The financial position of Independent
Treatment Centres in the Netherlands:
Big business or a flash in the pan?
An explorative study on the market for ITCs in the Netherlands and the market for free-
standing day hospital facilities in Australia
J.E. Wagemans
i246468
Master of Public Health – Health Policy, Economics and Management
Supervisor: Prof. Dr. J.A.M. Maarse
Second examiner: J.H. van der Made, MA
Maastricht University
Faculty of Health, Medicine and Life Sciences
December 2007
Preface I
J.E. Wagemans
Preface
This thesis is written as part of the Master Health Policy, Economics and Management at
Maastricht University. When I started with the Master thesis project in April 2007, I was
hoping to finish my Master thesis in a shorter period of time than my Bachelor thesis.
Since Independent Treatment Centres are a relatively unexplored topic of research and
because I started a study of law in September 2007, however, this plan did not succeed!
Nonetheless, I worked on this thesis with pleasure and I enjoyed carrying out a small
research myself.
The nice cooperation with Mieke and Annick surely added a lot to the pleasure with
which I worked on my thesis. For this, their helpfulness, and all the chats we had (both in
the library, the ‘BEOZ-hok’ and at the coffee corner), I would like to thank Mieke and
Annick. I enjoyed working with you very much! I would also like to thank Mr. Maarse
for his critical feedback and for giving me enough time to finish my thesis after I started
with my study of law. In addition, I would like to thank Mr. Maenen and Mr. Wijnen for
making me a little bit more acquainted in the world of bookkeeping.
My student days in Maastricht would not have been the same without ‘Subtiel’.
Therefore, I would like to thank Sanne, Karin, Marlien, Lisette en Samanta for being
interested in my thesis and listening to all my frustrations about it! Thanks for your
friendship and all the pleasant evenings!
Last but not least, I would like to thank my parents and brother for letting my go my
own way during my thesis and my study in general, and for having trust in me.
Abstract II
J.E. Wagemans
Abstract
This exploratory study describes the development of the legal framework for ITCs,
discusses the financial position of ITCs and compares the Australian market for free-
standing day hospital facilities with the Dutch market for ITCs.
Independent Treatment Centres (ITCs) can currently be defined as provider
organisations established for the delivery of inpatient and outpatient care to patients. The
greater part of their activities consists of ambulatory care covered under the Health
Insurance Act. As far as inpatient care is concerned, the centres are only permitted to
deliver care for which no central tariff regulation by the Dutch Care Authority exists.
In the past, a very restrictive governmental policy was pursued towards ITCs.
However, a stepwise acceptance took place and ITCs are called IMSZ type I since the
WTZi came into force in 2006. Consequently, ITCs are allowed to provide all types of
care in the B-segment and the differences between hospitals and ITCs have diminished.
Major shareholders of ITCs are the holding of the ITC, medical specialist(s), the
concern the ITC belongs to, and external parties that are active in the health care sector.
The legal forms under which the ITCs in the Netherlands operate show a high variety, but
the majority has a foundation. The financial risk of ITCs included in the analysis has
decreased over the period 2004-2006, but the ITCs have problems satisfying their
financial obligations on both the short and long term. The net-annual turnover of almost
all the included ITCs has been positive. Remarkably, the magnitude of the operating
results shows a high variety. The market for ITCs in the Netherlands is not (yet) big
business and ITCs should specifically pay attention to their solvability and liquidity, but
profit is made by the majority of the ITCs and the flow of patients is stable to increasing.
Free-standing day hospital facilities in Australia are either managed by an existing
hospital or are operating independently. The market for free-standing day hospital
facilities in Australia has developed some years before the market for ITCs in the
Netherlands and can thus considered to be more mature. This can be derived from the fact
that the share in terms of income of this type of facilities on the hospital market is higher
than in the Netherlands even though the share in terms of number of facilities is lower
than in the Netherlands.
Table of contents III
J.E. Wagemans
Table of contents
Preface..................................................................................................................................I Abstract .............................................................................................................................. II Table of contents ............................................................................................................... III List of tables and figures .................................................................................................... V 1. Introduction ..................................................................................................................... 1
1.1 Developments in Dutch health care .......................................................................... 3 1.2 Day treatment facilities from an international perspective ....................................... 7 1.3 Aim, relevance, objectives and research questions ................................................... 8 1.4 Theoretical framework ............................................................................................ 11 1.5 Methods of research ................................................................................................ 12 1.6 Readers’ guidance ................................................................................................... 13
2. Independent treatment centres....................................................................................... 14 2.1 Rules and regulations in the Dutch health care sector ............................................ 14
2.1.1 Hospital planning............................................................................................. 14 2.1.2 Hospital financing ............................................................................................ 16 2.1.3 Capital expenses............................................................................................... 18 2.1.4 The A- and B-segment ...................................................................................... 19 2.1.5 Profit motive ..................................................................................................... 20 2.1.6 The health insurance market ............................................................................ 22 2.1.7 Supervision ....................................................................................................... 23
2.2 History of ITCs........................................................................................................ 24 2.2.1 The 1998 Regulation ........................................................................................ 25 2.2.2 Criteria under the 1998 Regulation ................................................................. 26 2.2.3 A significant change in perspective and legislation regarding ITCs ............... 27 2.2.4 Overview of development regarding ITCs ....................................................... 29
2.3 Common level playing field.................................................................................... 29 2.4 Conclusion............................................................................................................... 30
3. Financial analysis of independent treatment centres..................................................... 32 3.1 Methods................................................................................................................... 32
3.1.1 Index numbers .................................................................................................. 33 3.1.2 Repeated-measures design ............................................................................... 35
3.2 Legal forms and the deposition of annual accounts ................................................ 35 3.3 Results ..................................................................................................................... 36
3.3.1 Legal form and shareholders of all ITCs in the Netherlands........................... 37 3.3.2 The outcome of the selection procedure........................................................... 40 3.3.3 Legal forms of the included ITCs ..................................................................... 40 3.3.4 Index numbers of the analysed ITCs ................................................................ 42 3.3.5 The net annual turnover and the operating results before tax-payment .......... 50 3.3.6 Overview of the financial position of ITCs in 2006 ......................................... 54 3.3.7 Results of the in-dept interviews....................................................................... 55
3.4 Discussion ............................................................................................................... 56 3.5 Conclusion............................................................................................................... 58
Table of contents IV
J.E. Wagemans
4. Free-standing day hospital facilities in Australia.......................................................... 61 4.1 Australia and its governmental system.................................................................... 61 4.2 The Australian health care financing system .......................................................... 62
4.2.1 The Australian health insurance system .......................................................... 63 4.3 Health services delivery .......................................................................................... 64 4.4 Trends in the hospital sector.................................................................................... 66
4.4.1 The history of the development of day surgery ................................................ 67 4.4.2 Principles for day surgery................................................................................ 69 4.4.3 Types of day surgery facilities.......................................................................... 70
4.5 Free-standing day hospital facilities........................................................................ 71 4.5.1 Development of the number of free-standing day hospital facilities................ 71 4.5.2 Geographical distribution of free-standing day hospital facilities .................. 74 4.5.3 Medical Specialties .......................................................................................... 75 4.5.4 Production ........................................................................................................ 75
4.6 Characteristics of the market for ITCs in the Netherlands...................................... 76 4.6.1 Development of the number of ITCs and their share on the hospital market .. 76 4.6.2 Geographical distribution of ITCs ................................................................... 77 4.6.3 Medical specialities provided by ITCs ............................................................. 78 4.6.4 Production of ITCs ........................................................................................... 78
4.7 Comparison between the market for free-standing day hospital facilities in Australia and the market for ITCs in the Netherlands .................................................. 78
4.7.1 Types of free-standing day surgery facilities and ITCs.................................... 79 4.7.2 Private sector activity....................................................................................... 79 4.7.3 Share on the total hospital sector..................................................................... 79 4.7.4 Development of the number of facilities........................................................... 80 4.7.5 Geographical distribution and medical specialties provided .......................... 80 4.7.6 Incentives created by free-standing day hospital facilities and ITCs .............. 80 4.7.7 Principles and regulations ............................................................................... 81 4.7.8 Supervision ....................................................................................................... 81 4.7.9 Interest groups.................................................................................................. 82
4.7 Discussion ............................................................................................................... 84 4.8 Conclusion............................................................................................................... 84
Conclusion......................................................................................................................... 86 Discussion ......................................................................................................................... 89 References ......................................................................................................................... 91 Appendix 1 – Glossary...................................................................................................... 96 Appendix 2 – Structured questionnaire............................................................................. 97 Appendix 3 – Interview questionnaire .............................................................................. 98 Appendix 4 – List of included ITCs................................................................................ 102 Appendix 5 – Repeated-measures design........................................................................ 106
List of tables and figures V
J.E. Wagemans
List of tables and figures
Table 2.1 Developments regarding ITCs 29
Table 2.2 Common level playing field 30
Table 3.1 The application of the inclusion criteria 40
Table 3.2 Legal forms of the ITCs included in the financial analysis 41
Table 3.3 Specialties provided in the ITCs included in the financial analysis 42
Table 3.4 Rotation time of debtors (in days) 43
Table 3.5 Solvability (in %) 45
Table 3.6 Current ratio 47
Table 3.7 Current ratio adjusted 47
Table 3.8 Cover of interest 49
Table 3.9 Net annual turnover (in €) 51
Table 3.10 Operating results before tax-payment (in €) 52
Table 3.11 The financial position of ITCs in 2006 55
Table 4.1 Development of the number of hospitals in Australia 72
Table 4.2 Development of the percentage of free-standing day hospital facilities on the total number
of hospitals in Australia 72
Table 4.3: Amount of free-standing day hospital facilities in Australia 73
Table 4.4: Population density in Australian States and Territories 75
Table 4.5: Type of centres in Australia in 2005-2006 75
Table 4.6: The hospital sector in the Netherlands 77
Table 4.7: Medical specialties provided in ITCs in the Netherlands 78
Table 4.8 Comparison between the Netherlands and Australia 83
Appendix 5 – Table 1: SPSS results for the rotation time of debtors 107
Appendix 5 – Table 2: SPSS results for the solvability 107
Appendix 5 – Table 3: SPSS results for the current ratio 108
Appendix 5 – Table 4: SPSS results for the cover of interest 108
Appendix 5 – Table 5: SPSS results for the net annual turnover 109
Figure 3.1 Legal forms of ITCs in the Netherlands 38
Figure 3.2 The shareholders of ITCs in the Netherlands 39
Figure 3.3 Rotation time of debtors (in days) 44
Figure 3.4 Rotation time of debtors (in days) above 90 days 44
List of tables and figures VI
J.E. Wagemans
Figure 3.5 Solvability (in %) 46
Figure 3.6 Current ratio 48
Figure 3.7 Cover of interest 50
Figure 3.8 Net annual turnover (in €) 51
Figure 3.9 Operating results before tax-payment (in €) 53
Figure 3.10 Development of the number of ITCs with a positive index number or operating result 53
Figure 4.1 Free-standing day hospital facilities in Australia 73
Figure 4.2: Free-standing day hospital facilities in Australian States and Territories 74
Figure 4.3: Geographical distribution of free-standing hospital facilities in Australia in 2005 – 2006 74
Figure 4.4 Geographical distribution of ITCs in the Netherlands 77
1. Introduction 1
J.E. Wagemans
1. Introduction
This Master thesis discusses the Dutch market of the so-called ‘zelfstandige behandelcentra’, or
Independent Treatment Centres. Independent Treatment Centres (ITCs) can currently be defined
as provider organisations established for the delivery of inpatient and outpatient care to patients.
The greater part of their activities consists of ambulatory care covered under the Health Insurance
Act (Zorgverzekeringswet or Zvw). As far as inpatient care is concerned, the centres are only
permitted to deliver care for which no central tariff regulation by the Dutch Care Authority
(Nederlandse Zorgautoriteit or NZa) exists.
Three examples of ITCs are ‘Medinova’, which has locations in Rosendaal (1994), Haarlem
(1996), and Rotterdam (1999), and provides general surgery, orthopaedics, plastic surgery, and
ophthalmology; ‘MS Centrum Nijmegen’ (1996), which is settled in Nijmegen and provides
neurology; and ‘Eye Centre de IJssel’ (2006) settled in Gorssel and provides ophthalmology.
An ITC can be established by a medical specialist entrepreneur, a non-medical specialist
entrepreneur, a hospital, an investment company, or a combination of those parties. ITCs should
not be confused with private clinics, which exclusively provide care that is not covered under the
Zvw. Furthermore, a distinction should be made between ITCs and specialised outpatient
departments in hospitals (for example the ‘Inguinal hernia centre’ in the Diakonessenhuis in
Zeist, and the still to be established ‘Eye tower’ in the Maastricht University Hospital).
The regulations regarding ITCs have been subject to alterations. As a consequence of recent
changes, the distinction between hospitals and ITCs has diminished. In fact, the term ITC is now
even superseded. The blurred situation regarding ITCs is nicely illustrated by the fact that no
complete, up-to-date overview of these centres in the Netherlands is available. This Master thesis,
which is part of a cooperative project (see section 1.3), attempts to bring more clarity to the
ambiguous market of ITCs by providing insight in the characteristics of and the developments in
this market.
Over the last years, ITCs and private clinics received a lot of attention from the media and
politics. Some headings from newspapers include ‘Toezicht klinieken in kinderschoenen’ (de
Volkskrant, 19-04-2007), ‘Hausse private ziekenhuiszorg lokt financiers’ (Het Financieel
Dagblad, 08-12-2005), ‘Gerommel in de privé-sfeer; Inspectie constateert systematische
1. Introduction 2
J.E. Wagemans
tekortkomingen’ (de Volkrant, 06-12-2003), ‘Aan de dood ontsnapt na laserbehandeling’
(Algemeen Dagblad, 10-07-2007), ‘Ziekenhuis enthousiast over markt’ (de Volkskrant, 26-10-
2006). According to reports from the Health Care Inspectorate (Inspectie voor de
Gezondheidszorg or IGZ), care provided by ITCs is often insufficient. This is due to incompetent
staff and undersized medical equipment (Echte prive-klinieken; daar is het wachten op, 2005).
In addition to these poor results, hospitals accuse ITCs of ‘cherry picking’. Hospitals state that
there is no common level playing field since ITCs only treat the ‘easy patients’ and are able to
charge lower tariffs for the same treatment. This feeling of discrimination is two-sided however.
ITCs incur a higher risk on capital expenses; it can be less attractive for health insurers to
contract an ITC due to the so-called ‘closing tariff’ of hospitals in the A-segment; and the risk
exists that hospitals cross-subsidise (Nederlandse Zorgautoriteit, 2007a; Raad voor de
Volksgezondheid & Zorg, 2003).
As a consequence of the changing rules and regulations in the Dutch health care sector, the
differences between ITCs and hospitals are diminishing. The current unequal position is
underlined by the existence of legal proceedings. Several legal proceedings and conflicts
concerning the tariffs ITCs and private clinics are allowed to charge, have taken place (College
van Beroep voor het bedrijfsleven, 20-06-2000; Maassen & Visser, 2002).
In addition, in 2006, the Dutch Competition Authority (Nederlandse Mededingsautoriteit or
NMa) received a complaint from the Hofpoort hospital because it felt restricted in its possibilities
to establish an ITC (Nederlandse Mededingsautoriteit, 2007). The occasion for the complaint was
that the medical specialist involved claimed to receive extra earnings from the ITC, on top of the
lump sum earning from the hospital, but did not get an approval for this. The NMa ruled,
however, that a sufficient amount of other possibilities for the hospital to establish an ITC was
available (e.g. other specialists not involved in the specific lump sum could be attracted or the
specialist could decide to be employed in the ITC exclusively) (Nederlandse Mededingsautoriteit,
2007).
The term ‘zelfstandige behandelcentra’ is translated differently all over the world. In the
United Kingdom terms such as ‘Independent Sector Treatment Centres’ and ‘Surgicentres’ are
used, while in Australia the term ‘Free-standing day hospital facilities’ is more common. Finally,
terms such as ‘Specialty Hospitals’, and ‘Ambulatory Surgery Centres’ are frequently used in the
1. Introduction 3
J.E. Wagemans
United States. This Master thesis uses the term Independent Treatment Centres (ITCs), because
the focus is on treatment centres that are managed independently from a hospital. This does not
exclude the possibility that an ITC is established by a hospital.
1.1 Developments in Dutch health care
The relatively recent development of the market of ITCs should be regarded in the broader
perspective of the Dutch health care sector. This section presents a brief overview of the general
trends that can be observed on the Dutch health care market during the past decennia.
Subsequently, relevant trends on the hospital market in specific are discussed.
A first serious attempt to restructure the health care sector in the Netherlands can be observed
in 1974. In this year, the Dutch government published the Memorandum on the Structure of the
Health Services (Structuurnota Gezondheidszorg), which advocates an integrated policy for the
entire health care market (Bjorkman & Okma, 1997). The objectives of this health care reform
were to reduce the use of specialist care and to control the growing health care costs. This reflects
the political spirit of that time: by means of legislation and an extension of government
intervention, the government intended to gain a larger influence on society (Jansen, 2006).
In the second half of the 1980s, the Dutch government announced a plan to move towards a
regulated competition model as part of a comprehensive programme designed to restructure the
health care system. These proposals to introduce a system of regulated competition were said to
be a reaction to the problems in the health care system and the political climate in the 1980s.
According to the Dekker-committee, which published its report in March 1987 under the title
‘Willingness to Change’, the provision of health care lacked flexibility and efficiency. In
addition, freedom of choice for the patient did not exist, and cost control could not be reached
(Lieverdink, 2001). The Dekker report proposed the introduction of market elements in order to
reduce health care costs. In doing so, the committee suggested a shift from a policy directed at the
supply side of health care, to a policy directed at the demand side. The shift also implied a less
prominent role for the government (Lieverdink & Van der Made, 1997).
Several proposals of the government aimed at improving efficiency while maintaining
solidarity, followed the Dekker report. However, the restructuring process generated growing
1. Introduction 4
J.E. Wagemans
opposition and, despite of the initial political support, by 1992 the government came to the
conclusion that political and social support for its reform was largely absent and that the
restructuring would not take place (Bjorkman & Okma, 1997; Lieverdink, 2001). The originally
present broad consensus and optimism about a new system of regulated competition changed
gradually into a political stalemate. Eventually, this period of ‘high politics’ was followed by a
period of gradual change in which the health care system was adjusted, but not restructured
(Lieverdink, 2001). Nevertheless, the concept of market competition has developed over the last
years as an important issue in Dutch public policymaking (Maarse, Groot, Van Merode, Mur-
Veenman, & Paulus, 2002).
The earlier mentioned developments can be seen in the scope of a transition process. Starting
in the mid eighties with the intentions to introduce market competition, followed by the shift
from a supply-driven orientation towards a demand oriented organisation in the 21st century.
Gradually, steps where taken to realize a shift of governmental responsibility to other actors on the
health care market. Individual responsibility was highly valued and the attention for the concept of
entrepreneurship in health care increased. Concepts of demand-driven care, market competition
and entrepreneurship are often confused with each other. The introduction of market competition in
health care does not automatically lead to more entrepreneurship in this sector. Whereas market
competition especially concerns the organisation or the structure of care, entrepreneurship refers to
the behaviour of parties that are closely associated with the care. Still, these concepts are closely
related to each other. Market competition stimulates entrepreneurship and conversely does
entrepreneurship demand space for market competition (Leers & Maarse, 2006).
