The Netherlands is ageing rapidly, and research has shown that there is insufficient room in nursing homes. That problem is increasing. The number of elderly healthcare jobs will have to roughly double over the next 20 years to provide sufficient healthcare to the increasing number of elderly people. Vacancies cannot be filled in time, given the shortages in the labour market. Moreover, the demand for complex elderly healthcare is increasing. More and more work must therefore be done with fewer and fewer means in the elderly care sector. Collaborations and, where necessary, mergers of elderly healthcare providers therefore seem inevitable. The question then presents itself whether the Dutch Healthcare Authority (NZa) and the Netherlands Authority for Consumers and Markets (ACM) will agree to mergers in elderly healthcare. In this blog, we identity the opportunities and threats and make suggestions on how to deal with filings at the NZa and the ACM.
Filing at the NZa: healthcare-specific merger test
A merger or acquisition must be notified to the NZa if a healthcare provider is involved that has at least 50 healthcare professionals. In principle, the NZa notification process is a procedural test, in which the NZa assesses, briefly stated, whether:
- The concentration process has been diligently prepared. Healthcare providers must identify the expected impact of the concentration on finances, healthcare provision, the quality and accessibility of healthcare, and support services;
- Stakeholders such as (but not only) clients, staff and healthcare purchasers have been sufficiently (and diligently) involved in the process; and
- If applicable, certain forms of crucial healthcare (namely long-term healthcare in the social context in elderly care) will not be jeopardised by the transaction.
Point 2 can be conveniently used to substantiate the ACM-filling (if any) – more on which below.
Although the NZa conducts a procedural review, that review can be intensive. This is partly due to recent case law and developments. Elderly healthcare organisations should pay particular attention to the following points in this context:
- Healthcare organisations must involve all relevant stakeholders in the decision-making process: not only the clients’ council, works council and healthcare purchasers, but also family or relatives’ associations. Family association Leekerweide applied to the court because the NZa allowed LeekerweideGroep and Wilgaerden to merge without involving Leekerweide in that decision. The Trade and Industry Appeals Tribunal found that family members of clients of a care institution for people with disabilities are stakeholders. LeekerweideGroep and Wilgaerden should therefore have involved family association Leekerweide. Competitors are not relevant stakeholders unless close cooperation takes place on certain points.
- The notification to the NZa must furthermore provide sufficient (and specific) insight into the consequences of the collaboration/merger, for instance regarding the continuation, quality and availability of care. But also regarding future healthcare initiatives within the partnership between the parties. Failure to do so may be reason for the NZa, for instance, to impose notification obligations on merging parties when approving the transaction.
It is extremely rare for the NZa not to approve, or only conditionally to approve, a transaction following the healthcare merger test (see here and here for those exceptions). Thorough
preparation is essential to ensure that the NZa approves the notification in a short period of time, and that the work performed in the process is put to good use in a notification to the ACM. See www.zorgspecifiekefusietoets.nl or contact us for more information.
Filing at the ACM
Not every healthcare merger that must be notified to the NZa must also be notified to the ACM. That must be done only if the turnover thresholds for notification to the ACM are met. The merging healthcare providers must have generated a combined annual turnover of at least €150 million in the preceding calendar year and at least two of the merging healthcare providers involved must each have generated an annual turnover of at least €30 million.
Reduced turnover thresholds for healthcare mergers applied until 1 January 2023. If it is up to the ACM, these reduced healthcare turnover thresholds will be reinstated immediately. The NZa is monitoring the repeal of the reduced healthcare turnover thresholds. Merger partners must report to the NZa whether the merger or acquisition would fall under the reduced healthcare turnover thresholds that applied until 1 January 2023. This makes it possible to monitor how many healthcare mergers have no longer been reviewed by the ACM since the repeal of the reduced turnover thresholds. Given this monitoring and the ACM’s lobbying, it is conceivable that reduced healthcare turnover thresholds will apply again in the future. The minister is also expressly keeping open the option of reintroducing the reduced healthcare turnover thresholds. In short, the scope of the ACM’s review may increase significantly again in the future.
ACM review of elderly care mergers
Many healthcare mergers have already been reviewed by the ACM (and previously by its predecessor, the NMa), including various elderly healthcare mergers, such as the Omring/Vrijwaard, Zorggroep Elde/Maasduinen, SHDH-Amie Ouderenzorg and Vivium/PuurZuid mergers.
