Dutch healthcare sector in financial problems; Providers in trouble doubled in a year

The average return of healthcare providers fell sharply in 2022 compared to a year earlier, from 1.9 percent to 1.1 percent and from 1,494 to 872 million euros. Returns may even come out at less than 1 percent once all data has been finalized. The number of providers in the red has more than doubled at the same time, to 282, and that number could also increase. These are some of the conclusions of consultancy and accountancy firm EY in its annual Barometer of Dutch Healthcare.

Creditworthiness is at risk, according to EY, although it doesn’t fear bankruptcies yet. The barometer is an analysis of the results of 785 healthcare providers working in the Netherlands, together accounting for almost 79.5 billion euros in revenue. There are significant differences between them. “Hospitals still kept their heads above water in 2022. But mental healthcare and long-term care had a hard time,” said Rob Leensen of EY. The number of healthcare providers in the red increased, especially in mental health care and geriatric care.

Higher costs due to hiring external parties, in particular, played a role, increasing from 7.8 to 8.7 percent. According to EY, increases in interest rates, construction costs, and rents also took their toll on the financial position, as did expiring coronavirus compensation measures. “It is clear that the coronavirus has had a huge impact on creditworthiness,” said Ralph Poulssen of EY.

He looks to the future with concern and takes into account that “fewer investors are interested in providing financing. The ease with which each individual healthcare provider could raise money on acceptable terms is a thing of the past.” The company cites as an example an outdated nursing home where clients still live together in a room that urgently needs to be renovated. The bank withdrew from the job after two years in the red.

EY also warned that healthcare providers want to continue production and fill beds for the sake of income, while this does not always serve people and society. There needs to be more prevention.

The complicated system, the freedom of choice, and the high requirements may also need to be looked at, according to EY. Instead of always aiming for an 8 or a 9, a 7 should perhaps also be acceptable in healthcare, is the idea.