Nevertheless, it has taken a long time before the plans to introduce market competition were
actually implemented. Just in 2006, the first phase of market competition – awareness – has been
closed, and the first true step towards market competition has been made. In this year, regulations
came into force which realized a transition from a focus on the supply-side of the health care
market to the demand-side of this market. However, the government remains responsible for the
public interests of access, quality and affordability of health care. The core of the new health care
system is the introduction of as much market incentives as possible (Exter A., Hermans H., Dosljak
M., & Busse R., 2004). In order to stimulate the parties on the health care market to compete on
efficiency and quality, the transparency of (the actors on) the market and the responsibility of the
1. Introduction 5
J.E. Wagemans
actors themselves should increase. In addition, from a competitive perspective it is necessary to
create a common level playing field in order to reach equal competition. The government
attempted to achieve this by means of new Acts such as the Zvw, the Health Care Market
Organisation Act (Wet Marktordening Gezondheidszorg or WMG), and the Care Institutions
Authorisation Act (Wet Toelating Zorginstellingen or WTZi), which were introduced in 2006. At
present however, no common level playing field between hospitals and ITCs yet exists. As
mentioned before, ITCs can set their own tariffs, whereas hospitals could cross-subsidise.
Although, these new Acts are nice attempts to stimulate competition, the current legislation needs
to be further adapted over the years to come in order to promote a common level playing field.
The development over the years illustrates that the process of transition is rather slow. It
underlines the evolutionary and incremental policy making of the Dutch government. Health care
policy making is often not linear: policy decisions may be revoked at a later point of time. This
could be referred to as the concept of half-way implementation that indicates a process in which
the introduction of a reform is adjusted half-way or even broken off under political pressure
(Maarse et al., 2002). The government has now introduced market competition in health
insurance and has already taken a few market making decisions concerning hospital care, such as
the introduction of case-based payment, the B-segment, and the WTZi. However, various other
market making decisions are planned for the near future. One can think of the extension of the B-
segment and the introduction of the profit-motive. In addition, it should be noted that a transition
process is not merely a result of top-down influences, but is influenced bottom-up as well.
Since ITCs are active on the hospital market, it is of relevance to discuss the most relevant
trends on this specific market. The consolidation of the hospital sector, technological advances,
and the subsequent shift from intramural to ambulatory care, are considered to be the three most
important interrelated developments.
Over the past decennia, an increase in scale of the hospital sector can be understood as one of
the most striking developments in the health care sector. Mergers between hospitals have been
the primary cause of this development. The government policy has been strongly related to the
number of mergers. For instance, several small hospitals disappeared in the sixties and seventies
due to the standards of the government regarding the quality of health care. Since merged
hospitals received a higher budget than two separate hospitals together would receive, the
1. Introduction 6
J.E. Wagemans
incentive caused by the so-called ‘function oriented budgeting system’ (FB-system) was another
factor that encouraged the number of mergers. Finally, the government started to promote market
competition and subsequently, mergers between hospitals (Maarse et al., 2002). Hospitals
intended to obtain certain economies of scale and economies of scope by merging with another
hospital. It was assumed that an increase in scale of a hospital would lead to a higher level of
quality of the health care provided, more client focused care and finally to a higher efficiency in
hospitals. Maarse et al. (2002) expect that the development of mergers will continue over the
coming years. An alternative scenario is the rediscovery of small specialised hospitals (Maarse et
al., 2002). The current trend regarding ITCs exemplifies the point of view of this latter scenario.
Besides an increase in scale of the hospital sector, a shift from intramural care to ambulatory
care can be noticed, encouraged by the increasing need for effective cost control. This shift can
partially be attributed to another trend on the hospital market, namely the development of new
medical technologies. Technological developments play an essential role for hospitals that focus
on a particular specialisation. As a consequence, not only the range of medical treatments has
increased significantly, but the possibilities of providing health care that requires a short stay in
ambulatory settings, such as ITCs, has increased as well. This latter element is highly important
for the topic of research. The complex and expensive treatments will probably continue to be
mainly performed in large hospitals (Maarse et al., 2002).
A continuing increase in scale and concentration on the hospital sector can be perceived as an
obstacle to market competition, since a healthy market system requires a sufficient number and
perhaps even an increase of health care providers (Maarse et al., 2002). As mentioned before,
medical technologies make it possible for medical specialists to perform certain treatments in
outpatient clinics. Subsequently, the development of ITCs can partially be attributed to the
development of new medical technologies. Since ITCs increase the number of health care
providers, the expansion of ITCs will have a positive influence on market competition. It is
noteworthy, that the expansion of ITCs is at odds with the trend of mergers on the hospital
market.
1. Introduction 7
J.E. Wagemans
1.2 Day treatment facilities from an international perspective
As a consequence of the development of new surgical techniques and short-acting anaesthetics,
the number of day surgery procedures performed has enormously increased internationally over
the last two decades (Castoro, Bertinato, Baccaglini, Drace, & McKee, 2007). Day surgery can
be defined as ‘the performance of surgical procedures that are more complex than office
procedures, which are usually done under local anaesthesia, but are less complex than major
procedures that require prolonged post-operative monitoring and hospital care in order to
guarantee the patient a safe recovery and a desirable outcome’ (Fong Yuk Fai, 1988). Several
types of day surgery facilities can be distinguished. Among these are day surgery units situated
within a hospital and freestanding day surgery facilities. As described before, this thesis focuses
on treatment centres (surgical as well as non-surgical) which are managed independently from a
hospital.
The foundations of modern day surgery were laid in Scotland at the turn of the 20th century.
Primarily due to resistance of medical professionals however, the report produced at that time did
not have much results (Castoro et al., 2007). Since 1962, some hospitals in the United States
applied the concept of developing facilities for ‘walk in walk out’ surgery (www.aams.org.au,
n.d.). In 1968, the first free-standing ambulatory surgery centre in the United States was founded.
Due to too little interest from the public, this centre failed (Fong Yuk Fai, 1988). In 1970, the
first successful free-standing clinic in the United States opened (Pyrek, n.d.). The motivation for
the medical specialists to develop this centre was to respond to the demand for innovation in
order to reduce the health care costs. ‘Prominent among the recommendations that have been
made have been proposals to perform minor surgery on an outpatient basis, eliminating the need
for hospitalisation and its attendant costs (and with findings that) a safe and efficient facility, for
the performance of general anaesthesia and minor surgical procedures need not be affiliated
either administratively or geographically with a hospital’ (www.aams.org.au, n.d.).
The first private clinic in the Netherlands dates back from 1989. Although this clinic was
involved in several complicated legal proceedings, the clinic is still operational. Some of the
other private clinics established in this first phase that have been involved in legal proceedings do
no longer exists (ZKN, 2007).
1. Introduction 8
J.E. Wagemans
The emergence of private clinics fits the increase of entrepreneurship in the health care sector.
Opportunities for entrepreneurship in health care are present in the field of less complex elective
care, which is characterised by a high volume and limited medical risks and can be organised
monodisciplinairy. Some specific specialties that are most suited for entrepreneurship are
dermatology, ophthalmology, rheumatology, orthopaedics, ENT, plastic surgery and many kinds
of diagnostics (Leers & Maarse, 2006).
The evolution of day treatment facilities has forced the government to respond by developing
and changing policies and regulations. The adjusted and developed policies and regulations
regarding ITCs are explained in the next chapter.
1.3 Aim, relevance, objectives and research questions
ITCs are a relatively new phenomenon in the health care sector and as their number is expected to
grow in the future, it is of importance to gain insight in this new market.
In January 2007, the NZa published a report on ITCs. This report described the role of ITCs in
the hospital market and their influence on the quality, accessibility and affordability of this
market (Nederlandse Zorgautoriteit, 2007b). It was stated that the number of ITCs has increased
considerably during the last years. Over the period 2000-2006, the quantity of licences granted by
the Board for Hospital Facilities (College bouw ziekenhuisvoorzieningen or Cbz) and the
Ministry of Health, Welfare and Sports (Volksgezondheid, Welzijn en Sport or VWS), raised
from 31 to 158. Remarkably however, the share of ITCs in the total returns of the hospital care
has remained quite limited, that is less than 1%. According to the report, the specialties of
ophthalmology, dermatology, orthopaedics, surgery, and plastic surgery are currently most
provided in ITCs. In general, tariffs charged in the B-segment by ITCs are 22% lower than those
charged by hospitals. The NZa observed that these lower tariffs of ITCs are apparently no
incentive for hospitals to charge lower prices in the B-segment. This can possibly be attributed to
the small production of ITCs. In the A-segment as well, prices charged by ITCs are lower than
those charged by hospitals (Nederlandse Zorgautoriteit, 2007a).
With regard to the recent developments on the Dutch health care market, it is of importance to
gain more knowledge concerning the aspects not addressed in the NZa-report. Therefore, a thesis
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J.E. Wagemans
which clarifies these aspects is considered to be of relevance. Moreover, the market of ITCs is a
highly complex phenomenon. The distinction between ITCs, private clinics, and specialised
outpatient departments of hospitals is ambiguous and the term ITC is already replaced for
‘Institution for Medical-Specialist Care’ (Instelling voor medisch-specialistische zorg or IMSZ)
type 1.
This Master thesis is a part of a cooperative research project on the market for ITCs. Due to
complexity and the magnitude of the research and the time constraints related to a Master thesis
project, the decision is made to split the results of the research into three parts. The other
researchers are Mieke Jansen (Jansen, 2007) and Annick van Kollenburg (van Kollenburg, 2007).
During the retrieval of information concerning the market for ITCs in the Netherlands, a lot of
cooperation has taken place. The results were reported in individual chapters however, with one
author being the main responsible. In this Master thesis, several of the results described in the
theses of both Mieke Jansen and Annick van Kollenburg are used.
The development of ITCs in the Netherlands is described in the cooperative research project
with the help of literature research, theories, questionnaires and in-depth interviews. Next, an
analysis of ITCs in three other countries is performed in order to illustrate what the market of
ITCs in other countries looks like. The results of this analysis can be used as a tool for
benchmarking. In addition, an overview of the market increases transparency and therefore
competition between health care providers. Competition stimulates the efficiency and quality of
health care, which is of social relevance. Subsequently, transparency is of social relevance since
consumers are able to make a well considered choice for the health care provider of their desire.
Besides, it is of value to gain understanding of the hampering and promoting factors that
influence Dutch ITCs. This could contribute to an appropriate view on the future regarding new
entrants on the market.
The policy concerning ITCs has shifted from highly restrictive to ‘ever more friendly’. The
first objective of the cooperative research project is to give an overview of the development of
the legal framework for ITCs over the years. In addition, the development of the framework for
cost reimbursement and capital investments should be described. The first research question is:
How did the legal framework for ITCs develop since the early 1990s? This research question is
addressed in all three Master theses.
1. Introduction 10
J.E. Wagemans
Though ITCs have received a lot of attention from the media and politics, the market can be
characterised by a lack of transparency. No complete registration of active ITCs exists, nor is
there sufficient knowledge concerning the number of centres that is affiliated to a hospital.
Therefore, the second objective of the cooperative research project is to gain insight in the
development and the characteristics of ITCs in the Netherlands. Consequently, the second
research question is: What is the current structure of the market for ITCs and which
developments have occurred recently? This research question is addressed in the Master thesis of
Annick van Kollenburg (van Kollenburg, 2007).
A third objective of the cooperative research project is to identify the hampering and
facilitating factors of this development. Moreover, it would be interesting to gain knowledge with
respect to the effects of the development of ITCs in order to be able to make some forecasts
concerning the market of ITCs and the health care market in general. An additional goal is to
investigate the influence of ITCs on the health care sector, especially with respect to the intended
introduction of market competition. Accordingly, the third research question is: Do ITCs
encourage competition on the Dutch health care market? This research question is addressed in
the Master thesis of Mieke Jansen (Jansen, 2007).
Furthermore, it is interesting to investigate whether the market for ITCs is indeed characterised
by entrepreneurship and whether external financiers are active on this specific market. Therefore,
the fourth objective of the cooperative research project is to gain more insight in the financial
details of ITCs. When more information concerning the financial position of the ITCs is known,
more valid forecasts with respect to the development of this market can be made and it can be
assessed whether ITCs can considered to be a real competitor for hospitals. Consequently, the
fourth research question is: What is the financial performance of Dutch ITCs and what is their
situation with regard to their legal form and shareholders? This research question is addressed in
this Master thesis.
The amount of day surgery procedures performed in various countries shows a wide variation.
The number varies from less than 10% in Poland to over 80% in the United States. Furthermore,
a large variation between procedures in the various countries can be observed (Castoro et al.,
2007). By means of a comparison between the Dutch situation regarding ITCs and the situation
on similar markets in other countries, lessons can be learned. Hence, the fifth objective of the
1. Introduction 11
J.E. Wagemans
cooperative research project is to compare the Dutch market of ITCs with a comparable market in
three other countries, namely the United States, the United Kingdom, and Australia.
Consequently, the fifth research question is: How does the market for ITCs in the Netherlands
compare to the market for this type of care in the United States, the United Kingdom, and
Australia and which lessons can be drawn from this comparison? The United States and the
United Kingdom are addressed in the Master theses of Annick van Kollenburg and Mieke Jansen
respectively. The situation on a market similar to the Dutch market for ITCs is described in this
Master thesis.
Consequently, the specific research questions addressed in this Master thesis are:
1) How did the legal framework for ITCs develop since the early 1990s?
2) What is the financial performance of Dutch ITCs and what is their situation with regard
to their legal form and shareholders?
3) ‘How did free-standing day hospital facilities in Australia develop and how does the
market for ITCs in the Netherlands compare to the market for this type of care in
Australia?’
1.4 Theoretical framework
The research question ‘Do ITCs encourage competition on the Dutch health care market?’,
which is addressed in the Master thesis of Jansen (2007), is answered with the help of the ‘Five
competitive forces model’ of Porter.
In his ‘Five competitive forces model’, Porter (1980) distinguishes five basic competitive
forces which determine the intensity of competition in a specific industry: threat of entrants,
threat of substitution, bargaining power of buyers, bargaining power of suppliers, and rivalry
among current competitors. The maximum amount of profit that can be obtained in the industry
(measured in terms of long turn return on invested capital) depends on the aggregate of these five
competitive forces (Porter, 1980). Knowledge of these five forces, among others, emphasizes the
essential strengths and weaknesses of the organisation, draws a picture of the organisation’s
position in the industry, and provides insight into the areas where the most profitable strategic
changes can be made (Porter, 1980). The five competitive forces model of Porter that is used in
1. Introduction 12
J.E. Wagemans
this thesis is based on the model of Leers and Maarse (2006), which is for the purpose of this
thesis adjusted to the market of ITCs.
1.5 Methods of research
In order to gain knowledge concerning the new phenomenon of ITCs, a descriptive explorative
research design is used (Bouter, Van Dongen, & Zielhuis, 2005). The results of the cooperative
research project are based on a combination of different sources, this is called ‘sources
triangulation’ and increases the internal validity of the research (Maso & Smaling, 1998). This
Master thesis especially deals with quantitative information. The methods of purchasing the
required information for the research project can be divided into three phases.
In the first phase a quick scan of available digital sources and sources obtainable in the library
was completed. This phase consists of a desk research and provides background information on
the topic.
In the second phase, an overview of available information of specific ITCs is conducted. At
first, a structured questionnaire is presented to all observed ITCs in the Netherlands (see
appendix 4). The outcomes of the structured questionnaire are presented in the Master thesis of
van Kollenburg (2007). Additional information is retrieved by visiting the internet sites of the
ITCs concerned. Next to the information that is provided by the questionnaire, the available
annual accounts and reports of ITCs are analysed in this phase as well. The results of the
financial analysis are presented in chapter 3 of this Master thesis.
The final and third phase of the data collection concerns the in-depth interviews, of which the
majority of the outcomes is presented in the Master thesis of Jansen (2007). After the completion
of all the questionnaires, the ITCs can be divided into three categories. At first, a distinction can
be made between ITCs which have been established by hospitals and ITCs which have been
established by medical specialist entrepreneurs or non-medical specialist entrepreneurs. The latter
group can be divided into individual ITCs and umbrella organisations, which encompass several
ITCs. Thus, three categories of ITCs can be distinguished. From each category, two ITCs are
selected to conduct an interview with members of the management boards. In total six members
of ITCs are selected. In addition, an interview with the secretary of the institution ‘Zelfstandige
1. Introduction 13
J.E. Wagemans
Klinieken Nederland’ (ZKN) – an organised interest group for Dutch ITCs and private clinics – is
conducted. The questionnaires of the in-depth interviews are attached in appendix 3.
The desk research, the questionnaires, annual accounts and reports, and in-depth interviews
generate the basis for the final analysis. The final date of the data collection of new ITCs was set
on June 1st 2007. This means that ITCs observed after June 1st 2007 are not included in the
analysis. Annual accounts published after July 15th, are not included in the analysis as well.
It should be noted that it is hard to generalise the results of the in-depth interviews with
members of the ITCs since each ITC is unique and has its own financial position and
characteristics.
The three countries selected for the international comparison are Australia, the United
Kingdom, and the United States. The selection of these countries is based on similar
developments, personal interests, the practical consideration that literature about these countries
is English-language, and because the countries are located on three different continents.
However, the selection of countries can result in bias, since the criteria are not based on previous
data. A selection on the basis of the health care systems present in each country could have been
a more reliable selection criterion. Due to the time limitation only English-language countries are
selected.
1.6 Readers’ guidance
The next chapter provides an overview of the legal framework regarding ITCs in the
Netherlands. The third chapter analyses the financial position of ITCs. A comparison between
the Dutch market for ITCs and the market for free-standing day hospital facilities in Australia is
made in the fourth chapter. A critical reflection on the cooperative research project is made in the
discussion. Finally, a conclusion is drawn.
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J.E. Wagemans
2. Independent treatment centres
This chapter provides an overview of the development of ITCs. The research question discussed
is: ‘How did the legal framework for ITCs develop since the early 1990s?’ Currently, an ITC can
be defined as ‘an institution for medical specialist care that can be claimed under the Zvw, with
the exception of care that requires overnight stay and for which a tariff has been determined
based on the Health Care Tariffs Act (Wet Tarieven Gezondheidszorg or WTG)’ (Zorgverzekeraars
Nederland, 2006)1.
The first section of this chapter discusses the general rules and regulations of the Dutch health
care sector that are of relevance to ITCs. The second section describes the development of ITCs
and the specific rules and regulations designed for these centres. An overview of these
developments is presented in table 2.1. Finally, this chapter ends with a short conclusion.
2.1 Rules and regulations in the Dutch health care sector
Over the last two decades, the Dutch hospital care sector is characterised by important changes
concerning the rules and regulations. This section is dedicated to the changes that are of
relevance to ITCs. The first subsection focuses on hospital planning regulation, whereas the
second and third subsection address reimbursement regulations in the hospital sector. In the
subsequent subsections, the A- and B-segment, the profit motive, the health insurance market,
and the supervision on the Dutch health care sector are discussed.
2.1.1 Hospital planning
The objective of the Hospital Facilities Act (Wet Ziekenhuisvoorzieningen or WZV) of 1971 was to
plan the capacity of health care providers (hospitals, nursing homes, etcetera). Planning the capacity
was seen as a cornerstone of the governmental policy to control health care expenditures (‘a built bed
is a filled bed’). The WZV gave the government a formal instrument to regulate hospital capacity,
1 “Instelling voor medisch specialistische zorg, welke zorg behoort tot de ingevolge de zorgverzekeringswet te
verzekeren prestaties met uitzondering van medisch specialistische zorg die wordt verleend in combinatie met
verblijf als bedoeld in artikel 10 onder g ZVW én waarvoor een tarief is vastgesteld op grond van de Wet tarieven
gezondheidszorg (WTG)” (Zorgverzekeraars Nederland, 2006).
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J.E. Wagemans
since hospitals were not permitted to extend their capacity in terms of beds, specialist units or
otherwise without a governmental license. In reality however, hospital planning was not only used to
regulate the extension of hospital services, but to implement significant bed reductions as well.
However, this system of central hospital planning was at odds with a market model. In 2006, the
disadvantages of the WVZ led to its abolishment and the introduction of a new act, the WTZi.
Disadvantages of the WZV were the bureaucratic regulations, administrative costs, and the system of
retrospective reimbursement of the costs of capital investments. The latter implied that neither
hospitals nor loan givers did incur any financial risk on capital investments. This made hospitals less
cost-conscious and limited their incentives to perform efficiently (Tweede Kamer der Staten-
Generaal, Vergaderjaar 2004-2005a).
