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18 July 2019 / news

Ministry of Welfare publishes letter concerning the investment possibilities and quality and operations of healthcare institutions

On 9 July 2019, the Ministry of Health, Welfare and Sports (VWS) has published a letter (in Dutch) with respect to profit distributions by healthcare providers.

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On 9 July 2019, the Ministry of Health, Welfare and Sports (VWS) has published a letter (in Dutch) with respect to profit distributions by healthcare providers.

This letter iterates the point of view of Minister De Jonge, Minister Bruins and State Secretary Blokhuis of the Ministry of VWS with regard to research concerning profit distribution by healthcare providers in the Netherlands. This research includes (i) an inquiry of the current practices concerning dividend distributions by healthcare institutions, (ii) an judicial analysis of the relevant legislation and guidelines concerning restrictions on profit distributions, and (iii) a public consultation of healthcare organisations’ views of profit distribution by healthcare providers. The Ministry has also published summaries (in Dutch) of these investigations.

Investment possibilities and profit distribution

In its letter, the Ministry of VWS emphasizes the possibilities created by risk-baring capital investments and dividend distribution by healthcare providers, such as the improvement of quality, accessibility and affordability of healthcare. However, it also takes notice of the research which shows that current healthcare providers are capable to invest for the forthcoming years based on their own funds. Consequently, there is no urgent need for risk-baring capital investments that may be stimulated by broadening the possibilities of profit distribution by healthcare providers to assure the continuation of improvement of healthcare. Therefore, the Ministry of VWS has decided to ‘take a step back’ in the process of broadening possibilities of profit distribution by healthcare providers. The Ministry wants to enhance quality insights of the Dutch healthcare system before continuing the process of enlarging profit distribution possibilities. To reach this goal, the Ministry has initiated various measures for quality insights. Furthermore, it has asked the Senate (Eerste Kamer) to postpone the debate regarding the legislative proposal of Enlarging investment possibilities in the medical specialist care (2014).

Measures for preventing inefficient expenditure of healthcare funds

According to the research, the distribution of profits by healthcare providers does not restrict the quality, accessibility and/or affordability of healthcare. Furthermore, there are no judicial grounds for a general prohibition of dividend distribution by healthcare providers. Concurrently there are concerns about undesirable practices by healthcare providers. For instance, financial or organisational constructions of healthcare providers may lead to inefficient expenditure of healthcare funds. To prevent these practices, the Ministry of Health has announced the implementation of measures in particular healthcare areas:

  • Measures regarding the accession of new healthcare institutions 
    The legislative proposal concerning the accession of new healthcare providers (Wtza) introduces an obligation to notify to all new healthcare providers. This legislative proposal replaces the Wtzi and enlarges the obligation to notify, which increases the scope of inspection of the Health and Youth Care Inspectorate (IGJ). Additionally, the Ministry is writing a memorandum of amendment, which includes subcontractors of healthcare providers in the scope of the obligation to notify (!). Due to the complexity and impact of these changes, an additional legislative proposal will be submitted to implement these amendments.

  • Measures regarding the Standards for Remuneration Act (WNT)
    Hence, measures to adapt the Standards for Remuneration Act are commencing, targeting healthcare companies that avoid the WNT by amending corporate structures or using subcontractors.

  • Measures regarding the enhancement of transparency, integrity and professional business operations of healthcare institutions 
    The Ministry of Health notes that it is the responsibility of healthcare institutions to operate in a integer and professional manner. However, according to the research, transparency of healthcare institutions may be enhanced by the imposition of governmental measures concerning the transparency, integrity and professional business operations of healthcare institutions. For the purposes of improving transparency, the accountability of healthcare institutions will be increased by mandatory financial transparency of both the healthcare organization and possible subcontractors (by the implementation of a memorandum of amendment of the Wtza). These measures will provide insights into the corporate structures of healthcare providers and their cooperation with external parties in healthcare activities. Additionally, it will set out the structures used by healthcare providers to distribute profits. Furthermore, the Ministry of Health plans to improve its legal guidance for internal and external monitoring of healthcare providers, to enhance the speed and effectiveness of healthcare regulators, such as the Dutch Healthcare Regulator (NZa) and the IGJ. The Ministry aims to provide additional information regarding the progress of implementation to the Senate around the end of 2019.

  • Enhancing public measures regarding extramural care
    These measures concern legislative proposals which provide additional criteria to the distribution of profit by healthcare providers. The criteria are subject to the category of healthcare providers and will vary from financial conditions, the quality of care, governance of healthcare institutions and terms and conditions on the distribution of dividend. Moreover, the introduction of a standard for a maximum for dividend distribution which is socially acceptable is currently debated.

    These measures are introduced by the Ministry of Health to ensure that public healthcare funds are used efficiently.

    Should you have any questions regarding the above, please do not hesitate to contact Frank Leijdesdorff, Dieuwke Hooft Graafland or your regular Loyens & Loeff adviser.

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