Healthcare providers are still experiencing the effects of the COVID pandemic every day and staff shortages in the healthcare sector are acute. These developments may force healthcare providers to work more closely together or to merge. Last year, several care providers requested the Netherlands Authority for Consumers & Markets (“ACM”) to approve their merger or acquisition. ACM unconditionally cleared most of the transactions, but prohibited two of them. ACM published the results of its survey into geriatric care mergers at the end of 2021. The debating of the 2016 legislative proposal on the Positioning of the NZa’s Tasks, which transfers the NZa healthcare merger review from the Dutch Healthcare Authority (“NZa”) to ACM, was on hold for a long time. That situation changed on the formation of the Rutte IV government. In 2022, it will also have to be decided whether the lowered turnover thresholds for healthcare mergers will remain in force (unchanged) and whether youth care will also be subject to the lowered thresholds. In 2022 the question will also have to be answered whether the proposal to further tighten healthcare merger supervision will be implemented. All of these developments are addressed in this blog.
Recent and pending healthcare merger cases at ACM
ACM had its work cut out for it with the supervision of healthcare mergers this past year. It approved the following concentrations, for instance:
- ACM cleared OneMed’s acquisition of MediReva. OneMed is a supplier of medical devices to healthcare institutions, professional care providers and private individuals. MediReva is a family business that supplies medical devices, medical nutrition and care materials to customers and healthcare professionals.
- Thebe and Ruitersbos were given approval to merge. Thebe and Ruitersbos operate in the fields of nursing home care and district nursing, among others.
- ACM cleared Noorderbreedte’s acquisition of Thuiszorg Het Friese Land. Noorderbreedte operates in the nursing home sector, among others. Thuiszorg Het Friese Land operates in the fields of district nursing and domestic help.
- ACM cleared the merger between IJsselheem and Hanzeheerd. IJsselheem and Hanzeheerd both provide geriatric care.
- Zuyderland Zorg was given approval by ACM to acquire Zuyderland Thuiszorg and Zuyderland Huishoudelijke Hulp. Zuyderland Zorg operates in the fields of geriatric care, hospital care and home care, among others. Zuyderland Thuiszorg provides nursing and home care. Zuyderland Huishoudelijke Hulp offers professional support to people in need of domestic help.
For the first time in a long while, ACM furthermore decided to prohibit two healthcare concentrations in quick succession:
- ACM did not clear Mediq’s acquisition of Eurocept. The acquisition would have given Mediq a very strong position in the field of ambulatory electronic infusion pumps for patients at home.
- ACM did not clear Bergman Clinics’ acquisition of Mauritskliniek. According to ACM, Bergman would have an even stronger position in relation to health insurers after the merger.
ACM is furthermore currently investigating a number of healthcare concentrations:
- Erasmus MC and IJsselland Ziekenhuis are requesting ACM’s approval of their proposed concentration. Erasmus MC is the largest university hospital in the Netherlands. IJsselland is a regular hospital with a catchment area covering Capelle aan den IJssel, Krimpen aan den IJssel, Nieuwerkerk aan den IJssel, Krimpenerwaard and the east of Rotterdam. ACM had previously ruled that a licence was required for the concentration.
- Espria and Sensire have requested ACM to approve their plan to set up a joint venture to which they wish to transfer their activities in the field of care centres. The joint venture will operate in such fields as personal alarms, medication safety and e-health.
ACM remains critical of geriatric care mergers despite remarkable findings in its own report
In its 2020 agenda, ACM announced that it would conduct an empirical survey into the market for nursing home care. The reason for the survey was the increase in the number of merger notifications in geriatric care and developments such as the shortage on the labour market that the sector is facing. Briefly stated, ACM wished to investigate the relationship between concentrations and the quality, accessibility and affordability of nursing home care. Almost two years after announcing the survey, ACM published the results at the end of November 2021. At the same time, ACM published the preliminary interpretation of its survey results in a consultation document. ACM’s survey has demonstrated that:
- there is no meaningful relationship between concentration and the quality (pp. 81 et seq. of the consultation document) and affordability of nursing home care (pp. 84 et seq.). A positive relationship was found, however, between concentration and accessibility, but that result could not be properly explained;
- there is hardly any competition in the nursing home sector. According to ACM, the results of the survey give rise to the question whether ACM should continue to assess concentrations in the nursing home sector (p. 9 of the consultation document);
- ACM should nevertheless continue to review nursing home concentrations, since it cannot be ruled out that they may have harmful effects. ACM notes that once providers have a dominant position, they may opt to offer a less diverse range of care, which would limit their clients’ freedom of choice (pp. 9 et seq. of the consultation document); and
- when assessing nursing home concentrations, ACM intends to focus less on the consequences for the healthcare procurement market, but more on the consequences for the clients’ freedom of choice (p. 11 of the consultation document).