On January 1st 2006, the WTZi came into force. At the same time, the Board for Hospital Facilities
(College Bouw Ziekenhuisvoorzieningen or CBZ) changed its name into the Board for Health Care
Institutions (College Bouw Zorginstellingen or CBZ)2. The primary objective of the WTZi is to
expand the liberties and responsibilities of the intramural sectors in the health care market (Tweede
Kamer der Staten-Generaal, Vergaderjaar 2004-2005a). The WTZi should guide the shift from a
system with a central steering from the supply-side to a decentralised system which is steered from
the demand-side. In the new system, the capacity should be determined by the parties involved in the
provision of care, and the governmental task should be restricted to the creation of preconditions
(Tweede Kamer der Staten-Generaal, Vergaderjaar 2000-2001). Thus, the fundamental principle of
the WTZi is that hospitals are responsible for their own planning decisions. This results in a more
equal common level playing field, since ITCs already are responsible for their own planning
decisions. If health care providers want to establish a new medical centre, they are responsible
themselves to assess whether there is sufficient market demand for the new initiative. In addition,
they should find financial partners to acquire the capital resources needed. The WTZi still requires a
governmental license for hospitals to operate, but this license is no longer a planning instrument but
an instrument to guarantee the quality of care and to secure good governance. The WTZi intends to
encourage competition between health care providers and to restrict governmental planning.
However, the government still has formal power to impose obligations upon hospitals and health
2 The abolition of the CBZ has been announced and will take place by 2010 the latest (Tweede Kamer der Staten-Generaal, Vergaderjaar 2006-2007b).
2. Independent treatment centres 16
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insurers (Tweede Kamer der Staten-Generaal, Vergaderjaar 2006-2007b). First, the government may
intervene when it believes that the access of hospital care is at risk. Second, the government retains its
responsibility for specific types of medical care because the Special Medical Treatments Act (Wet
Bijzondere Medische Verrichtingen or WBMV) is not abolished.
To conclude, the alterations result in a more equal common level playing field between hospitals
and ITCs, since they are both responsible for their own planning decisions. Still, the government has
formal power to intervene.
2.1.2 Hospital financing
In the early 1980s the open-ended hospital funding system was replaced with a new system of fixed
budgets. In 1988, the latter system of historical budgeting was fundamentally revised in order to
achieve a situation in which hospitals receive an equal budget when performing equal tasks (Maarse,
Van der Horst, & Molin, 1993; www.nvz-ziekenhuizen.nl, n.d.). This new ‘FB-system’ rested upon a
normative allocation model. The parameters that were developed in order to achieve the goal are
related to the availability component, capacity component and production component of the budget
(Maarse et al., 1993). Hospitals increased their budget with expense accounts (e.g. blood
examinations) charged from the health insurer. A balance between the budget and expense accounts
was made at the end of each year. An important aspect of the FB-system was the fact that hospitals
had to avoid underproduction since this causes the hospital to receive an allowance on the patient
tariffs allocated for the next year. In contrast, hospitals with overproduction received a discount on
the patient tariffs (www.nvz-ziekenhuizen.nl, n.d.)
Over the years, the imperfections of the FB-system became apparent. The demand for health care
exceeded the supply which resulted in waiting times. In addition, the centrally regulated tariffs were
artificial and did not give hospitals insight in the costs of hospital services. The most significant
problems however, were the lack of a relation between costs and revenues, i.e. an insufficient link
between tariffs and performance, and the absence of a powerful incentive for hospitals to optimise the
full cycle of hospital care to patients (www.nvz-ziekenhuizen.nl, n.d.).
In order to resolve these problems, all parties involved worked on the development of a new
hospital financing system based on the principle of case-based payments. The first initiative for such
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a change came from the committee-Biesheuvel. In 1995, this committee advised the government
to rescind the system of fixed global budgets and to adopt a new financing system in which both
hospital and specialist remuneration were based on the volume of care delivered. During the
following years, hospitals and health insurers discussed the formulation of diagnosis and
treatment profiles and the concept was further developed (www.minvws.nl, 2007; www.zn.nl,
n.d.) In the meantime, in 1995, the lump sum financing system was introduced. The lump sum
implies that the returns of medical specialists are fixed – apart from trend based adjustments – and
that their income is partially separated from their actual production (Commissie Onderbouwing
Normatief Uurtarief Medisch Specialisten, 2005). Not until August 2000, the Minister of VWS took
the initiative to base the financing system in the curative sector on the production delivered
(www.zn.nl, n.d.).
On January 1st 2005, a change in the way health insurers reimburse hospitals was introduced.
Prior to that date, hospitals sent separate invoices to health insurers or patients for the different
episodes of the treatment, e.g. a visit to the outpatient clinic, a hospital admission, a surgery, and
outpatient examinations. As of January 1st 2005, however, an experiment was started in which the
reimbursement of hospitals by health insurers is based on case-based payments (Diagnose
Behandeling Combinatie or DBC). A DBC is an administrative code which combines the
diagnosis, treatment and all related costs involved in the care process of the specific disease of
one particular patient. A DBC therefore includes the entire set of activities and interventions
performed by the hospital and medical specialists from the first consultation and diagnosis to the
final check-up (DBC-onderhoud; Minister van Volksgezondheid Welzijn en Sport, 2006;
www.dbconderhoud.nl, n.d.). The new DBC structure is expected to increase competition
between hospitals, because health insurers will inflict greater pressure during contract
negotiations. The reimbursement will no longer be based on performances and nursing days.
Instead, the earnings of hospitals and specialists will be based on the type and number of realised
DBC’s and the tariff of each DBC agreed upon with health insurers (Commissie Onderbouwing
Normatief Uurtarief Medisch Specialisten, 2005).
From January 1st 2008, the fixed global budget system will gradually be replaced with case
based payments. Physicians will no longer receive a fee-for-service (lump sum) but instead will
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receive a single uniform standard hourly rate for medical specialist care (Tweede Kamer der
Staten-Generaal, vergaderjaar 2006-2007a).
The replacement of the FB-system and the lump sum by means of the introduction of DBC’s
can not be introduced overnight. From 2005 on, the declaration of all hospital care occurs on the
basis of DBC’s. For the time being however, the financing of hospital care on the basis of DBC’s
will only take place for care that is provided in the B-segment (see subsection 2.1.4). Central
regulation of hospital tariffs (A-DBC’s) applies to 90% of the hospital budget (Engberts,
Kalkman-Bogerd, & Hendriks, 2006; Tweede Kamer der Staten-Generaal, Vergaderjaar 2005-
2006a). In contrast, the financing system of ITCs is based on the volume of care delivered.
The new system of DBC’s will improve the insight of hospitals into the costs involved in
treating the many different kinds of patients. The perceived benefits of the implementation of
DBC’s are an improvement in the organisation and quality of medical care in the coming years.
Moreover, more transparency concerning the supply of care will promote competition between
health care providers and is therefore of special relevance for ITCs since this supports the
competition among ITCs and between hospitals and ITCs as well (Maarse et al., 2002).
2.1.3 Capital expenses
Capital expenses are the costs of interest and depreciation as a result of investments in buildings and
other capital goods. In the current system, those costs are integrated in the budget of hospitals, by
means of a full cost covering mark-up on the per diem rate of inpatient care. Consequently, neither
hospitals nor loan givers did incur any financial risk on capital investments. In contrast, the
reimbursement scheme of ITCs misses a component for capital expenses as hospitals do receive. As a
result, ITCs do run a financial risk on their investments.
This indicates that there is no common level playing field concerning capital expenses between
hospitals and ITCs yet. Since market competition requires hospitals to incur a risk on capital
investments, the government decided that hospitals should be responsible for the consequences of
their investment decisions. Starting on January 1st 2008, hospitals will take investment decisions at
their own expense and risk. From 2009 on, the subsequent ex post calculation of capital expenses will
no longer take place anymore. In addition, the capital expenses of hospitals will be integrated in the
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tariffs of medical specialist care by means of a normative mark up upon the DBC tariffs. The idea is
that all health care providers should recover their capital expenses by the provision of care (Tweede
Kamer der Staten-Generaal, Vergaderjaar 2006-2007b). The expectation is that the increased risk of
hospitals regarding their capital investments will make hospitals more critical on this aspect. In
addition, hospitals are assumed to operate as entrepreneurs in negotiating with financial agents on
capital and other financial services. Furthermore, new financial agents such as investment companies,
venture capitalists and real estate companies have discovered health care as a promising field for
investing and partnership. These developments on the capital market, that are still in their initial stage,
are controversial and politically quite sensitive, because various hospitals claim that they may go
bankrupt (Maarse, 2007). This can be illustrated by the cautious policy on a profit motive in the
health care sector, which is described in subsection 2.1.5.
The issue of the revision of capital investments is highly relevant for ITCs since it attributes to a
common level playing field between ITCs and hospitals.
2.1.4 The A- and B-segment
Currently, the prices of most diagnoses and related procedures are fixed at national level. This is
also known as the A-segment, which consists of 90% of the former hospital budget and is not
open to full price competition. However, the Dutch government decides in 2007 whether the
current budget system will be replaced by a more competitive system, based on yardstick
competition (YC) (NZa, 2007c). According to the Netherlands Bureau for Economic Policy
Analysis (Centraal Plan Bureau or CPB) ‘YC is a regulatory scheme that rewards regulated firms
on the basis of how their performance compares with the performance of similar firms in the
same sector’ (Centraal Plan Bureau, 2000, p.15). This model of YC is envisaged for the A-
segment of hospital care. For the remaining 10%, also known as the B-segment, no fixed prices
are determined. In the B-segment health care providers and health insurers can negotiate on the
number of DBC’s, their price and the quality provided. So, this part of hospital care is already
open to full price competition. With respect to transparency, care institutions are obliged to
publish their price list of the DBC's in the B-segment (DBC-onderhoud; Minister van
Volksgezondheid Welzijn en Sport, 2006; www.dbconderhoud.nl, n.d.).
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So far as the end of 2006, the Minister of VWS at that time, Minister Hoogervorst, intended to
adjust the financing of hospitals by January 2008. This would imply that health care providers
and insurers could, with regard to 70% of the hospital care (which is 95% of the elective care),
negotiate on the tariffs of care products (the B-segment). The characteristic features of elective
care are that it concerns routine and non-urgent care and is provided in a high number by the
majority of the health care providers. For the availability of acute care, highly clinical and
speciality care, education, and expensive and orphan medicines (the A-segment), regulation will
remain in place. For this regulation, financing based on performance will be one of the principles
(Tweede Kamer der Staten-Generaal, Vergaderjaar 2005-2006a).
In 2007, however, the new Minister of VWS, Minister Klink, announced that the B-segment
would be enlarged to only 20% as of January 1st 2008 (Tweede Kamer der Staten-Generaal,
Vergaderjaar 2006-2007b). In contrast to the intended 70%, this restriction of 20% is a clear
example of an evolutionary, cautionary, and incrementalist approach.
There are various reasons for slowing down the introduction of price competition. First, there
is much concern about the complexity of the DBC-system. In addition, health insurers might not
be capable enough to function as an effective countervailing power in price negotiations. A third
reason is a lack of transparency, which is an essential condition for effective market competition.
Regarding B-DBC’s, hospitals and ITCs can compete on tariffs. So, full price competition is
possible in this segment. With regard to the A-segment (90%), there is no full price competition
possible, and hospitals have to charge the tariffs regulated by the NZa. ITCs however, can apply
these regulated tariffs as maximum tariffs. As a consequence, these centres frequently arrange
deductions with health insurers which leads to tariffs that are 10 to 20 % lower than those of
hospitals (Nederlandse Zorgautoriteit, 2007a).
2.1.5 Profit motive
The articles 10 and 15 of the WZV stated that a license could exclusively be granted to a legal person
whose activities are not aimed at gaining profit. This is based on the not-for-profit character of
intramural health care providers. The WTG prevents a profit motive as well since there is no
possibility to include a profit component in the current tariffs. According to article 5 section 3 of the
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WTZi, a profit motive in the sense of the distribution of profit to members or shareholders is only
allowed for an institution which belongs to a category assigned by an ordinance (Exter A. et al.,
2004). Before an institution is allowed to operate as a for profit provider with external shareholders
(e.g. private insurers), it has to comply with several conditions. The institution should have an
integral financing system based on performance (including the costs of accommodation) and the
institution should be fully risk-bearing with respect to fluctuations in the amount of care provided. It
is expected that the distribution of profit by health care providers will be possible by the year 2012. In
exceptional cases, a profit motive can be allowed by a cabinet decision to institutions that already
comply to the conditions described above before the year 2012 (Tweede Kamer der Staten-Generaal,
Vergaderjaar 2004-2005a).
Recently, however, Minister Klink restricted the possibility of the profit motive. The argument for
this is that the current capital position of health care providers was created in a completely ‘protected
environment’ of subsequent calculation3. Therefore, institutions can be expected to permanently
reserve their amassed capital for care purposes. The policy regulations of the WTZi encompass an
‘anti-leaking-condition’ (anti-weglekbeding) which forbids health care providers to leak away capital:
profit should be reinvested in the health care sector. The intention is to legally establish this condition
as from 2010 (Tweede Kamer der Staten-Generaal, Vergaderjaar 2006-2007b). However, the view of
Minister Klink is re. If he means that health care providers are not allowed to pay a return on
investments to shareholders, he is actually killing the idea on a profit motive in health care. Probably,
he only means that the current reserves of health care providers, amassed in a ‘protected environment’
may not leak away to private investors. This illustrates the cautionary approach of the government
as well.
If it is ensured that capital amassed in a protected environment will be reserved for health care, the
government is willing to enlarge the choice for other legal forms such as a private or public limited
company. Those limited companies are attractive for institutions since it expands their access to the
capital market. Moreover, health care providers will experience more pressure from shareholders to
perform efficiently. In addition, new entrants will stimulate existing institutions to provide good and
efficient care. However, the minister envisions some disadvantages of care institutions that are a
private or public limited company. First, it is not certain that the social involvement of care
3 ‘Nacalculatie in Dutch’
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institutions will naturally increase. Depending on the intentions of financiers, adverse effects may
occur. The goal to quickly make profit, for example, can endanger the quality of care (Tweede Kamer
der Staten-Generaal, Vergaderjaar 2006-2007b).
Maintaining a ban on the profit motive was considered to be not in accordance with the freedom of
establishment within the meaning of the treaty of the European community. Moreover, profit is not a
totally new phenomenon on the health care market. Within hospitals, the majority of the medical
professionals is joined in a partnership (maatschap) and their salary depends on the profit made by
this partnership. Furthermore, a part of the existing ITCs puts out their activities to subcontractors
(e.g. medical professionals) who are employed in an organisation with a profit motive (Exter A. et al.,
2004). Finally, the expansion of possibilities to have a profit motive is in line with the increasing
responsibility given to all parties on the health care market.
Since the WTZi came into force, the possibilities of a profit motive increased significantly. This
will increase market competition, and attracts external investors and new entrants on the market for
ITCs.
2.1.6 The health insurance market
During the ‘Purple’ cabinets, the compartments-model was designed and introduced. The first
compartment contains long-term care and uninsurable medical risks. The provision and financing of
this type of care is primarily arranged by the government through the Exceptional Medical Expenses
Act (Algemene Wet Bijzondere Ziektekosten or AWBZ). The second compartment includes short-
term medical care which should be accessible for everyone. From January 1st 2006, this type of care
is ranged under the so-called ‘basic-insurance’ which is implemented by competing private health
insurers. Third compartment care encompasses care which is not insured by law and for which every
citizen can voluntarily take out a complementary health care insurance (Exter A. et al., 2004;
www.snellerbeter.nl).
As of January 1st 2006, a single universal scheme came into effect in the Dutch health insurance
system. The aim of this new system is to make the insurance system more efficient, innovative and
consumer-driven. A key feature of the new health insurance system is the combination of a single
mandatory scheme and regulated market competition (Bartholomée & Maarse, 2006).
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Hence, the obligation for health insurers to contract each hospital provider has expired. The reason
for this is that the new health care system is aimed at the development of competition among health
insurers and negotiations between health insurers and providers regarding the tariffs and volume as
well as on the quality of health care. Since health insurers are no longer obliged to sign contracts with
all health care providers, they can apply selective contracting and have better possibilities to satisfy
the specific demands of their insured (Werkgroep 'Burgers kunnen beter kiezen', 2004). Still, the NZa
complained about a lack of variation in policies that results in less freedom of choice for the
consumer.
As mentioned before, the new health insurance system is mandatory and covers the entire Dutch
population. Fundamental in the new legislation is the fact that health insurers are obliged to accept
every applicant and are forbidden to vary premiums on the basis of age, sex or specific health risk.
Finally, the new health insurance scheme has a private character, and is arranged under private law by
the government (Bartholomée & Maarse, 2006).
2.1.7 Supervision
Although a well functioning market is expected to be able to correct itself, supervisors play an
important role with respect to the optimal performance of the market. In case the market fails, the
supervisors can intervene. This especially holds true for a market like the Dutch health care market
that has recently been reorganised on a free-market basis.
Many regulatory and supervisory tasks on the Dutch health care market are delegated to
Independent Regulatory Agencies (Zelfstandige Bestuursorganen of ZBO’s). A ZBO is ‘a regulatory
agency on the central governmental level which is not hierarchically subordinated to a minister and is
not an advisory organ’ (Aanwijzingen inzake Zelfstandige Bestuursorganen, 124a)4. The main
objectives of the delegation to ZBO’s are to increase both expertise and credibility.
Supervision on the Dutch health care sector can be divided into generic and specific supervision.
The NZa and the IGZ are responsible for the specific supervision. The NZa investigates the
competitive positions and the market behaviour on the health care market, determines the tariffs in the
4 ‘Een bestuursorgaan op het niveau van de centrale overheid, dat niet hiërarchisch ondergeschikt is aan een minister en niet is een adviescollege, als bedoeld is de Kaderwet adviescolleges, waarvan de adviestaak de hoofdtaak is’ (Aanwijzingen inzake Zelfstandige Bestuursorganen, 124a).
2. Independent treatment centres 24
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A-segment; and supervises whether the health insurers comply to the obligations laid down in the
Health Insurance Act (Zorgverzekeringswet or Zvw) (Tweede Kamer der Staten-Generaal,
Vergaderjaar 2004 - 2005). The IGZ supervises the quality, safety and accessibility of the health care
and guards over the rights of patients (www.igz.nl, n.d.). However, as it turns out in the Master thesis
of Mieke Jansen, the supervision of the NZa and the IGZ on the market of ITCs leaves room for
improvement.
2.2 History of ITCs
Since the mid eighties, an emergence of private clinics can be observed. These clinics arose in
order to reduce existing waiting lists and to fulfil the need for more patient focused care. They
particularly developed as private initiatives. A private clinic is a provision that should, with
respect to its character, comply with the current regulations, but is by its initiator(s) purposefully
kept out of these regulations (Van Zenderen, 1992). The objective of private clinics is not so
much to make profit, but more to compete with the existing providers to which the regulations do
apply (Knoors, Vrijland, & Zenderen, 2000).
Initially, the government was resistant to these clinics and started legal procedures against
them or compelled them to apply for a license. However, since 1991, a policy of tolerance came
into force (Van Zenderen, 1992). Yet, they were still perceived as undesirable by the Dutch
Government (De Brouwer, 2004; Knoors et al., 2000). According to the State Secretary of Public
Health at that time, State Secretary Simons, private clinics are allowed in case they comply with
three requirements: the performance of the clinic may not result in an increase in health care
costs; private clinics should be accessible to everyone; and private clinics should provide quality
care ("Privekliniek mag onder voorwaarden", 1990). In the ‘Besluit werkingssfeer WTG 1992’,
private clinics were classified as separate bodies for health care. This emphasised the fact that
private clinics can only charge a tariff that is approved on the basis of the WTG which is
determined by the Central Authority for Health Care Charges (Centraal Orgaan Tarieven
Gezondheidszorg or COTG) (College bouw Ziekenhuisvoorzieningen, 1999).