The ACM has always closely and critically reviewed elderly healthcare mergers. It even prohibited the Zorggroep Noordwest Veluwe/Het Baken merger. In reviewing a merger, the ACM considers the joint position of the parties involved in what is known as the ‘relevant markets’. In elderly care, these in any event include the following product markets:
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Product markets according to the ACM |
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1. |
Psychogeriatric nursing home healthcare |
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2. |
Somatic nursing home healthcare |
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3. |
Geriatric rehabilitation healthcare |
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4. |
High-care residential primary healthcare |
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5. |
Low-care residential primary healthcare |
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6. |
Primary palliative healthcare |
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7. |
Daytime activities funded under the Social Support Act |
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8. |
Daytime activities funded under the Long-Term Care Act |
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9. |
District nursing |
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10. |
Domestic healthcare |
These markets are not only numerous, but also subject to change. Markets 3 to 6, for instance, are in a state of flux. The NZa recently decided to introduce modular funding in 2025 for primary healthcare and geriatric rehabilitation healthcare. This may have implications for the way the ACM assesses the markets.
Geographic markets
In addition to the product markets, the ACM also considers the associated geographic markets. In elderly healthcare, the geographic dimension is often local or at most regional. Where the activities of the merging parties overlap in the relevant markets (product and geographic markets), those parties must identify their market positions and those of their competitors in their notification to the ACM. Market shares based on turnover and volume must be stated in an ACM notification. This is important to the ACM, because the ACM needs to be convinced that sufficient competition remains in the relevant market. That can be a laborious and complex job.
ACM survey of elderly care mergers
In 2021, the ACM published a survey into the elderly healthcare market, focusing in particular on nursing home healthcare. In response to that investigation, a vision document followed in 2022. In that vision document, the ACM distinguished three categories of mergers in elderly healthcare. The ACM classified those categories according to the number of choices available to clients before and after a merger:
- A merger from two options to one option for the elderly. In the ACM’s opinion, this leaves insufficient options for clients. The ACM will then most likely prohibit the merger. That is not the case if parties can successfully invoke what is known as the rescue merger defence or an efficiency defence;
- A merger from three to two options for the elderly. The ACM has stated that it will critically assess such mergers. The ACM will approve such a merger under certain circumstances. The ACM will consider (a) the actual options and diversity of the elderly healthcare offer and their scope; and (b) any entry plans of new competitors; and
- A merger from four to three options for elderly healthcare. The ACM has stated that such a merger will be allowed, because sufficient options then remain for clients.
The ACM therefore mainly considers the number of alternatives after a merger in the market(s) in question. Especially in scenarios 1 and 2, it is important to thoroughly prepare the notification. In doing so, it is advisable to consider the feasibility of and strategy for the proposed merger with an expert beforehand.
Role of clients’ council, works council and healthcare purchasers
The ACM may prohibit a merger only if it “significantly restricts effective competition on the relevant market”. This bar is high. If the works council or the clients’ council and the healthcare purchaser believe that a merger is feasible, the ACM must take that into account. Not in the least because the healthcare administration office has a procurement monopoly as the only healthcare purchaser. With regard to elderly healthcare providers, the ACM has furthermore acknowledged that there is relatively little competition. In that case, it is also unlikely that effective competition will be significantly restricted. It therefore seems a logical conclusion that the ACM confirmed that there is room for mergers in elderly healthcare.
ACM knows that courts are critical
Even if the ACM is highly critical of a healthcare merger (in the elderly healthcare sector or elsewhere), or even threatens to prohibit it, that need not be the last word. The ACM prohibited the Mediq/Eurocept and Bergman/Mauritskliniek mergers in late 2021. After the merging parties applied to the court, the ACM was rebuked in both cases: it should not have prohibited the mergers. Although the ACM has a margin of discretion, it must properly define the relevant market. The significant restriction of effective competition – i.e. the ACM’s theory of harm – must always be sufficiently realistic and likely, in the court’s opinion. The ACM drew the conclusion from its defeats in court that there were grounds for an investigation into its approach when reviewing healthcare mergers. This was reason for the ACM to adjust its methods to counter false negative outcomes.
Well begun is half done
There is every reason to assume that there is plenty of room for mergers between elderly healthcare institutions. Experience has shown that it pays to thoroughly prepare for a merger that must be notified to the NZa or the ACM. This will save both time and costs. If you doubt whether a collaboration or merger must be notified to the NZa and/or the ACM, or if you have questions about the feasibility of a merger if it is reviewed by the NZa or ACM, please contact us or consult www.zorgspecifiekefusietoets.nl.
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