ACM’s conclusions set out above are remarkable. They give rise to the question why concentrations in the nursing home sector allegedly present a real risk of significantly restricting actual competition between care providers: ACM notes, among other things, that (i) there is hardly any competition in the nursing home sector and (ii) there appears to be no demonstrable relationship between concentration and the quality of the care. ACM justifies its continuing review of concentrations in the sector by its wish to safeguard freedom of choice. That sounds sympathetic, but does not do justice to the outcome of ACM's own survey into the extent of actual competition among geriatric care providers. It is furthermore remarkable that, although ACM itself sets great store by (more) competition with a view to safeguarding the freedom of choice in mergers of geriatric care providers, it does not expressly acknowledge in its consultation document that the growing number of private geriatric care providers are competing with traditional providers. Private providers can play a very important role. This is despite the fact that this had already been investigated in the Omring/Vrijwaard case and ACM had acknowledged that a private provider was competing with the traditional geriatric care providers. Stakeholders, such as providers of nursing home care and care administration offices, had until 21 January 2022 to respond to ACM's survey results. ACM is expected to publish its final results in 2022.
Legislative proposal regarding the transfer of the NZa’s care-specific merger review to ACM
It may also become clear in 2022 whether and when the NZa’s care-specific merger review and its Significant Market Power (“SMP”) instrument will actually be transferred to ACM. In 2016, the Legislative Proposal regarding the Positioning of the NZa’s Tasks was sent to the Lower House. One of the aims of the proposal is to transfer the care-specific merger supervision and the SMP instrument from the NZa to ACM. The proposal has been on the table for over five years now. More information on this transfer and the envisaged new turnover and other thresholds that apply can be found here and here. After the fall of the Rutte III government in January 2021, the legislative proposal was declared controversial (see here for our earlier blog). The Standing Committee for Health, Welfare and Sport of the Lower House has now held another (procedural) meeting to discuss the proposal. The government’s response to the questions (contained in the Third Further Report) raised by the Lower House earlier in 2019 in respect of the Legislative Proposal regarding the Positioning of the NZa’s Tasks will now have to be awaited. The Lower House wanted more clarity, for instance, on how and within what timeframe ACM will implement its new tasks.
Extension of lowered ACM healthcare turnover thresholds
ACM only assesses concentrations that meet certain turnover thresholds. Since 2007, reduced turnover thresholds have applied to the question whether a transaction in the care sector must be reported to ACM. Those lower turnover thresholds are set out in the Decree on the Temporary Extension of the Scope of the Supervision of Concentrations of Healthcare Providers (the “Decree”) of the Minister of Economic Affairs. The Decree expires on 1 January 2023. A decision must therefore be taken in 2022 as to whether the lowered turnover thresholds will be extended. The question furthermore presents itself whether the lowered turnover thresholds should also apply to youth care providers. That is currently not the case. The evaluation of the lowered turnover thresholds commissioned by the Ministry of Health, Welfare and Sport suggests that the lowered turnover thresholds are still necessary to protect the interests of patients and insured persons. It also finds that “there may be reason to add the youth care domain to the regime of the reduced turnover thresholds.” We therefore expect the lowered turnover thresholds for care concentrations to remain in force after 2023. It also cannot be ruled out that lowered ACM turnover thresholds will apply to youth care providers as from 2023. We explained in this blog that care mergers can be reviewed more specifically than on the basis of generic lowered turnover thresholds.
What has become of the merger prohibition bill?
In 2020, Mr De Jonge, the Minister of Health, Welfare and Sport at the time, presented a far-reaching proposal to tighten healthcare merger reviews. In sum, the Minister wanted (i) healthcare providers that demonstrably have SMP and (ii) all healthcare providers subject to a measure by the IGJ (Inspectorate for Health and Youth Care) to be prohibited from merging, unless they successfully demonstrate that the merger is necessary to avert bankruptcy. We previously wrote that that proposal is unnecessary, because existing instruments of ACM are in fact sufficient. That was recently demonstrated again when ACM prohibited the acquisition of Eurocept by Mediq and the acquisition of Mauritskliniek by Bergman Clinics. The bill furthermore violates the fundamental right of freedom of enterprise (see also here for our earlier blog). The Minister of Health, Welfare and Sport wanted to use the aforesaid Bill on the Positioning of the NZa’s Tasks to further tighten the supervision of care mergers. As described above, the debating of the Bill on the Positioning of the NZa’s Tasks has recently recommenced. If the current Minister pursues the proposal, the Lower House will have to address the desirability of the bill. Since ACM again demonstrated in 2021 that it critically assesses healthcare mergers and even prohibited two transactions, we expect that the Lower House will realise that the bill is unnecessary.