The new Minister of VWS, Minister Borst, was more resistant to private clinics. According to
this Minister, medical specialist care should be provided inside hospitals as the multidisciplinary
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approach to care is an important aspect in the Dutch health care system (College bouw
Ziekenhuisvoorzieningen, 1999). Since this approach is lacking in small categorical institutions,
like private clinics, these clinics did not fit into the policy of that time. Moreover, the Minister
argued that a drain off of hospital production should be prevented.
In 1997, the Minister proposed an emergency law, which was intended to temporarily prohibit
the new establishment of private clinics (Minister van Volksgezondheid Welzijn en Sport, 1998).
However, following the advice of the Council of State, this emergency law did not came into
force (Minister van VWS, 1998).
2.2.1 The 1998 Regulation
In February 1998, ITCs were classified under the jurisdiction of the WZV. Since this
classification, the ‘Regeling Zelfstandige Behandelcentra’ (1998 ITC regulation) came into force
(Minister van VWS, 1998). As a consequence, the construction and exploitation of ITCs was
prohibited, unless the ITC had a WZV license (Tweede Kamer der Staten-Generaal,
Vergaderjaar 1998-1999). If an ITC complied with the criteria laid down in the new policy
regulations, on the basis of article 3 of the WZV, the license was in principle granted (Tweede
Kamer der Staten-Generaal, Vergaderjaar 1998-1999). The 1998 ITC regulation was aimed at
legalizing existing treatment centres and, at the same time, to prevent an expansion of these
centres (Knoors et al., 2000; NZa, 2007a). The most important reason for the 1998 ITC
regulation was the assumption that ITCs could play a part in the reduction of the waiting lists in
the Dutch health care sector (CBZ, 1999). The Minister explicitly declared that hospitals were in
charge of the final responsibility of the care delivered (Tweede Kamer der Staten-Generaal,
Vergaderjaar 1998-1999).
ITCs were defined as ‘organisational partnerships which deliver medical specialist care that
can be claimed under the Sickness Fund Act (Ziekenfondswet or ZFW), and which do not
function on behalf of a hospital’ (Minister van VWS, 1998)5. The idea was that the specialty care
provided in ITCs would be competitive with regard to hospitals. ITCs are oriented towards
5 “Organisatorische verbanden die niet deel uitmaken van en of fungeren ten behoeven van een ziekenhuis en die
strekken tot de verlening van medisch-specialistische zorg als waarop ingevolge het bepaalde bij of krachtens de
Ziekenfondswet aanspraak bestaat (reguliere zorg), ongeacht de wijze waarop de kosten daarvan worden vergoed”
(Minister van VWS, 1998).
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activities which do not require the complex medical-technical infrastructure of a hospital (CBZ,
1999). Consequently, ITCs provide elective care. Furthermore, inpatient care was not permitted
(i.e. overnight stay). Under the terms of the ZFW, ITCs were classified as ‘admitted institutions
for medical specialist non-clinical care’ (CBZ, 1999). In general, the type of surgery is the
decisive factor for the appropriateness of providing this surgery in an ITC. However, the physical
status of the patient is the most important aspect, since day surgery is not sensible for patients
with serious heart diseases, severe diabetes, severe respiratory problems or marked anaemia
(www.aams.org.au, n.d.).
Since the 1998 regulation came into force, the term ‘private clinic’ is only used for institutions
which exclusively provide third compartment, i.e. privately paid, care (Minister van VWS,
1998). Motives for a regulation were, among others, the quality aspect, the integration of medical
speciality care, equal access and solidarity. Furthermore, the regulation intended to discourage
the dichotomy in the health care sector (Knoors et al., 2000).
2.2.2 Criteria under the 1998 Regulation
In order to apply for a license, an ITC ought to meet certain criteria, which are laid down in a
policy regulation (ex art. 3 WZV) in June 1999.
These criteria include the following:
o An ITC should consist of an organisational partnership, which means that two or more
specialists should mutually cooperate. Single specialist units or multiple single-specialist
units in one building with a common administration are not considered an organisational
partnership;
o an ITC should provide medical-specialist care which can be claimed under the ZFW.
Thus the ITC should deliver second compartment care. This distinguishes an ITC from a
private clinic, which exclusively delivers care from the third compartment;
o the health care provider should posses corporate personality (rechtspersoonlijkheid) and
the ITC should be a non-profit institution. Frequently, a foundation is used as legal
framework. Although a foundation is allowed to make excess revenues, certain
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restrictions exist with respect to the payment of the profit; the payments should have a
social or idealistic tendency;
o the general requirement from the WZV applies as well: the health care provider should
maintain a hospital provision. This means a constructional accommodation in which
insured care is consistently provided;
o the ITC should be accessible to all insured citizens, which implies that the centre should
be contracted by health insurers. It should be mentioned that ITCs and healthcare insurers
do not have any obligations to contract each other, therefore selective contracting can
occur (Hermans & Buijsen, 2006; NZa, 2007a).;
o the ITC is not allowed to exceed the desired capacity of supply;
o an ITC should have a cooperation agreement with nearby hospitals;
o the intended activities of the ITC are exclusively directed at the provision of medical-
specialty actions for which considerable waiting times exist in the area in which the clinic
is established.
Before a license can be granted, the initiator of the ITC should posses a ‘certificate of need’.
In 2000, about 45 of the existing private clinics (approximately 110) have been converted into an
ITC, based on the Regulation of 1998 (CBZ, 2003b).
2.2.3 A significant change in perspective and legislation regarding ITCs
Between 2000 and 2003, the perspective on ITCs has changed significantly. During the
formulation of the ‘Regeling zelfstandige behandelcentra’, ITCs were perceived to be ‘a
necessary evil’. In 2003, however, the government gave priority to the elimination of waiting
lists and realised the objections against ITCs were not founded (Minster van VWS, 31 March,
2003). ITCs had proven to stimulate the dynamics in the health care market, and to be more
efficient than hospitals. Moreover, the bureaucracy and overhead is lower compared to hospitals
and the working environment is attractive for medical professionals. Furthermore, ITCs had
proven to reduce the existing waiting times (CBZ, 2003b; Hermans & Buijsen, 2006;
Nederlandse Zorgautoriteit, 2007a). Thus, the entrance of new ITCs on the health care market
was perceived to be desirable in 2003.
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In order to facilitate the entrance of new health care providers, the regulation has been revised
in 2003 and four criteria were cancelled: the existence of a waiting list in the specialty area on
which the ITC will focus; a cooperation agreement with a nearby hospital; a statement of need of
nearby hospitals and the health insurer with an important position on the market in the specific
region; and the approval of the province where the ITC was located (Hermans & Buijsen, 2006;
Minster van VWS, 31 March, 2003; NZa, 2007a).
Since this revision, the establishment of new ITCs by hospitals is no longer excluded.
However, hospital participation may not be aimed at displacing costs and tariffs, but should be
aimed at the provision of extra production in order to decrease the waiting lists (CBZ, 2003a,
2003b; Hermans & Buijsen, 2006).
Since the WTZi came into force in 2006, the 1998 ITC regulation has been cancelled. The
official name of an ITC changed into ‘Institution for Medical-Specialist Care’ (Instelling voor
Medisch-Specialistische Zorg or IMSZ). However, the term ITC is still used in daily practice.
Since this act came into force in 2006, it became possible for ITCs to deliver all kinds of B-
segment care, as no centrally regulated tariffs exist for this kind of care.
Furthermore, overnight stay in the B-segment is allowed under the WTZi. As a result, the
provision of care in the B-segment can be either with or without overnight stay. Care in the A-
segment can only be delivered when residence is not required, this is also called the ’24-hours
criterion’ (ZN, 2006).
Under the WTZi there is no longer a clear distinction between ITCs and hospitals as both can
deliver all types of care in the B-segment. The aim of such a common level playing field for
hospitals and ITCs is to improve the competition on the health care market (NZa, 2007a). In the
WTZi, two types of IMSZ’s are distinguished. Type 1 does not provide care that includes
overnight stay to patients with a DBC in the A-segment. On the contrary, type 2 does provide
this kind of care. An institution type 1 is in fact the former ITC. In addition, both types IMSZ
should in principle be non-profit and should comply with the same transparency requirements
(College Bouw Zorginstellingen, 2006).
Since the term ITC is more commonly known and provides a more clear distinction between
hospitals and ITCs, this term, and not the term IMSZ type 1, is used in this thesis.
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2.2.4 Overview of development regarding ITCs
Table 2.1 presents a brief overview of the history of ITCs in the Dutch health care market.
Table 2.1 Developments regarding ITCs
Time period Development regarding ITCs
Mid ‘80s Rise of private clinics.
1991 Policy of tolerance with respect to private clinics, but unfriendly financial system.
1992 Classification of private clinics as separate bodies for health care.
1997 Minister Borst proposes an emergency law to temporarily prohibit the new establishment of
private clinics. This proposal was not sent to the Parliament.
1998 The ‘Regeling Zelfstandige Behandelcentra’ comes into force.
2003 Revision of the 1998 ITC regulation which resulted in the elimination of four criteria:
- the existence of a waiting list in the specialty area on which the ITC will focus;
- a cooperation agreement with a nearby hospital;
- a statement of need of the health insurer with an important position on the market in the
specific region and nearby hospitals;
- the approval of the province.
2006 The WTZi comes into force and the 1998 Regulation is cancelled.
ITCs are allowed to provide care with overnight stay in the B-segment.
2.3 Common level playing field
The rules and regulations discussed in the previous (sub)sections are aimed at establishing more
market competition in the hospital sector. Market competition can be achieved by creating a
common level playing field, which implies that all competitors have to comply with the same
rules and regulations. Table 2.2 presents a clear overview with regard to the (future) existence of
a common level playing field between hospitals and ITCs.
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Table 2.2 Common level playing field
Rules and
regulations
Clarification Common level
playing field
Hospital planning Hospitals responsible for own planning decisions +
Hospital financing FB-system gradually replaced for DBC’s: more transparency +
Capital expenses From 2008, investment decisions of hospitals for their own risk
From 2009, subsequent ex post calculation is cancelled
+
A- and B-segment A-segment (90%): for hospitals tariffs fixed at national level, for
ITCs maximum tariffs
B-segment (10%): full price competition
-
+
Profit motive From 2012, profit motive allowed under certain conditions =
Health insurance
market
Obligation to contract each hospital has expired +
WTZi - both hospital and ITC are an IMSZ
- overnight stay in B-segment allowed for ITCs
+
2.4 Conclusion
With respect to the view on ITCs, a transition process can be observed. In the past, ITCs were
confronted with a very restrictive and unfriendly policy, not only with regard to planning, but
also with regard to reimbursement. There was a prevailing planning and cost control policy
paradigm plus a strong and effective hospital lobby for not accepting these ‘cherry pickers’.
However, a stepwise acceptance took place. ITCs were integrated into a legal framework and
even perceived as helpful to reduce existing waiting lists. They perfectly fit in the intended
model of market competition in the hospital sector. In order to facilitate market competition, a
stepwise process to achieve a common level playing field in hospital care has occurred. Several
regulations were revised and new Acts, such as the WTZi came into force. The WTZi aims to
create more freedom and responsibility for health care providers by means of less involvement of
the government. Other examples of taken decisions are the introduction of case-based payment,
full price competition in the B-segment, and the abolition of the obligation for health insurers to
+ more equal - less equal
= no difference
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contract each hospital. Nevertheless, quite a few market making decisions are yet to be taken in
order to promote a common level playing field. One can think of the introduction of a profit-
motive, the extension of the B-segment, and the revision of arrangements for capital investments.
The latter implies that the capital expenses will be integrated in the tariffs and have to be
recovered by means of the provision of care.
In sum, the market for ITCs was characterised by a restrictive policy, but ITCs were
eventually perceived as helpful and gradually more and more regulations to facilitate the
development of the market for ITCs came into force. Nevertheless, market competition in health
care has by far not reached its full potential and has a long bumpy way to go.
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3. Financial analysis of independent treatment centres
In this chapter, the available annual accounts of several ITCs in the Netherlands are analysed in
order to give an overview of their financial position. In addition, the legal forms and the
shareholders of the ITCs are presented. Thus, this chapter intends to answer the following
research question: ‘What is the financial performance of Dutch ITCs and what is their situation
with regard to their legal form and shareholders?’
The first section of this chapter describes the methods used for the financial analysis. In the
second section, some relevant theory concerning the legal framework and annual accounts is
considered. The results of the analysis are presented in the third section. Possible shortcomings
and problems encountered are discussed in the fourth section. Finally, a conclusion is drawn.
3.1 Methods
In order to obtain the annual accounts of ITCs, the website of the Central Information office for
Health care Professions (Centraal Informatiepunt Beroepen Gezondheidszorg or CIBG) has been
used (www.cibg.nl). The final date of the retrieval of annual accounts was July 15th of 2007.
The first inclusion criterion used during the retrieval of the annual accounts was the
availability of these accounts for the year 2006. The rationale for using financial data of 2006 is
that this will provide the most recent overview of the financial position of ITCs in the
Netherlands. A more reliable analysis can be performed on ITCs that have been operating for
several years, since they have an established name and network and do not have to deal with
costs related to the start up anymore. Consequently, the second selection criterion used was that
the ITCs had to be operational for at least three years. In addition, the analysis of three
consecutive years will provide a more complete representation of the changes and developments
over time and contributes to a valid conclusion concerning the financial position of ITCs. After
the retrieval of the annual accounts of 2005 (which include an account of 2004 as well) and 2006,
the accounts that did not include an explanation on the balance sheet and the profit-and-loss
account were excluded from the analysis.
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For the correct interpretation of the values and explanations in the annual accounts, two
specialists in the area of financial administration have been consulted.
In order to analyse the financial position of the ITCs, several index numbers are calculated and
the development of these index numbers over the years is assessed. In addition, the net annual
turnover and the operating results before the payment of tax of three consecutive years are
compared for each individual centre. Next, the ITCs are compared with each other regarding the
operating results before the payment of tax.
SPSS 14.0 is used in order to assess whether the differences in the index numbers, the net
annual turnover and the operating results before the payment of tax are significant during the
period 2004-2006.
In addition to the analysis of the financial position of a selected group of ITCs, details
concerning the legal form and shareholders of all ITCs in the Netherlands are presented. Those
details are retrieved from the questionnaires, the website of the Chamber of Commerce
(www.kvk.nl), and the annual accounts and reports of the ITCs.
Finally, the answers to the questions of the in-dept interviews regarding the financial position
of the respondents are presented. As mentioned in the introduction, representatives of 6 ITCs
were interviewed. Since 2 of these ITCs concern a chain, and thus have several locations, it is
possible that the data of more than 6 individual centres are presented. It should be mentioned that
the ITCs that were interviewed are not the same ITCs of which the annual accounts have been
analysed.
3.1.1 Index numbers
In order to analyse the financial position of several ITCs, various index numbers are calculated.
The index numbers computed for the analysis concern the rotation time of the debtors, the
solvability, and the liquidity. In addition, the net annual turnover and the operating results before
the payment of tax (from now on referred to as ‘operating results’) are examined and compared.
The rotation time of debtors is an indicator for the average time (in days) between the creation
and collection of receivables. The higher the number of days, the greater the risk for the
organisation. In other words, the longer an organisation has to wait for payments from its debtors,
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the more risk it runs on obtaining its receivables, and thus achieving a sound financial position.
The rotation time of debtors can be calculated by means of the following formula (Eikelboom &
De Bondt Fiscaal Financieel Adviseurs BV, 2003; Maenen, 2007):
Since a rotation time of debtors of 45 days is considered to be standard (Maenen, 2007), a
marginal value of 45 days is used in the analysis.
The solvability indicates whether an organisation is capable of satisfying its financial
obligations on the long term. The lower the solvability, the more dependent an organisation is on
external providers of capital (www.zibb.nl, 2007b), and the more problems it will have when
attempting to attract debt capital (Slot & Minnaar, 1994). The next formula is used for the
calculation of the solvability of the ITCs (Eikelboom & De Bondt Fiscaal Financieel Adviseurs
BV, 2003):
A solvability percentage of 20 or higher is considered to be desirable (Maenen, 2007;
www.zibb.nl, 2007b).
The liquidity of an organisation reflects the ability of the organisation to keep a balance
between its receipts and expenses, in order to be able to satisfy its financial obligations on the
short term (Slot & Minnaar, 1994). The current ratio is one of the instruments used to gain
insight in the liquidity of an organisation and can be calculated by using the following formula
(Kamer van Koophandel, 2005):
It is possible that the material fixed assets of an organisation are (partially) financed with its
short-term debts. In this case, it is possible to determine which amount of the short-term debts is
used for the financing of the material fixed assets. Then, the current ratio can be recalculated with
the adjusted short-term debts (Maenen, 2007).
A current ratio between 1 and 1,5 is considered to be desirable (www.zibb.nl, 2007a), the
marginal value used in the analysis is 1.
Rotation time debtors = (business debtors / net returns) x 365 days
Solvability = (equity capital / total invested capital) x 100%.
Current ratio = current floating assets / short-term debts
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Another indicator of the liquidity of an organisation is the cover of interest. The cover of
interest indicates how many times the interest can be paid out of the gross operating results. This
cover is an important criterion for banks in case of the granting of a loan (Van der Have, 2004).
The next formula is used to calculate the cover of interest:
The cover of interest of an organisation should be at least 4 (Maenen, 2007).
3.1.2 Repeated-measures design
Repeated-measure is a term that is used when the same people, or in this situation ITCs,
participate in all conditions of a research (Field, 2005). In these situations, a one-way repeated-
measures ANOVA can be applied. Since the index numbers, the net annual turnover and the
operating results of the ITCs are analysed over three consecutive years, they can be regarded as
repeated-measures data. Consequently, the one-way repeated-measures ANOVA is applicable.
As a consequence of the low number of ITCs included in the financial analysis (n = 12), it is
hardly attainable to observe a significant difference over the years with respect to the index
numbers, the net annual turnover and the operating results. Indeed, according to Cohen (Field,
2005), the following guidelines can be used: when a standard α-level of 0.05 and a recommended
power of 0.80 are used, 738 participants are needed to detect a small effect size, 85 participants
are needed to detect a medium effect size, and 28 participants are needed to detect a large effect
size.
Nevertheless, the repeated-measures design has been applied for the comprehensiveness of the
analysis. Additional information concerning this design and the output produced by SPSS, can be
found in appendix 5.
3.2 Legal forms and the deposition of annual accounts
Several types of business companies that are applicable to ITCs can be distinguished: the private
limited company, the foundation, and the partnership. In addition, a short description of the
holding company is given.
Cover of interest = (operating results before tax and interest) / interest expenses
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A private limited company (PLC) (Besloten Vennootschap or B.V.) is a type of company in
which the societal share capital is divided in nominal shares, i.e. the shares are not freely
transferable. The most important requirements concerning a PLC are: the company can only be
established by means of a notarial act; the Minister of Justice should give a ‘certificate of
incorporation’; the company should have a starting capital; and the company should be registered
in the company register (Vereniging Kamers van Koophandel, 2007).
Important features of a foundation (stichting) are that a foundation has no members and that it
is established to realize an objective. Although a foundation is allowed to make profit, certain
restrictions exist with respect to the payment of profit: the payments should have a social or
idealistic tendency. Like a PLC, a foundation should be registered in the company register
(Vereniging Kamers van Koophandel, 2007).
A partnership (maatschap) is a cooperation between two or more persons, who are called
partners (KvK, 2007b). Each partner contributes something, one could think of labour,
knowledge, money, or commodities, with the purpose to share the resulting benefits. A
partnership is a type of company chosen by professionals. It is not required to draw up a contract
for the establishment of a partnership. Since the partnership does not practice a company, the
partnership is not registered in the company register (Vereniging Kamers van Koophandel, 2007).
