee for the activity carried out. Most often, a non-contracted provider will set their fees at this lower level so that the patient does not get any further costs.

Currently a new law is in development to “promote” healthcare contracting. The new law will allow healthcare insurance companies to reduce their payments levels for non-contracted care to levels below the costs of the providers. This will force providers to charge some of their costs to the patients, thereby reducing the probability that patients will choose non-contracted providers. The government and the insurance companies believe that there are clear advantages to reducing the use of non-contracted parties. Other parties, however, see clear disadvantages, especially for new innovative entrants to the market who often are not given contracts, or are only given very limited contracts by the insurance companies. The increased market power given to the insurance companies will probably also led to longer waiting lists , especially at the end of the year when providers typically have reached the revenue ceilings in their contracts. This change will clearly strengthen the position of the healthcare insurance companies, but will be bad news for patients and innovative new healthcare providers.

Buurtzorg to enter market for General Practitioners

Buurtzorg is one of the very interesting companies operating in the Dutch healthcare sector. It is technically a non-profit foundation, but is very innovative and functions very much as a for-profit company. Buurtzorg started out by providing (medical) homecare with an operational model based on small local teams working independently. Buurtzorg has steadily been expanding into new business areas such as mental healthcare with Buurtzorg T and elderly care.

Buurtzorg has recently announced that it is investing almost €1 million in Buurtdokters. Buurtdokters is a company that wants to make it easier for doctors to provide primary-care services by carrying out all back-office activities. Hopefully this will increase the number of (young) doctors prepared to start or take over an existing general practice and thereby help reduce the increasing shortage of GP-doctors in the Netherlands.

As we have written about in earlier updates there are a number of commercial companies trying to develop chains of GP-practices. However, in many cases these have not yet been able to show that they can deliver consistent levels of quality service and are facing increasing scrutiny from regulators. Buurtdokters appears to be following a slightly different model, more similar to Dental Service Organizations (DSO) where the GP remains independent but is supported by Buurtdokters in carrying out key activities. The link to Buurtzorg will also give opportunities for synergies in the servicing of patients who also use homecare services. It will be interesting to see if this concept, and the cooperation with Buurtzorg, will be more successful than competitors such as Co-Med.

Elderly care providers expect to become structurally loss-making

Brabant is a region in the southern part of the Netherlands. Recently all the providers in the region providing elderly care have sent a joint “manifest” to the government highlighting the issues they are facing. Key among the issues that are highlighted include:

• A strong growth in the need for their services (the number of clients requiring nursing home care in the region will grow from 76.000 to 165.000 in 2040)
• A reduction in the working population leading to a shortage of 8.000 staff in the regional elderly care sector
• Increasing costs due to inflation and agreed salary increases to staff
• Planned decreases in tariffs for key services

The organizations accept that future clients will need receive less assistance and will need to take more responsibility themselves, and that the organizations will need to work with their staff to implement new technologies, processes, and ways of working. However, current plans for reducing tariffs do not give the providers sufficient time and resources to implement required changes and will lead to all the operators in the region making losses. The pressure on the government is building, and it is probably a matter of time before short-term help is given to the elderly care sector. This will most probably take the form of delaying planned tariff changes.

Absence from work due to illness in the healthcare sector is down

Absence from work due to illness has been a growing problem in the Dutch healthcare sector. Illness-related absence has been higher in the sector than the average for the Netherlands and has also been increasing, reaching a level of almost 10%. This translates into one in ten employees being away from work at any given time and has both operational and financial consequences. Work planning is made more difficult by absent staff and this also leads to higher costs as both the staff who are ill as the replacement need to be paid. The high levels of absence due to illness has been one of the key drivers for the growth in temporary-staffing in the healthcare sector.

There is “good” news. The level of absence due to illness in the healthcare sector has decreased to 7.8% in the first quarter of 2023 and to 7.2% in Q2. The message, however, is mixed, as the reduction has mainly been in short absences (between 1-91 days), while days lost to long absences (more than 91 days) has continued to increase. Hopefully, this trend will continue.