The holding company is a company (generally with the legal form of a public limited
company) that owns such a large portion of the shares of one or several other companies that this
holding company has power over the other company or companies (Slot & Minnaar, 1994).
The ‘Regulation reporting WTZi’ (Regeling verslaggeving WTZi) applies, among others, to
institutions that provide medical-specialist care. Consequently, ITCs have to act according to this
regulation (www.minvws.nl, 2007). According to article 9, section 2 of this regulation,
institutions are obliged to file their annual reporting of 2006 with the CIBG on June 1st of 2007 at
the latest (www.cibg.nl, n.d.).
3.3 Results
This section starts with an overview of the legal forms of all ITCs in the Netherlands and details
concerning their shareholders. Next, the outcome of the application of the selection criteria for
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the financial analysis is given. In the third subsection, some general information concerning the
included ITCs is described. The results of the financial analysis are presented in the fourth and
fifth subsection, starting with the index numbers and ending with the net annual turnover and the
operating results. The sixth subsection provides an overview of the financial position of the
included ITCs in 2006. Finally, the results of the in-dept interviews are discussed.
3.3.1 Legal form and shareholders of all ITCs in the Netherlands
In the Master thesis of Annick van Kollenburg (2007), all the separate locations of ITCs in the
Netherlands are included in the analysis. As a consequence, the characteristics of 129 ITCs are
presented. For the purpose of this chapter, however, not all separate locations are counted
individually. The rationale for this is that although some ITCs are a foundation with locations that
each have their own legal form, other ITCs are one foundation with multiple locations that do not
have their own legal form. Therefore, the situation was assessed for each ITC separately and the
ITCs were divided into eight categories. Consequently, the number of ITCs included in the
analysis of this chapter is 94.
Figure 3.1 presents the legal form of all ITCs in the Netherlands included in this thesis. Since
data concerning the legal form was not available for 3 ITCs, the legal forms of 91 ITCs are
presented. As can be seen in the figure, the majority of ITCs is a foundation (more than 48%),
and almost 10% is a PLC. In addition, almost 9% of the ITCs is a foundation with multiple
locations, and more than 3% of the ITCs is a foundation with multiple locations in the form of a
PLC. Furthermore, over 23% of the ITCs is both a foundation and a PLC, and more than 4% of
the ITCs is a foundation and a PLC with multiple locations. In case an ITC is both a foundation
and a PLC, the PLC functions as the subsidiary company (werkmaatschappij) of the foundation.
Finally, one of the ITCs is a PLC with multiple locations and one ITC is a foundation, a PLC and
a limited partnership (commanditair vennootschap or C.V.). In sum, the majority of the ITCs is a
foundation with one location. However, when, among others, combinations of a foundation and a
PLC and foundations with several locations are included as well, 89% of the ITCs has a
foundation as (one of) its legal forms. In a similar way, almost 43% of the ITCs has PLC as (one
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of) its legal forms. A combination of a foundation with a PLC can be found in almost 31% of the
ITCs.
With respect to the motive to choose for a certain legal form, three of the respondents of the in-
depth interviews chose for a PLC because of the profit motive that is related to this legal form. In
addition, two of these three respondents mentioned that a PLC is more transparent. Another
respondent opted for a PLC in combination with a foundation in order to secure the capital of the
foundation. On the other hand, two of the respondents preferred the foundation. One of them
mentioned the absence of interference of shareholders as the most important reason. The other
respondent chose for a foundation since he was under the impression that it is not allowed to be a
PLC.
foundation, PLC, and limited partnership (n=1)
foundation and PLC with multiple locations (n=4)
PLC with multiple locations (n=1)
foundation with multiple locations that are a PLC (n=3)
foundation with multiple locations (n=8)
foundation and PLC (n=21)
PLC (n=9)
foundation (n=44)
Figure 3.1 Legal forms of ITCs in the Netherlands
Figure 3.2 presents the available details concerning the shareholders of the ITCs. Since
foundations do not have shareholders, all ITCs that are a foundation (with one or multiple
locations) are excluded (n=52) from this analysis. The ITCs for which no data was available were
excluded as well (n=7). Consequently, 32 ITCs were included in the analysis. In the majority of
3. Financial analysis of independent treatment centres 39
J.E. Wagemans
the cases (almost 19%), the holding is the shareholder of the ITC. Except for two missing values,
these holding companies have the legal form of a PLC. For almost 16% of the ITCs, the medical
specialist(s) are the shareholder. In an equal number of cases, the concern to which the ITC
belongs or an external party active in the health care sector (for example a ‘zorggroep’) has
shares in the ITC (both in nearly 13% of the cases). The same holds true for three other types of
shareholders. In well over 6% of the ITCs a hospital, the management of the ITC, or private
persons hold the shares of the ITC. In more than 9% of the cases, the medical specialist(s)
together with the founder(s) of the ITC are the shareholders. The category ‘other’ consists of, for
example, a hospital and a health insurer which both have shares in the ITC.
With respect to the ITCs that have more than one shareholder, an insufficient amount of
information is available concerning the majority shareholder. Therefore, no statements can be
made with regard to this aspect.
other (n=4)
private person(s) (n=2)
external party active in health care sector (n=4)
medical specialist(s) and founder(s) (n=3)
concern (n=4)
holding of the ITC (n=6)
management (n=2)
hospital (n=2)
medical specialist(s) (n=5)
Figure 3.2 The shareholders of ITCs in the Netherlands
3. Financial analysis of independent treatment centres 40
J.E. Wagemans
3.3.2 The outcome of the selection procedure
The search for annual accounts of ITCs of the year 2006 resulted in the retrieval of 21 annual
accounts from the website of the CIBG. Seven of these 21 ITCs had not yet been operating for
three years or more. Of the remaining 14 ITCs, one centre was excluded since the explanation on
the balance sheet and the profit-and-loss account was absent. Finally, one of the ITCs has been
established by a hospital and the loan granted by this hospital was so high, that the ITC can
considered to be a continuation of the hospital and would not be able to survive without the loan.
Consequently, this ITC has been excluded as well, and 12 ITCs remained to be included in the
financial analysis. The exclusion of the ITCs is presented in table 3.1.
Table 3.1 The application of the inclusion criteria
3.3.3 Legal forms of the included ITCs
The legal forms of the 12 ITCs included in the analysis have been investigated (table 3.2). Eight
ITCs have the legal form of a foundation and 3 of these have several locations. Three ITCs are
both a foundation and a PLC. In these 3 cases, the PLC functions as the subsidiary company of
the foundation. One of those 3 ITCs has filed a consolidated annual account; the other 2 have
filed the annual account of the foundation. One of the 12 ITCs has the legal form of a PLC.
The distribution of the legal forms of the included ITCs is similar to the national distribution.
The only exception is the foundation with multiple locations, which is present in 25% of the ITCs
in the financial analysis, whereas it is the legal form of only 8% of the ITCs nationally.
Inclusion criterion Amount
ITCs of which an annual report of 2006 is available 21
ITCs not operative since 2004 or before 7 -
ITC with an annual report in which the explanation is absent 1 -
ITC that is not able to survive without support of the hospital 1 -
ITCs included in the analysis 12
3. Financial analysis of independent treatment centres 41
J.E. Wagemans
Table 3.2 Legal forms of the ITCs included in the financial analysis
In the introduction, a categorisation of ITCs into three groups has been described. All 12 ITCs
included in the analysis can be categorised in the group of the individual ITCs. Four of these
ITCs have more than one location.
The medical specialties provided in the ITCs, are presented in table 3.3. In case the ITC has
multiple locations, these locations have not been included separately. The rational for this is that
each of the 4 ITCs that has multiple locations, provides the same specialties in each individual
location. Since the majority of the ITCs provided more than one specialty, the number of
specialties presented in the table exceeds 12.
Similar to the specialties provided in all ITCs in the Netherlands, dermatology is the most
frequently provided specialty in the ITCs included in the financial analysis. With respect to the
specialties of general surgery and intern medicine as well, the situation of the included ITCs
corresponds to the situation nationally. It should be noted however, that none of the ITCs
included in the financial analysis provides the specialty of ophthalmology, which is frequently
provided nationwide.
Legal form Amount Percentage
Foundation 5 42 %
Foundation with multiple locations 3 25 %
Foundation and a PLC 3 25 %
PLC 1 8 %
Total 12 100 %
3. Financial analysis of independent treatment centres 42
J.E. Wagemans
Table 3.3 Specialties provided in the ITCs included in the financial analysis
Specialty Number of ITCs
Dermatology 6
Anaesthetics 2
Cardiology 2
General surgery 2
Intern medicine 2
Maxillofacial surgery 1
Ear, Nose and Throat (ENT) 1
Neurology 1
Radiology 1
Rheumatology 1
Plastic surgery 1
Gynaecology 1
Total 21
3.3.4 Index numbers of the analysed ITCs
In this section, the index numbers calculated for the ITCs are presented in both tables and graphs.
For each ITC, each index number is computed for the years 2004, 2005, and 2006. According to
the marginal values described in section 5.1.1, the calculated index numbers are coloured red
when negative and green when positive.
Rotation time of debtors
The missing values in table 3.4 are a consequence of the fact that the values necessary for the
calculation were not available or not appropriate to use. As can be derived from the table, the
rotation time of debtors of the majority of ITCs is above the marginal value of 45 days. In 2004,
the rotation time was more than 45 days for all ITCs included. One year later, the rotation time
was above the marginal value for almost 82% of the ITCs. In 2006, almost 64% of the ITCs had a
rotation time of debtors above the marginal value.
3. Financial analysis of independent treatment centres 43
J.E. Wagemans
Table 3.4 Rotation time of debtors (in days)
The graphical representation of the rotation time of debtors is divided into two graphs (figure 3.3
and figure 3.4). The reason for this is that the inclusion of the ITCs with a rotation time of more
than 90 days would lead to an inconveniently arranged graph. As can be seen in figure 3.3, the
rotation time of debtors was for 3 ITCs (C, J, and K) considerably higher in 2005 when compared
to 2004 and 2006. In contrast, the rotation time for 1 ITC was noticeably lower in 2005 (F). For 3
ITCs, the rotation time is relatively stable and fluctuates around the 45 days (D, E, and I). The
rotation time for 1 ITC (G) is too high and increases during the period 2004-2006. The rotation
time of 2 ITCs (B and L) is decreasing, but still considerably above 45 days. The rotation time of
the remaining ITC (H) is sufficient in 2006, but it is difficult to make statements concerning the
development over time since data of 2004 is missing. In 2006, the rotation time of debtors for 4
of the 11 ITCs was sufficient.
ITC 2004 2005 2006
A.. - 1 -1 -1
B. 365 269 165
C. 822 1203 185
D. 48 45 35
E. 50 48 44
F. 66 53 80
G. 50 65 81
H. -2 77 44
I. 51 39 38
J. 53 87 66
K. 49 77 53
L. -2 338 288
1 net return is €0 or less
2 no business debtors presented on the balance sheet
3. Financial analysis of independent treatment centres 44
J.E. Wagemans
0
10
20
30
40
50
60
70
80
90
100
'04 '05 '06
year
rotation tim
e (days))
0
200
400
600
800
1000
1200
1400
'04 '05 '06
year
rotation tim
e (days)
In table 1 of appendix 5, the results of the SPSS analysis are presented. Mauchly’s test of
sphericity indicates that the assumption of sphericity has been violated (χ2 (2) = 16.03, p < 0.05).
Consequently, degrees of freedom were corrected using the Greenhouse-Geisser estimates of
sphericity (ε= 0.53, p > 0.05). The results indicate that there are no significant differences
between the rotation time of the debtors of the ITCs over the years.
ITC A
ITC B
ITC C
ITC D
ITC E
ITC F
ITC G
ITC H
ITC I
ITC J
ITC K
ITC L
marginal value
Figure 3.3 Rotation time of debtors (in days)
Figure 3.4 Rotation time of debtors (in days) above 90 days
ITC A
ITC B
ITC C
ITC D
ITC E
ITC F
ITC G
ITC H
ITC I
ITC J
ITC K
ITC L
marginal value
3. Financial analysis of independent treatment centres 45
J.E. Wagemans
Solvability
The missing values in table 3.5 are caused by the negative values of the equity capital of the
specific ITCs. In case the equity capital is less than €0, the solvability can not be calculated.
Figure 3.5 is the graphical representation of table 3.5.
In 2006, the solvability of half of the ITCs for which the solvability has been calculated is
positive. This is an improvement with respect to 2004, since only 2 ITCs had a positive
solvability in that year. However, the percentage of ITCs with a solvability of 20% or higher in
2006 is lower than the percentage of ITCs with a solvability of at least 20% in 2005 (respectively
50% and 57%).
Figure 3.5 indicates that the solvability of 3 (D, G and K) of the 6 ITCs that have no missing
values has remained relatively stable during the period 2004-2006. Solvability of ITC B was
considerably higher in 2005. On the contrary, the solvability of ITC C was lower in 2005. The
solvability of ITC J has improved during the period 2004-2005, but has stabilised hereafter.
ITC 2004 2005 2006
A. -1 -1 -1
B. 18 81 38
C. 69 56 68
D. 5 6 7
E. -1 -1 -1
F. 2 -1 0
G. 5 6 12
H. 17 -1 -1
I. -1 2 3
J. 13 25 28
K. 71 73 81
L. -1 -1 -1
Table 3.5 Solvability (in %)
3. Financial analysis of independent treatment centres 46
J.E. Wagemans
0
10
20
30
40
50
60
70
80
90
'04 '05 '06
year
solvability (%)
In table 2 of appendix 5, the results of the SPSS analysis are presented. Mauchly’s test of
sphericity indicates that the assumption of sphericity has been violated (χ2 (2) = 9.15, p < 0.05).
Consequently, degrees of freedom were corrected using the Greenhouse-Geisser estimates of
sphericity (ε= 0.53, p > 0.05). The results show that there are no significant differences
concerning the solvability of the ITCs over the years.
Current ratio
Table 3.6 presents the current ratio based on the figures reported on the balance sheet of the
annual accounts. The current ratio computed with the adjusted short-term debts is presented in
table 3.7. The missing values in this table are due to the fact that not all ITCs use their short-term
debts to finance their material fixed assets. In addition, 2 of the 12 included ITCs do not have
material fixed assets.
As can be derived from a comparison of the tables, 6 of the 12 ITCs have used their short-term
debts to finance their material fixed assets during the period 2004-2006. In total, 8 ITCs (D, E, F,
G, H, I, J and L) have done this in one of several years during the period 2004-2006. An
adjustment of the short-term debts (when possible) results in a higher current ratio for the
ITC A
ITC B
ITC C
ITC D
ITC E
ITC F
ITC G
ITC H
ITC I
ITC J
ITC K
ITC L
marginal value
Figure 3.5 Solvability (in %)
3. Financial analysis of independent treatment centres 47
J.E. Wagemans
majority of the ITCs. For one ITC (E) the current ratio is lower, but is still sufficient after the
calculation with the adjusted short-term debts.
Despite of the fact that a considerable number of the ITCs has used their short-term debts for
the financing of their material fixed assets, the current ratios based on the figures presented on the
balance sheet will be used for the analysis.
Half of the ITCs had a positive current ratio in 2004. In 2005, two-thirds of the ITCs had a
positive current ratio. In 2006, this percentage decreased to 58%.
ITC 2004 2005 2006
A. 5.0 1.7 0.9
B. 1.2 5.3 1.6
C. 3.2 2.3 3.1
D. 0.9 0.8 0.4
E. 0.9 1.5 1.8
F. 0.7 0.6 0.6
G. 0.6 1.3 1.7
H. 3.6 0.5 0.6
I. 0.8 0.7 0.7
J. 1 1.2 1.3
K. 5.3 6.2 9.1
L. 0.2 1.0 1.0
ITC 2004 2005 2006
A. -1 -1 -1
B. -2 -2 -2
C. -2 -2 -2
D. 1 1 1
E. 1 1 1
F. 1 1 1
G. 0.9 -1 -1
H. -1 1 1
I. 1 1 1
J. 1.2 1.4 1.4
K. -1 -1 -1
L. 1 1 1
Table 3.7: Current ratio adjusted
1 the short-term debts are not used for the financing of the material fixed assets
2 the organization has no material fixed assets
Table 3.6: Current ratio
3. Financial analysis of independent treatment centres 48
J.E. Wagemans
In figure 3.6, a current ratio of 6 or higher is presented as a ratio of 6. This is because the
presentation of higher values would result in an inconveniently arranged graph. The graph
shows that the current ratio of 7 ITCs is sufficient in 2006. The current ratios of the ITCs that
were insufficient in 2006 are constant or decreasing over the years.
0
1
2
3
4
5
6
7
'04 '05 '06
year
current ratio (
The results of the SPSS analysis are presented in table 3 in appendix 5. Mauchly’s test of
sphericity indicates that the assumption of sphericity has not been violated (χ2 (2) = 1.23, p >
0.05). The significance of the F-ratio is 0.995 (p > 0.05), which means the F is not significant and
the null hypothesis should be accepted. Thus, the results show that there are no significant
differences concerning the solvability of the ITCs over the years.
Cover of interest
In 2006, the cover of interest of 7 of the 10 ITCs for which the cover was calculated was
sufficient (table 3.8). As a consequence of the high number of missing values, it is difficult to
make statements concerning the development over the years. For only 5 of the ITCs, the cover of
interest of three consecutive years is available. Therefore, missing values type 1 are included in
the analysis. These missing values represent ITCs with a negative operating result before tax
Figure 3.6: Current ratio
ITC A
ITC B
ITC C
ITC D
ITC E
ITC F
ITC G
ITC H
ITC I
ITC J
ITC K
ITC L
marginal value
3. Financial analysis of independent treatment centres 49
J.E. Wagemans
payment. Although this makes it less meaningful to calculate the cover of interest, the cover of
interest can considered to be negative in these cases. Consequently, the cover of interest was
sufficient for 50% of the ITCs in 2004. This percentage decreased to 33% in 2005, and increased
again to 58% in 2006.
In figure 3.7, a cover of interest of more than 50 has been set at 50 in order to prevent an
inconveniently arranged graph.
ITC 2004 2005 2006
A. -1 -1 -1
B. 265 3 35
C. 14 2 4
D. 44 44 88
E. -1 2 -1
F. -1 -1 2
G. -1 5 4
H. 1 -1 1
I. 4 3 2
J. -2 474 21
K. 37 15 583
L. -3 -1 35
Table 3.8: Cover of interest
1 the operating result before tax payment is negative
2 no interest presented on the profit-and-loss account
3 interest is €0
3. Financial analysis of independent treatment centres 50
J.E. Wagemans
0
10
20
30
40
50
60
'04 '05 '06
year
cover of interest
Table 4 in appendix 5 presents the result from the SPSS analysis. Mauchly’s test of sphericity
indicates that the assumption of sphericity has not been violated (χ2 (2) = 2.92, p > 0.05). The
significance of the F-ratio is 0.481 (p > 0.05), which means the F is not significant and the null
hypothesis should be accepted. Thus, the results show that there are no significant differences
concerning the cover of interest of the ITCs over the years.
3.3.5 The net annual turnover and the operating results before tax-payment
The net annual turnover is an indicator of the growth of the market for ITCs. However, no
statements can be made concerning the profitability of the market, since the costs incurred by the
ITCs should be considered too. Therefore, the operating results are presented in this section as
well.
Table 3.9 presents the net annual turnover of the ITCs during the period 2004-2006. Figure 3.8
is the graphical representation of table 3.9. The net annual turnover of ITC F and G are not
presented in figure 3.8, since the inclusion of a net annual turnover of more than €2.000.000, -
would result in an inconveniently arranged graph.
Figure 3.7: Cover of interest
ITC A
ITC B
ITC C
ITC D
ITC E
ITC F
ITC G
ITC H
ITC I
ITC J
ITC K
ITC L
marginal value
3. Financial analysis of independent treatment centres 51
J.E. Wagemans
The results show that the net annual turnover of 5 ITCs (G, H, I, J and L) increased during the
period 2004-2006. The net annual turnover of 1 ITC (A) has decreased. The turnover of 3 ITCs
(C, D and F) remained fairly constant during the period of analysis. Two ITCs (B and K) had a
fluctuating turnover. Finally, the net annual turnover of 1 ITC (E) has increased from 2004 to
2005, but has been moderately constant during the period 2005-2006.
0,00
200.000,00
400.000,00
600.000,00
800.000,00
1.000.000,00
1.200.000,00
1.400.000,00
1.600.000,00
1.800.000,00
2.000.000,00
'04 '05 '06
year
net annual turnover (€)..
ITC 2004 2005 2006
A. 269.295 110.821 17.230
B. 219.326 31.129 495.812
C. 6.807 6.807 6.808
D. 598.292 535.530 538.828
E. 193.923 311.054 309.345
F. 24.462.697 24.307.827 23.689.126
G. 3.883.624 4.587.845 5.223.004
H. 136.134 581.697 1.067.018
I. 1.093.938 1.447.240 1.768.971
J. 392.936 569.184 652.251
K. 633.818 585.491 664.190
L. 0 974.278 1.761.522
Table 3.9: Net annual turnover (in €)
Figure 3.8: Net annual turnover (in €)
ITC A
ITC B
ITC C
ITC D
ITC E
ITC F
ITC G
ITC H
ITC I
ITC J
ITC K
ITC L
3. Financial analysis of independent treatment centres 52
J.E. Wagemans
In table 5 of appendix 5, the results of the SPSS analysis are presented. Mauchly’s test of
sphericity indicates that the assumption of sphericity has been violated (χ2 (2) = 18.18, p < 0.05).
Consequently, degrees of freedom were corrected using the Greenhouse-Geisser estimates of
sphericity (ε= 0.54, p > 0.05). The results indicate that there are no significant differences
between the net annual turnover of the ITCs over the years.
Table 3.10 and figure 3.9 present the operating results of the ITCs during the period 2004-
2006. The operating results of ITC F are not presented in the figure since these amounts deviate
largely from the operating results from the other ITCs and would result in an inconveniently
arranged graph.
In 2006, the operating results before the payment of tax of 9 of the 12 ITCs were positive. This
implies an improvement over the years, since the operating results of 7 ITCs were positive in
2004. A great variety in the magnitude can be observed.
ITC 2004 2005 2006
A. -4,662 -8,770 -3,531
B. 20,835 71 115,974
C. 6,545 2,019 2,856
D. 246,411 134,543 100,286
E. -76,866 7,020 -5,554
F. -727,354 -456,238 461,721
G. -102,640 235,174 136,788
H. 48 -160,979 -15,506
I. 13,438 13,325 8,786
J. 30,290 42,138 9,065
K. 138,938 44,255 148,918
L. -873 -11,969 2,246
Table 3.10: Operating results before tax-payment (in €)
3. Financial analysis of independent treatment centres 53
J.E. Wagemans
-200.000,00
-150.000,00
-100.000,00
-50.000,00
0,00
50.000,00
100.000,00
150.000,00
200.000,00
250.000,00
300.000,00
'04 '05 '06
year
operating results (€).
Figure 3.10 presents for the operating results and each index number individually, the
percentage of ITCs that had a positive score on this aspects in 2004, 2005, and 2006 successively.
A positive development concerning the rotation time of debtors and the operating results can be
seen. The other three index numbers are fluctuating. Both the solvability and the current ratio
show a peak in 2005, whereas the cover of interest was low in 2005 compared to 2004 and 2006.
0
10
20
30
40
50
60
70
80
'04 '05 '06
year
positive index number or operating
result (percentage)
rotation time of
debtors
solvability
current ratio
cover of interest
operating results
before tax payment
Figure 3.9: Operating results before tax-payment (in €)
ITC A
ITC B
ITC C
ITC D
ITC E
ITC F
ITC G
ITC H
ITC I
ITC J
ITC K
ITC L
Figure 3.10 Development of the number of ITCs with a positive index number or operating result
3. Financial analysis of independent treatment centres 54
J.E. Wagemans
3.3.6 Overview of the financial position of ITCs in 2006
In table 3.11, the financial position of the 12 ITCs, based on their index numbers and their
operating results before tax payment, is presented for 2006. Since ITC A has two missing values,
it is more difficult to make valid statements. In view of the fact that the values that are known are
negative, and the net return is €0 or less, the financial position is insufficient. In addition, the
operating results before tax payment are negative. ITC B, C, J, and K are functioning well. They
should pay attention however to the rotation time of their debtors, as this index number is above
the marginal value which implies a risk for the ITCs. Regarding ITC D, it can be said that it runs
a low risk on its returns and has relatively high operating results. Nevertheless, it is not capable
of satisfying its obligations on both the short- and long-term. Therefore, the ITC is said to be
functioning moderately. ITC E can considered to be functioning moderately as well since two of
the four known index numbers are positive. Although its operating results are negative, they are
not as low as in 2004. ITC F has a negative financial position since all the index numbers are
insufficient. Remarkably, this ITC has the highest operating result of all 12 ITCs. ITC G runs a
risk on its returns and has problems to satisfy its obligations on the long-term, but has a positive
current ratio, cover of interest and operating result. Therefore, ITC G is functioning moderately.
The financial position of ITC H is insufficient since it has negative operating results, and has
mainly insufficient index numbers. ITC I has positive operating results and runs a low risk on its
returns, but has problems concerning its foreign capital. Therefore, ITC is considered to be
functioning moderately. Finally, ITC L is functioning moderately as well since it has three
positive values and 2006 is the second year it has a sufficient current ratio, but the ITC has a low
operating result.
In sum, the market for ITCs in 2006 cannot yet considered to be big business, but the financial
position of the majority of the ITCs can be characterised to be moderately to positive.
3. Financial analysis of independent treatment centres 55
J.E. Wagemans
ITC Rotation
time debtors
Solvability Current
ratio
Cover of
interest
Operating
results
before tax
payment
Conclusion
A. mv 1 mv - - - -
B. - + + + + +
C. - + + + + +
D. + - - + + +/-
E. + mv + - - +/-
F. - - - - + -
G. - - + + + +/-
H. + mv - - - -
I. + - - - + +/-
J. - + + + + +
K. - + + + + +
L. - mv + + + +/-
3.3.7 Results of the in-dept interviews
The financial position of the ITCs included in the in-depth interviews can be considered to be
moderately to positive as well. Five of the respondents assessed their financial position as
satisfactory since the excess revenue made was considerable. This in contrast to the other four
ITCs that were either loss-making or had an insufficient or fluctuating excess revenue. Regarding
the development of their financial position over the years, three of the six respondents observed
an upward trend.
Concerning the expectations and plans for the future, three of the respondents envisioned a
considerable growth. None of them intended to expand the number of specialties it provides. Two
of them consider the opening of additional locations. The other one wants to double the
production and attract more patients. A fourth respondent values the quality of care and desires to
grow within the bounds of its own possibilities, and does not desire to become a chain of ITCs.
Another ITC on the other hand, hopes to achieve an all-care concept. One of the ITCs
Table 3.11: The financial position of ITCs in 2006
1 ‘mv’ means missing value
3. Financial analysis of independent treatment centres 56
J.E. Wagemans
experienced high costs related to the introduction of DBC’s and does not expect these costs to
decrease in the coming years. As a consequence of retirement, the last ITCs will terminate its
activities at the end of this year.
With regard to the development of the number of patients treated since the establishment, four
of the respondents observed a stable intake of patients. Four of the respondents experienced an
increase in the number of patients treated. Another respondent mentioned that the intake of
patients was subject to fluctuations. Finally, one respondent did not have a clear overview of the
development of the amount of patients treated.
3.4 Discussion
The financial analysis included 12 ITCs, which is just well over 12% (12/94*100%) of the ITCs
that can be observed in the Netherlands. Consequently, the conclusions made should be
generalised with caution. The fact that no significant differences over the years have been found
with respect to the index numbers and the operating results, can probably be explained by the low
number of ITCs included in the analysis. Indeed, according to Cohen (Field, 2005), 28
participants are needed in a study to detect a large effect size. Since the annual accounts of only
12 ITCs have been analysed, it can be expected that no significant difference will be found.
However, with respect to the legal forms, the included ITCs can considered to be an adequate
reflection of the national situation. Regarding the medical specialties provided as well, the ITCs
included in the financial analysis appear to be an adequate sampling. It should be noted however,
that the specialty of ophthalmology, which is frequently provided in Dutch ITCs, is not
represented in the sampling.
With respect to the legal forms and the shareholders, the remark should be made that it was not
always possible to conduct the questionnaires from people involved in the management of the
ITC. Consequently, the results might not be entirely complete. For example, it could be possible
that the 44 ITCs that mentioned to solely be a foundation, have the legal form of a PLC as well.
Regarding the shareholders of all the ITCs in the Netherlands, the results described can be
considered to be reasonably valid. Of the 39 ITCs that are not a foundation, and are thus allowed
to have shareholders, information concerning the shareholders is available for 32 ITCs.
3. Financial analysis of independent treatment centres 57
J.E. Wagemans
A remark should be made concerning the fact that the management of the ITC will in most
cases consist of one or several of the medical specialists active in the ITC. Consequently, it can
be assumed that the percentage of ITC of which the medical specialists are the shareholders, is
higher than the 16% presented in the analysis.
Conclusions with respect to the solvability of the ITCs should be drawn with caution. Since the
equity capital of a considerable number of the ITCs is €0 or less, the solvability can not be
calculated for a substantial part of the ITCs. This can do harm to the validity of the conclusion
drawn.
Half of the ITCs has used their short-term debts to finance their material fixed assets during the
period 2004-2006. A possible explanation might be that the ITCs are not able to contract (more)
long-term loans with banks and other financiers due to their low solvability. However, this is
more costly for ITCs since the interest for short-term loans is higher than for long-term loans.
The database of the CIBG contains just 21 annual accounts or reports from 2006 of the 94
ITCs in the Netherlands. Even though much more financial data of 2005 is available, the
inclusion criterion of the availability of accounts and reports of 2006 has been maintained. The
motivation for this is that this will provide a more recent overview. Moreover, in order to make a
feasible comparison between the ITCs, centres of which no financial data of 2004 was available,
have been excluded. Furthermore, an analysis of the financial position of an ITC that has just
been established one or two years ago, is expected not to be representative since these ITCs will
probably have to deal with costs related to the establishment and still have to create their brand
name. A possible explanation for the low availability of annual accounts of 2006, is that the final
date of the retrieval of annual accounts for this thesis was set just well over one month after the
deadline for ITCs to file in their annual reporting. It is possible that ITCs have been somewhat
late and that the CIBG publishes the annual accounts on their website with a delay of several
weeks.
Since the power of the financial analysis is very low, it was tried to achieve significant results
by making some adjustments in the SPSS analysis. Since the Bonferroni correction is associated
with a loss of power, the one-way repeated-measures ANOVA has been executed with a Sidak
correction as well. After this, the F-ratio’s did become more significant, but still remained to be
insignificant.
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The financial analysis of the annual accounts shows a moderate financial position of ITCs. The
results of the in-dept interviews are more positive, but are less reliable. The most obvious
explanation of this contradiction is that the ITCs included in the financial analysis are not the
same as the ITCs consulted for the in-dept interviews. Another explanation might be that the
respondents tend to present their financial position more positive than it actually is. In addition,
the respondents only mentioned their profit and the number of patients treated, the liquidity and
solvability were not discussed. On the other hand, the annual accounts only consist of hard
numbers and background information is missing. Nonetheless, the results of the financial analysis
are more reliable, and the results of the in-depth interview can only be used as additional
background information.
3.5 Conclusion
The legal forms under which the ITCs in the Netherlands operate, show a high variety. An ITC
can be a foundation and/or a PLC with one or several locations. The majority of the ITCs is a
foundation with one location (more than 48%). In total, more than 89% has a foundation as (one
of) its legal form(s). Similarly, almost 10% of the ITCs is a PLC with one location, and almost
43% has a PLC as (one of) its legal forms. A combination of a foundation and a PLC can be
observed for almost 31% of the ITCs. The motives of the ITCs that were interviewed in-dept to
choose for the PLC as legal form for their ITC were the possibility of a profit motive,
transparency, and securing the capital in the foundation. A reason to choose for a foundation was
the absence of the interference of shareholders.
In case the ITC has shareholders, most frequently the shareholder is the holding of the ITC.
Other common shareholders are the medical specialist(s) (in combination with the founder of the
ITC or otherwise), the concern the ITC belongs to, and external parties that are active in the
health care sector. Private investors only play a minor role on the market for ITCs.
During the period 2004-2006, the rotation time of debtors of ITCs has been too high for the
majority of the ITCs included in the analysis. Even though the SPSS-analysis did not show a
significant change of the rotation time over the years, in general, the situation can considered to
be improving. In 2004, all the included ITCs had an undesirable rotation time, whereas this holds
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true for almost 63% in 2006. Although the rotation time of debtors is decreasing, most ITCs still
run a high risk on their returns.
With respect to the solvability as well, no clear trend over the years can be observed. This is
partially due to the high number of missing values. Although the situation has improved during
the period 2004-2006, the solvability still leaves room for improvement, since the solvability of
only half of the included ITCs for which the solvability can be calculated, was positive in 2006.
Half of the ITCs included in the analysis have used their short-term debts to finance their
material fixed assets during the period 2004-2006. The current ratio of the ITCs seems to be
fluctuating over the years, but SPSS showed no significant differences. In sum, at least half of the
ITCs has had a positive current ratio during the period 2004-2006.
The cover of interest seems to be fluctuating as well. This cover was sufficient for 50% of the
ITCs in 2004, for 33% in 2005, and 58% in 2006. However, SPSS showed no significant
differences. It can be concluded that the situation concerning the cover of interest of the ITCs
included in the analysis, is better than the situation regarding the rotation time of debtors and the
solvability, but still leaves room for improvement.
All the included ITCs had a positive net annual turnover during the period 2004-2006, except
for one ITC in 2004. For the majority of the ITCs, the net annual turnover has increased or
remained stable during these years. Although there is no convincible growth, no economic
downturn of the market for ITCs can be observed either. Therefore, the situation can considered
to be moderately positive.
The financial position of ITCs with respect to the operating results before the payment of tax
can considered to be improving over the years. Remarkably, the magnitude of the operating
results varies between several thousand euros to almost half of a million euros.
In 2006, the majority of the included ITCs scored sufficiently on four of the five variables
measured in the financial analysis. This indicates an improvement with respect to the previous
years. Nevertheless, since the score of three of the four variables still lies between 50% and 60%,
there remains much room for improvement. This is confirmed by table 3.15 that shows that the
financial position of the 12 ITC is moderate to positive in 2006.
The majority of the respondents of the in-dept interviews were satisfied concerning their
financial position. With regard to the development over the years and expectations for the future,
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most of the respondents observed an upward trend and made plans to expand. The number of
patients treated is mainly stable or increasing.
Conclusions regarding the financial position of ITCs should be drawn with caution since only
12% of the ITCs in the Netherlands have been included in the financial analysis and the figures
presented in this chapter show much volatility. However, it can be observed that the rotation time
of debtors is decreasing and the operating results are increasing over the years. This implies that
the risk the included ITCs run has decreased over the period 2004-2006. The fact that the flow of
patients has generally been stable or increasing over the years supports this finding. The index
numbers concerning the liquidity and the solvability fluctuated during the period 2004-2006. This
entails that the ITCs in general have problems satisfying their financial obligations on both the
short and long term. The net-annual turnover of almost all ITCs has been positive and the
operating results before the payment of tax are improving over de period 2004-2006.
To conclude, the market for ITCs is not (yet) big business and ITCs should specifically pay
attention to their solvability and liquidity, but profit is made by the majority of the ITCs included
in the analysis and the flow of patients is stable to increasing.
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4. Free-standing day hospital facilities in Australia
Over the last two decades, specialised surgery units for patients who are not admitted to a
hospital overnight, have been developed in Australia (Deuning, 2006; Mac Gillavry & Zwakhals,
2006; www.surgeons.org, 2007c). This chapter addresses these day surgery facilities in Australia,
and the free-standing day hospital facilities in specific. The research question addressed in this
chapter is ‘How did free-standing day hospital facilities in Australia develop and how does the
market for ITCs in the Netherlands compare to the market for this type of care in Australia?’
The first section of this chapter gives an overview of Australia and its governmental system.
The health care financing system is presented in section two. The third section discusses the
delivery of health services in Australia. An overview of trends in the hospital sector and the
development of day surgery is given in the fourth section. The fifth section addresses a specific
day surgery centre; the free-standing day hospital facility. A brief overview of the Dutch hospital
care market and the market for ITCs is given in section six. In the conclusion, a comparison is
drawn between the Netherlands and Australia regarding both the health care sector in general and
the market for free-standing day hospital facilities/ITCs.
4.1 Australia and its governmental system
Australia is a developed country with a generally high standard of living and a population of
about 18,7 million people. On January 1st of 1901, the Constitution of Australia came into force
and established a Commonwealth (federal) Government. Each of the six States and the two
Territories within the Commonwealth have a parliament which has powers in all areas that are
not specified as Commonwealth power in the constitution. In 1946, an amendment of the
constitution made it possible for the Commonwealth to provide health benefits and services,
without altering the powers of the States on this aspect. By the Hospital Benefits Act of 1946, the
Commonwealth agreed with the States to subsidise public hospital beds on the condition that
there was no charge for patients in public wards. The National Health Act of 1953 combines the
four main pillars of the Australian health care system; the pharmaceuticals benefits scheme, the
hospital benefits scheme (Commonwealth funding for State hospitals), pensioner medical
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services, and the medical benefits scheme (which subsidised medical costs for members of non-
profit health insurance schemes) (Commonwealth Department of Health and Aged Care, 2000;
Hilless & Healy, 2001).
Nowadays, policy making is primarily performed by the Commonwealth, particularly on
national issues like public health. The delivery and management of public health services and the
maintenance of direct relationships with the majority of the health care providers, is the main
responsibility of the States and Territories (Commonwealth Department of Health and Aged
Care, 2000).
4.2 The Australian health care financing system
The objective of the national health care funding system of Australia is “to give universal access
to health care while allowing choice for individuals through a substantial private sector
involvement in delivery and financing”(Commonwealth Department of Health and Aged Care,
2000, p.5).
Australia has a hybrid system in which both public and private responsibility for the financing
of health care is combined. In history, Australia has tried to apply a model of health care
financing that finds a balance between the three sources of finance: public, private out-of-pocket,
and private insurance. Due to various governments, however, the centre of gravity in this balance
has changed over the years (Hughes Tuohy, Flood, & Stabile, 2004). When compared
internationally, Australia has a relatively high involvement of the private sector in its health care
system at present. This ‘private practice is publicly supported’ as the private sector has developed
from within, and was often protected by, the Australian government (Hall & Savage, 2005). The
private sector accounts for about one third of total health expenditure (including out-of-pocket
payments) and two thirds of health services delivery (Hilless & Healy, 2001). In addition, private
health insurance provides approximately 11 percent of the total national health care funding
(Commonwealth Department of Health and Aged Care, 2000).
With respect to health care financing, the two levels of government have different
responsibilities. The Commonwealth funds most medical services out of the hospitals, whereas
the States and Territories directly fund a wide variety of health services. The Commonwealth
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government funds 46% of total (recurrent and capital) health spending, the State and Territory
governments fund 22% (Hall & Savage, 2005). Together, the Commonwealth, the States and the
Territories fund public hospitals and community care for the elderly and disabled. Medicare is
financed largely from general taxation revenue and is supplemented by the State and Territory
governments (Commonwealth Department of Health and Aged Care, 2000).
4.2.1 The Australian health insurance system
Medicare is Australia’s universal health care system and covers all people living in Australia who
are Australian citizens, New Zealand citizens or holders of permanent visas. Medicare guarantees
that everyone who is entitled to Medicare has access to free or low-cost medical, optometrical
and hospital care while being free to choose private health services. Medicare gives public
(Medicare) patients access to free treatment in a public hospital, and free or subsidised treatment
by health care practitioners (Medicare Australia, 2007a). The Medicare Services subsidised by
the Australian government are listed in the Medicare (or Medical) Benefits Schedule (MBS)
(Commonwealth of Australia, 2007).
When patients are admitted to a hospital, they can choose to be either public (Medicare) or
private patients. If they choose for the former option, they receive free medical care and treatment
from medical professionals nominated by the hospital. In case a patient makes the choice to be a
private patient, the professionals and the hospital charge this patient for the care received and the
hospital costs made. Medicare will cover 75% of the MBS fee determined by the government.
When the patient has private health insurance, this insurance will cover (a part of) the remaining
costs (Medicare Australia, 2007b). In addition, patients can choose to be treated in a private
hospital. If the patient has a private health insurance, it will contribute to the costs charged. In
case the patient is not privately insured, the doctor’s fees generally attract Medicare benefits
(Commonwealth Department of Health and Aged Care, 2000).
In 2005-06, 87% of the hospital admission concerned public patients. Nine percent of the
admissions concerned private admissions. The remaining admissions included patients whose
care was paid for by other Government agencies in Australia (Commonwealth Department of
Health and Aged Care, 2007).
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Private health insurance can be considered to be supplementary where it provides higher
quality or shorter waiting times than in the public system. It can be considered to be
complementary when it covers health care services not covered in the public system. In 2003, just
less than 44% of the Australian population was insured for private hospital treatment, 41,5% was
covered for ancillary services (Hall & Savage, 2005).
Advantages of being privately insured are a free choice of doctor, choice of hospital, and
choice of timing of procedure. Moreover, care that is not covered by Medicare such as dental and
optical care, can be (partially) covered by a private health insurance. Annual premiums charged
by private health insurance depend on the extent of cover, the front-end deductible, and the state
of residence. Private health insurance funds are obliged to accept everyone for each policy type
they offer (Hall & Savage, 2005). In addition, the funds are forbidden to base the premiums
charged on the health status or claims history of their insured. This prohibition is called
community rating (Commonwealth Department of Health and Aged Care, 2000).
Since 1996, the Australian government applies a policy that is aimed at the expansion of the
role of private health insurance in the health care sector (Hall & Savage, 2005). This policy
consists of measures regarding the affordability, stability and attractiveness of this type of
insurance. An example of such a measure is the introduction of a 30% rebate, paid by the
government, on private health insurance (Commonwealth Department of Health and Aged Care,
2000).
4.3 Health services delivery
In Australia, health services are delivered by a mix of public and private sector providers. The
Commonwealth Government beliefs that a considerable involvement of the private sector in the
provision and financing of health services is of importance to the viability of the Australian
health system (Commonwealth Department of Health and Aged Care, 2000). In Australia’s
current health care system, a private hospital system exists next to a public hospital system.
Physicians are allowed to practise in both public and private hospitals. As described above, care
can also be provided on a private basis in public hospitals, when a patient chooses to (Hughes
Tuohy et al., 2004). General practitioners are important gatekeepers in the Australian health care
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system, since a referral is required for the reimbursement of specialist services (Hall & Savage,
2005).
Public and private hospitals have different roles in the Australian health care system. In
2005-06, 90% of the emergency hospital admissions occurred in public hospitals. During the
same period, only 44% of all elective hospital admissions occurred in public hospitals
(Commonwealth Department of Health and Aged Care, 2007).
Public hospitals consist of hospitals established by governments and hospitals originally
established by religious or charitable organisations that are at present directly funded by the
government. A minority of the hospitals providing public hospital services is built and managed
by private organisations. In these cases, arrangements with the State governments are made.
Private hospitals are owned by both for-profit and not-for-profit organisations (Commonwealth
Department of Health and Aged Care, 2000). At the moment, for-profit corporate ownership is
the major form of private hospital ownership (Hall & Savage, 2005). Separate centres for same-
day surgery and other non-inpatient operating room procedures are mainly active in the private
sector (Commonwealth Department of Health and Aged Care, 2000). Nevertheless, day surgery is
performed in both the public and private sector in Australia (www.surgeons.org, 2007c).
Public hospitals can be distinguished into acute and psychiatric hospitals. With respect to
private hospitals, three categories can be distinguished; acute hospitals, psychiatric hospitals, and
free-standing day hospital facilities. Acute hospitals can be characterised as providing “at least
minimal medical, surgical or obstetrical services for admitted patient treatment and/or care and
provide round-the-clock comprehensive qualified nursing services as well as other necessary
professional services. They must by licensed by the state or territory health authority” (Australian
Bureau of Statistics, 2007, p.42). Psychiatric hospitals deliver care to admitted patients with
psychiatric, mental or behavioural disorders. Free-standing day hospital facilities can be defined
as facilities which “provide investigation and treatment for acute conditions on a day-only basis
and are approved by the Commonwealth for the purpose of basic table health insurance benefits”
(Australian Bureau of Statistics, 2007, p.43).
The majority of the medical specialists is self-employed, only a small part consists of salaried
employees of Commonwealth, State or local governments (Commonwealth Department of Health
and Aged Care, 2000). In the public sector, specialists are employed on a salaried basis. A fee-
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for-services system is applied in the private sector. According to Hughes Tuohy et al. (2004), this
creates an incentive for medical professionals to treat especially private patients as this results in
extra marginal gain. It may even be possible that the specialists have an incentive to maintain
long waiting lists in the public sector to create a demand for services on a private basis (Hughes
Tuohy et al., 2004). Hall and Savage (2005) as well, state that public hospitals and medical
professionals have an incentive to treat private patients at the margin. This is due to the fact that
State and Territory governments determine public hospital operating budgets. Private patients, on
the contrary, create additional revenue for public hospitals from private insurance funds and out-
of-pocket payments. Since this revenue can be treated more flexible than budgets provided by the
states, it creates an incentive.
4.4 Trends in the hospital sector
Over the last decade, the role of the private sector in the Australian health care system has
increased. Over the period 1996-1997 to 2001-2002, public-patient separations in public hospitals
increased with 12%. Private separations from private hospitals on the other hand, grew with 39%.
It is not certain whether this increased private hospital activity is insurance-induced demand or
whether it is caused by activity displaced from the public sector (Hall & Savage, 2005).
Traditionally, private hospitals delivered less complex, non–emergency care such as simple
elective surgery. Some private clinics however, are increasingly providing complex, high
technology services as more technology and new procedures have become available
(Commonwealth Department of Health and Aged Care, 2000; Hilless & Healy, 2001). Due to
their increased clinical capacity, elective surgery provided in private hospitals is now perceived
as an alternative for elective surgery in public hospitals for which long waiting lists exist.
Although the stock of beds in the public sector has decreased significantly during the 1990s, the
stock of private beds has grown slightly (Hilless & Healy, 2001). The number of beds available is
becoming a less relevant measure however, due to enormous increase in day surgery. Similar to
other developed countries, a trend towards a shorter hospital stay can be observed in Australia.
For example, same day separations increased from 31% in 1991-1992, to 46% in 1997-1998. A
significant part may consist of new patients who otherwise would not enter a hospital, instead of
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patients whose hospital stay has been shortened. As a result of new treatment methods in separate
(especially private sector) centres that are build for same-day treatment, the configuration of
hospitals in Australia is altering (Hilless & Healy, 2001).
Currently, up to 60% of the operative procedures carried out encompass day patient procedures
performed in a day surgery facility in the public or private sector. Day surgery can be defined as
“the performance of surgical procedures that are more complex than office procedures, which are
usually done under local anaesthesia, but are less complex than major procedures that require
prolonged post-operative monitoring and hospital care in order to guarantee the patient a safe
recovery and a desirable outcome” (Fong Yuk Fai, 1988). A day surgery facility is “a specific
operating complex for the surgical treatment of patients who are admitted and discharged on the
same day” (www.surgeons.org, 2007c).
According to the Royal Australian College of Surgeons, several advantages of day surgery
procedures can be distinguished (Australian Day Surgery Council, 2004). First, costs can be
reduced as fewer staff is required, and staff and facilities are not needed at night and during
weekends. Moreover, if an operation suitable for day surgery is performed as such, and not as an
in-patient surgery, the unnecessary occupation of expensive hospital beds is prevented. Except
for these economic advantages, advantages of day surgery for hospitals include the higher
attractiveness for nursing staff as less shift work is involved, and the higher efficiency with which
in-patient facilities can be managed due to the lower amount of day patients. Lastly, day surgery
encompasses several advantages for patients and their relatives. Those advantages include a
lower risk of cross-infection, less anxiety for the patient when an overnight stay in the hospital
will not take place, a quicker return to normal activities, and less stress for relatives due to
savings in time and travel.
4.4.1 The history of the development of day surgery
In 1980, the establishment and development of day surgery facilities has been formalized in a
paper by the medical profession (www.surgeons.org, 2007b). One year later, the Working Party –
consisting of the Council of the Royal Australasian College of Surgeons, the Australian
Association of Surgeons, the Faculty of Anaesthetics of the Royal Australasian College of
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Surgeons, and the Australian Society of Anaesthetics – published a manual of standards for day
surgery. In 1986, a Committee in New South Wales, which constituted of the same four
organisations as the Working Party, published the first ‘Manual for the Accreditation of Day
Surgery Facilities’. In 1988, the Working Party changed its name to the National Day Surgery
Committee, since this name represented their advising role concerning all aspects of day surgery
and day surgery facilities, including accreditation. Over the following four years, the Committee
developed two Expanded groups in order to achieve the widest possible representation from the
medical profession and all other major organisations involved in the delivery of health care
(www.surgeons.org, 2007b). During 1994-1995, the Committee defined Clinical Indicators for
Day Surgery Centres on behalf of the accreditation program (Australian Day Surgery Council,
2004). In 1995, the Commonwealth Department of Health and Human Services developed a
definitive list of procedures (type B), which are considered to be suitable for day surgery. In
1996, the Committee changed its name to the Australian Day Surgery Council, to raise its status
and to provide greater authority to its activities.
During the same meeting, the concept of extended recovery for day surgery patients was
accepted (www.surgeons.org, 2007b). An extended day surgery recovery unit is a
“constructed/modified patient accommodation, freestanding or within a registered day surgery
centre (facility) or hospital, specifically designed for the extended recovery of day
surgery/procedure patients, and registered with Commonwealth/State Governments for this
purpose” (Australian Day Surgery Council, 2004, p.8). Surgeons have frequently stated that for
many patients it is not possible to be discharged on the same day as the operation is performed.
These patients are considered to be insufficiently recovered to be discharged on the day of the
operation or have a low social back up, the latter specifically applies to elderly patients. Since
this decreases the amount of patients that is being treated in day surgery, the Australian Day
Surgery Council has supported the concept of extended recovery for day surgery, which will
include overnight stay. It should be noted that these extended recovery units are of ‘hotel type’
and cannot be compared to acute hospital bed accommodation. As a consequence, the capital and
running costs of these units will be significantly lower (www.surgeons.org, 2007a). In 1997, the
Australian Day Surgery Council recommended Commonwealth and State government support for
the development of extended recovery day surgery units.
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An Office or Outpatient Surgery/Procedure is “an operation/procedure carried out in a medical
practitioner’s office or outpatient department, other than a service normally included in an
attendance (consultation), which does not require treatment or observation in a day
surgery/procedure centre (facility) or unit, or as a hospital patient”(Australian Day Surgery
Council, 2004, p.8). Until the present time, the health insurance does not cover office-based
surgery. Consequently, a disincentive for medical practitioners to carry out this kind of surgery
exists. In 1997, therefore, the Australian Day Surgery Council recommended the introduction of
Medicare facility rebate for office-based operations/procedures.
A third recommendation made by the Australian Day Surgery Council in 1997, is the inclusion
of day surgery in undergraduate and postgraduate medical education. The rationales for this
recommendation are that the students should learn the specific techniques necessary for patients
to make a rapid recovery from operations, and the fact that the large amount of clinical material
available in free-standing day surgery centres should be utilised (www.surgeons.org, 2007a).
4.4.2 Principles for day surgery
The Australian Day Surgery Council has formulated the following principles for day surgery
(Australian Day Surgery Council, 2004):
o Day surgery facilities should provide cost-effective and safe methods of treatment for
several surgical procedures;
o Before a day surgery facility can be approved and registered, the facility should comply to
several minimal standards concerning physical facilities and staffing, the provision of
equipment; specific surgical standards and procedures, and several anaesthetic standards;
o A federal committee should establish standards, a professional group is responsible for
the regulation and accreditation of individual centres, and each day surgery facility should
have a Medical Executive Committee to monitor the performance and the adherence to
standards;
o The development of day surgery facilities should be integrated into the health services
planned for the community. Proper planning and peer review should occur in order to
restrict over-utilisation of services or the performance of inappropriate surgery;
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o All day surgery patients should be submitted to a pre-operative assessment process. In
addition, an adequate quality control and supervised after care should occur;
o Appropriately selected patients with acute surgical problems, including trauma, can be
treated as day surgery patients, under the condition that all clinical, administrative, and
discharge standards are met;
o Day surgery facilities should encourage provision for the teaching of undergraduate and
postgraduate medical and nursing staff.
In addition, a freestanding day surgery facility is required to have a written agreement with a
public or private hospital concerning the transport of a patient to an in-patient bed in case it is not
sensible to discharge a certain day surgery patient (Australian Day Surgery Council, 2004).
4.4.3 Types of day surgery facilities
Day surgery facilities can be organised in several ways in Australia (Australian Day Surgery
Council, 2004):
o a public or private hospital can establish a day surgery facility alongside its in-patient
services using existing admitting areas, wards, operating theatres and recovery rooms;
o a public or private hospital can establish a day surgery facility within the hospital with
separate admission and ward areas, but by using the existing theatre and recovery areas;
o a purpose built facility within a public or private hospital with its own admission, theatre,
recovery and discharge areas;
o a purpose built free-standing day surgery facility managed by an existing hospital;
o a purpose built free-standing day surgery facility which is operating independently.
Thus, day surgery can be performed in hospital based units, in both the public and private
sector, as well as in free-standing centres. Although some hospitals have established separate free
functioning day surgery units, the majority of the hospitals mixes day surgery patients with
overnight stay patients (www.surgeons.org, 2007a). The Australian Day Surgery Council,
however, recommends day surgery facilities within hospitals to have separate admission and
discharge areas, and quite independent patient rest facilities (Australian Day Surgery Council,
2004). The argument is that separate facilities are necessary to simplify admission and discharge
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procedures, to restrict unnecessary delays, to benefit from staffing efficiencies, and to use rooms
and administration specially designed for day surgery (Australian Day Surgery Council, 2004). In
addition, the economic advantages of day surgery are best achieved in free-standing centres or
completely free functioning units in acute bed hospitals (www.surgeons.org, 2007a).
Furthermore, an independently operated freestanding day surgery facility has some advantages
with respect to in-patient care and integrated day surgery facilities. These advantages include a
streamlined approach to all activities involved for the surgery; it is more easy to identify and
control costs; the risk of nosocomial infections are reduced; and integrated care can be better
provided by a dedicated and well trained day surgery staff (Australian Day Surgery Council,
2004). It should be noted however, that the establishment costs of the provision of technical
equipment may not be cost effective for some specialized medical procedures in smaller free-
standing day surgery facilities (Australian Day Surgery Council, 2004).
4.5 Free-standing day hospital facilities
As described above, free-standing day hospital facilities provide investigation and treatment for
acute conditions on a day-only basis and are approved by the Commonwealth for the purpose of
basic table health insurance benefits.
4.5.1 Development of the number of free-standing day hospital facilities
In the last ten years, the number of free-standing day hospital facilities has grown rather
gradually from 140 establishments in 1995-1996 to 256 establishments in 2005-2006 (table 4.1).
In 2005-2006, 547 private hospitals were operating in Australia. Consequently, nearly half of the
private hospital market in Australia consists of free-standing day hospital facilities (46,8 %). As
can be derived from table 4.2, the share of free-standing day hospital facilities in terms of number
on the total hospital market is almost 20% (19,7%) in 2005-2006. The proportion of free-standing
day hospital facilities on the total hospital market has increased with almost 7% (6.8%) over the
last four years and can be considered to be relatively stable during this period. The increase in the
number of free-standing day hospital facilities during the period 2001-2002 to 2005-2006 is
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8,5%. During the period 1995-2001, the number of free-standing day hospital facilities has
increased with almost 70% (68,6%).
No information concerning the number of free-standing day hospital facilities managed by a
hospital or the number that is managed independently is available. In addition, no information
concerning the existence of chains of these facilities has been found.
In addition to the free-standing day hospital facilities, day surgery has been provided in 320
private hospitals and many public hospitals in 2004 (Australian Day Surgery Council, 2004).
1995-96 2001-02 2002-03 2003-04 2004-05 2005-06
Private acute and psychiatric hospitals
323 301 296 291 285 291
Public acute and psychiatric hospitals
- 745 748 761 759 755
Free-standing day hospital facilities
140 236 240 234 247 256
Total - 1282 1284 1286 1291 1302
Figure 4.1 presents the development of the number of free-standing day hospital facilities in
Australia over the period 1995-1996 to 2005-2006.
1995-96 2001-02 2002-03 2003-04 2004-05 2005-06
Free-standing day hospital facilities
- 18.4% 18.7% 18.2% 19.1% 19.7%
Table 4.1: Development of the number of hospitals in Australia (Australian Bureau of Statistics, 2007;
Commonwealth Department of Health and Aged Care, 2007; van Kollenburg, 2007)
Table 4.2: Development of the percentage of free-standing day hospital facilities on the total number of
hospitals in Australia
4. Free-standing day hospital facilities in Australia 73
J.E. Wagemans
0
50
100
150
200
250
300
'95-
'96
'00-
'01
'01-
'02
'02-
'03
'03-
'04
'04-
'05
'05-
'06
year
number of facilities .
Table 4.3 and figure 4.2 present the development of the number of free-standing day hospitals in
the various States and Territories over the period 1995-1996 to 2005-2006. The largest increase
of the amount of these facilities can be observed in Queensland.
Free-standing day
hospital facilities
’95-‘96 ’00-‘01 ‘01-‘02 ’02-‘03 ’03-‘04 ’04-‘05 ‘05-‘06
New South Wales 73 89 93 98 93 96 93
Victoria 23 51 52 56 54 61 63
Queensland 17 36 47 44 46 48 52
South Australia 10 19 23 23 22 22 25
Western Australia 10 13 12 12 11 12 13
Tasmania, Northern Territory and Australian Capital Territory
7 9 9 7 8 8 10
Australia 140 217 236 240 234 247 256
Table 4.3 Amount of free-standing day hospital facilities in Australia (Australian Bureau of Statistics, 2007)
Figure 4.1 Free-standing day hospital facilities in Australia
4. Free-standing day hospital facilities in Australia 74
J.E. Wagemans
0
20
40
60
80
100
120
'95-
96
'00-
'01
'01-
'02
'02-
'03
'03-
'04
'04-
'05
'05-
'06
year
number of facilities .
New South Wales
Victoria
Queensland
South Australia
Western Australia
Tasmania and
Territories
4.5.2 Geographical distribution of free-standing day hospital facilities
Figure 4.3 presents the geographical distribution of free-standing day hospital facilities in
Australia in 2005-2006. It can be observed that the majority of these facilities is established in
New South Wales. Victoria and Queensland as well, have a high number of free-standing day
hospital facilities. Table 4.4 shows that the population density is the highest in these States as
well.
Tasmania, Northern Territory and Australian Capital Territory
Western Australia
South Australia
Queensland
Victoria
New South Wales
Figure 4.2 Free-standing day hospital facilities in Australian States and Territories
Figure 4.3 Geographical distribution of free-standing hospital facilities in Australia in 2005-2006
(Australian Bureau of Statistics, 2007)
4. Free-standing day hospital facilities in Australia 75
J.E. Wagemans
4.5.3 Medical Specialties
Table 4.5 shows that the medical specialties with the highest occurrence in free-standing day
hospital facilities are specialist endoscopy (28%), ophthalmic (22%), plastic/cosmetic (13%) and
general surgery (6,6%) (Australian Bureau of Statistics, 2007). The majority of the free-standing
day hospital facilities are of multidisciplinary type (www.surgeons.org, 2007a).
4.5.4 Production
An increase of 7.9% in patient separations from 537,518 to 579,907 can be noticed over the
period 2004-2005 to 2005-2006. The average annual growth rate over the period 2000-2001 to
2005-2006, was 8.1% (Australian Bureau of Statistics, 2007).
The total number of full-time equivalent staff in free-standing day-hospital facilities was 2,231
in 2005-2006 (Australian Bureau of Statistics, 2007). The staff includes all staff employed in the
facility, no data has been found concerning the FTEs of medical specialists working in free-
standing day hospital facilities.
State/Territory 2005
New South Wales 6774249
Victoria 5022346
Queensland 3963968
Western Australia 2010113
South Australia 1542033
Tasmania, Northern Territory and Australian Capital Territory
1013217
Australia 20328609
Specialty Number Percentage
General surgery 17 6.6%
Specialist endoscopy 71 27.7%
Ophthalmic 57 22.2%
Plastic/cosmetic 33 12.9%
Other 78 30.4%
Total 256 100%
Table 4.4 Population density in Australian States and Territories
Table 4.5 Type of centers in Australia in 2005-2006 (Australian Bureau of Statistics, 2007)
4. Free-standing day hospital facilities in Australia 76
J.E. Wagemans
The average annual income of free-standing day hospital facilities increased with 13% over the
five years to 2005-2006. In 2005-2006, these facilities received an income of $410.0m, which is
equal to €248.5m (the exchange rate Euro: Australian dollar is 1,65) (www.beursxl.nl).
In 2005-2006, the annual income of public hospitals was $2,068m (The Australian Institute of
Health and Welfare, 2007). The annual income of private hospitals (free-standing day hospital
facilities excluded) was $6,591m (Australian Bureau of Statistics, 2007). Thus, the annual
income of the hospital sector in Australia was $8,659m ($2,068 + $8,659) in 2005-2006.
Consequently, the share of free-standing day hospital facilities of the total hospital sector in
Australia in terms of income was almost 5% ($410 / $8,659 * 100%) in 2005-2006.
4.6 Characteristics of the market for ITCs in the Netherlands
This section briefly discusses the characteristics of the market for ITC’s in the Netherlands that
are of relevance for the comparison with the situation in Australia.
4.6.1 Development of the number of ITCs and their share on the hospital market
In the Netherlands, all hospitals are non-profit organisations active in the private sector (Exter A.
et al., 2004). A distinction is made between general hospitals, university hospitals, and
categorical hospitals. ITCs as well can considered to be part of the hospital sector. When
counting the number of each hospital type, the number of organisations and not all the individual
locations are considered. The ITCs are counted based on the year they received their license (van
Kollenburg, 2007). With respect to the number of categorical hospitals, no information was
available after 2004. Therefore, the assumption is made that the number remained constant and
that there were 10 categorical hospitals in 2005 and 2006 as well. The development of the amount
of hospitals during the period 2000-2006 is presented in table 4.6. As can be derived from this
table, the share of ITCs on the total hospital market in the Netherlands is almost 50% (46,6%) in
2006. During the period 2002-2006, the number of ITCs has increased with 120%. During the
period 1995-2001, the number of free-standing day hospital facilities has increased with more
than 50% (52,2%).
4. Free-standing day hospital facilities in Australia 77
J.E. Wagemans
4.6.2 Geographical distribution of ITCs
Figure 4.4 shows the geographical distribution of ITCs in the Netherlands. The majority of the
ITCs is located in North and South Holland and Utrecht, the provinces with the highest
population density.
Groningen (n=1)
Drenthe (n = 3)
Flevoland (n = 3)
Friesland (n = 3)
Overijssel (n = 6)
Limburg (n = 7)
Noord-Brabant (n = 13)
Gelderland (n = 14)
Utrecht (n = 18)
Noord-Holland (n = 29)
Zuid-Holland (n = 32)
Hospital 1995 2000 2001 2002 2003 2004 2005 2006
General - 96 94 89 89 86 82 83
University - 8 8 8 8 8 8 8
Categorical - 11 10 10 10 10 10 10
ITC 23 34 35 40 50 61 76 88
Total - 149 147 147 157 165 176 189
Table 4.6 The hospital sector in the Netherlands (Mac Gillavry & Zwakhals, 2006; Ministerie van VWS,
2005; van Kollenburg, 2007)
Figure 4.4 Geographical distribution of ITCs in the Netherlands (van Kollenburg, 2007)
4. Free-standing day hospital facilities in Australia 78
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4.6.3 Medical specialities provided by ITCs
As can be derived from table 4.7, the medical specialties provided by the majority of the ITCs in
the Netherlands are dermatology (18%) and ophthalmology (12%).
Specialty Percentage
Dermatology 18,2%
Ophthalmology 12,3%
General surgery 8,5%
Gynaecology 7,6%
Intern medicine 7,2%
Plastic surgery 6,8%
Other 39,4%
Total 100%
4.6.4 Production of ITCs
In the Netherlands, the returns of the market for ITCs is less than 1% of the total hospital market.
According to the NZa, 8% of the returns of the total hospital sector was approximately €1100m
in 2004 (CTG/ZAio, 2005). Consequently, 1% of the returns of the hospital market is
approximately €137.5m. Thus, the total returns of the market for ITCs in the Netherlands is
estimated at less than €138m.
4.7 Comparison between the market for free-standing day hospital facilities in Australia and
the market for ITCs in the Netherlands
In this paragraph, a comparison is made between the Australian market for free-standing day
hospital facilities and the Dutch market for ITCs. The results of this comparison are presented in
table 4.8.
Table 4.7 Medical specialties provided in ITCs in the Netherlands (van Kollenburg, 2007)
4. Free-standing day hospital facilities in Australia 79
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4.7.1 Types of free-standing day surgery facilities and ITCs
In Australia, five types of day surgery facilities can be distinguished. Three of these consist of
facilities within a hospital. Those can be compared to the Dutch policlinic outpatients’
departments in which day surgery is performed. With respect to the day surgery facilities within a
hospital, the Australian Day Surgery Council recommends these facilities to have separate
admission and discharge areas, and quite independent patient rest facilities. The other two types
of day surgery facilities in Australia concern free-standing day surgery facilities, either managed
by an existing hospital, or operating independently. This is quite similar to the Dutch situation of
ITCs. In the Netherlands, the majority of the ITCs is established by a (non) medical specialist
entrepreneur and is managed independently from a hospital. Unfortunately, no information has
been found concerning the number of free-standing day hospital facilities in Australia that are
managed by a hospital, and the amount of facilities that are operating independently. The Day
Surgery Council stated that the economic advantages of day surgery are best achieved in free-
standing centres or completely free functioning units in acute bed hospitals.
In addition, no information concerning the existence of chains of free-standing day surgery
facilities has been found.
4.7.2 Private sector activity
In Australia, day surgery is performed in both the public and the private sector. Free-standing
centres for day surgery however, are mainly active in the private sector. This can considered to be
similar to the Dutch situation, since ITCs exclusively operate in the private sector. The majority
of the ITCs in the Netherlands are established by private entrepreneurs, the remaining are
established by hospitals which concern the private sector as well, and are not based on
governmental initiative.
4.7.3 Share on the total hospital sector
With respect to the share, in terms of numbers, of ITCs/free-standing day hospital facilities on the
total hospital market, the market for ITCs in the Netherlands appears to be much bigger. The
shares are 20% and 47% respectively. However, the share in terms of income of ITCs on the total
4. Free-standing day hospital facilities in Australia 80
J.E. Wagemans
hospital sector is estimated at less than 1%, whereas the share in terms of income of free-standing
day hospital facilities is estimated at almost 5%.
4.7.4 Development of the number of facilities
During the period 2002-2006, the number of ITCs has more than doubled in the Netherlands
(grow of 120%) and the number of free-standing day hospital facilities increased with less than
10% in Australia. However, the number of free-standing day hospital facilities has increased with
almost 70% and the number of ITCs has grown with 52% during the period 1995-2001.
4.7.5 Geographical distribution and medical specialties provided
Similar to the Dutch situation, the highest concentration of ITCs/free-standing day hospital
facilities can be found in the most densely populated areas of the country.
With respect to the medical specialties provided in the Netherlands and Australia,
ophthalmology and general surgery can be found in the top four. Specialist endoscopy is the most
provided specialty in Australia (28%), whereas intern medicine can be found in just 7% of the
ITCs in the Netherlands.
4.7.6 Incentives created by free-standing day hospital facilities and ITCs
In both Australia and the Netherlands, incentives for medical specialists to treat patients in the
private sector or in ITCs respectively, can be found. In both the Australian private sector and in
the Dutch market for ITCs, a fee-for-service system exists. This in contrast to the less favourable
budget system in the public sector in Australia and the hospitals in the Netherlands. In addition,
cherry picking can be observed in both countries. In Australia, the specialists have an incentive to
treat private patients since they will result in higher earnings. ITCs in the Netherlands on the
other hand prefer to treat the ‘easy’ patients with a low risk of complications.
4. Free-standing day hospital facilities in Australia 81
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4.7.7 Principles and regulations
When compared to the Dutch situation, the principles for day surgery formulated by the
Australian Day Surgery Council are on some aspects similar to the 1998 Regulation. One of the
principles is that the development of day surgery facilities should be integrated into the health
services planned for the community, in order to restrict over-utilisation of services. This can be
compared to the following three aspects of the 1998 Regulation; ‘the ITC is not allowed to
exceed the desired capacity of supply’, ‘the intended activities of the ITC are exclusively directed
at the provision of medical-specialty actions for which considerable waiting times exist in the
area in which the clinic is established’ and finally the ‘statement of need’. These aspects of both
the principles and the 1998 Regulation are aimed to control the development of these facilities or
centres. Since 2003 however, the conditions to establish an ITC in the Netherlands have become
less strict and some of the criteria of the 1998 Regulation have been cancelled. This is in line with
the intended market competition in the Dutch health care sector, which implies that actors
become more responsible for their own actions and that not the government, but the market itself,
will decide which initiatives will survive or not.
Another similarity between the principles and the 1998 Regulation is the cooperation
agreement with a nearby hospital. This has been cancelled in the Netherlands as a consequence of
the acceptance of ITCs. It should be noted however, that all hospitals are obliged to admit
emergency patients. In Australia, the agreement concerns the transport of a patient to an in-
patient bed in case it is not sensible to discharge a certain day surgery patient. This is necessary
since the concept of extended recovery for day surgery, although recommended by the Australian
Day Surgery Council, has not been implemented yet in Australia. In the Netherlands, ITCs are
allowed to provide treatments that require overnight stay in the B-segment since 2006.
4.7.8 Supervision
Although both free-standing day surgery facilities and ITCs need an accreditation or license to be
allowed to be active in the health care sector, the supervision in Australia seems to be stricter.
One of the principles of the Australian Day Surgery Council is that a federal committee should
establish standards and that each day surgery facility should have a Medical Executive
Committee to monitor the performance and the adherence to standards. In the Netherlands, the
4. Free-standing day hospital facilities in Australia 82
J.E. Wagemans
IGZ is responsible for the supervision of ITCs. However, since the Inspectorate is not able to give
a complete overview of the ITCs in the Netherlands, it can be questioned whether the IGZ is
capable of a sufficient supervision of these centres.
4.7.9 Interest groups
The national organs that are concerned with the interests of the ITCs in the Netherlands and the
free-standing day hospital facilities are ‘Zelfstandige Klinieken Nederland’ and the Australian
Day Surgery Council respectively. Both organs do not concentrate exclusively on ITCs or free-
standing day hospital facilities, since the ZKN is concerned with private clinics as well and the
Day Surgery Council is also concerned with day surgery centres within hospitals.
4. Free-standing day hospital facilities in Australia 83
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Table 4.8 Comparison between the Netherlands and Australia
Characteristic Netherlands Australia
Types of centres - centre established by a hospital
- individual centre
established by a (non) medical
specialist entrepreneur
- chain of centres established by
a (non) medical specialist
entrepreneur
- free-standing day surgery
facility managed by hospital
- free-standing day surgery
facility operating independently
Share in terms of number on the
hospital market
47% 20%
Total returns of market €138m €249m
Share in terms of income on the
hospital market
Less than 1% Almost 5%
Development of market 1995-
2001
Increase of 52% Increase of 70%
Development of market 2002-
2006
Increase of 120% Increase of 10%
Geographical distribution Highest concentration is most
densely populated areas
Highest concentration is most
densely populated areas
Medical specialties 1. dermatology
2. ophthalmology
3. general surgery
4. gynaecology
1. specialist endoscopy
2. ophthalmology
3. plastic/cosmetic
4. general surgery
Cherry picking Yes Yes
Regulations Less strict Strict
Hospital agreement No Yes
Overnight stay Only in B-segment No
Supervision Health care inspectorate at
national level
Medical executive committee
for each individual facility
Interest group Zelfstandige Klinieken
Nederland
Australian Day Surgery Council
4. Free-standing day hospital facilities in Australia 84
J.E. Wagemans
4.7 Discussion
Not all the desired information concerning free-standing day hospital facilities in Australia was
available. For example, no data has been found with regard to the proportion between the number
of facilities managed by a hospital and the number of facilities that is operating independently.
No information concerning the existence of chains of free-standing day hospital facilities has
been acquired either.
Due to the lack of available sources concerning the structure of the market for free-standing
day hospital facilities in Australia, very few sources have been used. However, since the
information found was provided by governmental institutions, the data are assumed to be reliable.
In addition, data from the Netherlands needed for the comparison was sometimes missing as
well. No up-to-date information concerning the public expenditure on health care in the
Netherlands was available. Besides, it was hard to obtain a recent overview of the Dutch hospital
sector. Moreover, with respect to the number of categorical hospitals, no information was
available after 2004.
4.8 Conclusion
The types of free-standing day surgery facilities in Australia that are managed by an existing
hospital or are operating independently, are quite similar to the Dutch ITCs since the majority of
the ITCs in the Netherlands is established by a (non) medical specialist entrepreneur and is
managed independently from a hospital. In addition, both free-standing day surgery facilities and
ITCs are (primarily) active in the private sector.
With respect to the share, in terms of numbers, on the total hospital market, the market for
ITCs in the Netherlands appears to be much bigger; the shares are 20% and 47% respectively.
However, the share in terms of income of ITCs on the total hospital sector is estimated at less
than 1%, whereas the share in terms of income of free-standing day hospital facilities is estimated
at almost 5%. The higher share in terms of income of free-standing day hospital facilities could
be due to the fact that a considerable number of the free-standing day hospital facilities in
Australia have existed for a longer time than ITCs and are thus more incorporated in the health
care sector and are used more frequently by patients. The difference in share in terms of numbers
can be due to the more strict regulations in Australia.
4. Free-standing day hospital facilities in Australia 85
J.E. Wagemans
During the period 2002-2006, the number of ITCs has grown with 120%, the number of free-
standing day hospital facilities increased with less than 10%. However, the number of free-
standing day hospital facilities in Australia has increased with almost 70% and the number of
ITCs has grown with 52% during the period 1995-2001. Hence, the conclusion can be drawn that
the development of ITCs in Australia had its peak some years before the growth of the market in
the Netherlands.
With respect to the medical specialties provided in the Netherlands and Australia,
ophthalmology and general surgery can be found in the top four.
With respect to the regulations applicable to and the supervision on free-standing day hospital
facilities and ITCs, the situation appears to be stricter in Australia. For example, overnight stay in
a free-standing day hospital facility is not allowed in Australia, whereas ITCs are allowed to
provide treatments that require an overnight stay in the B-segment.
Conclusion 86
J.E. Wagemans
Conclusion
In the 1980’s, the first notes concerning the introduction of market competition in the health care
sector could be heard in the Netherlands. However, the proposals turned into a political stalemate
in the early 90ies and a health care reform was not realised. Nevertheless, the concept of market
competition in health care has developed into an important issue in Dutch public policy making
over the last years. In 2006, the first true steps towards market competition have been made. The
responsibility of actors on the health care market has increased, the focus on the supply-side has
started to shift to the demand-side, and rules and regulations have been adapted in order to
establish a more common level playing field. Other market making decisions are planned for the
near future.
The emergence of ITCs should not be seen as a process in itself, but as a part of broader
developments in the health care sector. Especially due to new technological developments that
enlarge the possibility of providing health care that requires a short stay in ambulatory settings,
the establishment of facilities such as ITCs was enabled.
The evolution of day treatment facilities has forced the government to respond by developing
and changing policies and regulations. In the past, ITCs were confronted with a very restrictive
and unfriendly policy and were regarded as ‘cherry pickers’. However, a stepwise acceptance
took place. In 1998, the ‘Regeling Zelfstandige Behandelcentra’ came into force and the
construction and exploitation of ITCs was permitted in case the ITC had a WZV license.
Nevertheless, ITCs were still perceived as a necessary evil. During the years that followed, ITCs
had proven to reduce the existing waiting times, to stimulate the dynamics in the health care
market and to be more efficient than hospitals. Consequently, in 2003, several criteria of the 1998
Regulation were cancelled to facilitate the establishment of new ITCs. Since the WTZi came into
force in 2006, the 1998 Regulation has been abolished and ITCs are called ‘Institutions for
Medical-Specialist Care’ (IMSZ). ITCs are allowed to provide all types of care in the B-segment
under the WTZi and the differences between hospitals and ITCs have diminished. However, no
common level playing field exists yet.
Conclusion 87
J.E. Wagemans
One of the expected results of market competition is the increase of entrepreneurship in the
health care sector. Opportunities for entrepreneurship in health care are present in the field of less
complex elective care, which is the main type of care provided in ITCs. Consequently, the market
for ITCs is an appropriate situation to investigate whether entrepreneurship indeed has expanded
over the last period. However, the financial analysis showed that private investors only play a
minor role on the market for ITCs. Major shareholders are the holding of the ITC, medical
specialist(s), the concern the ITC belongs to, and external parties that are active in the health care
sector. The legal forms under which the ITCs in the Netherlands operate show a high variety. In
total, more than 89% of the ITCs has a foundation and almost 43% has a PLC as (one of) its legal
forms.
With respect to the financial position of ITCs in the Netherlands, it can be concluded that the
risk ITCs run has decreased over the period 2004-2006. This is due to the fact that the rotation
time of debtors is decreasing and the operating results are increasing over the years. The fact that
the flow of patients has generally been stable or increasing over the years supports this finding.
The ITCs included in the financial analysis have problems satisfying their financial obligations
on both the short and long term since the index numbers concerning the liquidity and the
solvability fluctuated during the period 2004-2006. The net-annual turnover of almost all the
ITCs has been positive and the operating results before the payment of tax have improving over
de period 2004-2006. Remarkably, the magnitude of the operating results varies between several
thousand euros to almost half of a million euros.
In Australia, several types of day surgery facilities can be distinguished. Two of those concern
free-standing day hospital facilities, either managed by an existing hospital, or operating
independently. This is quite similar to the market for ITCs in the Netherlands since the majority
of the ITCs is established by a (non) medical specialist entrepreneur and is managed
independently from a hospital. In addition, in the Netherlands as well as in Australia, ITCs/free-
standing day hospital facilities are (mainly) active in the private sector. Furthermore, in both
countries, ophthalmology and general surgery are among the most provided medical specialties in
these types of facilities or centres.
The share, in numbers, of ITCs on the hospital sector is 47% in the Netherlands, whereas the
share of free-standing day hospital facilities in Australia is 20%. On the contrary, the share in
Conclusion 88
J.E. Wagemans
terms of income of ITCs on the total hospital sector is estimated at less than 1%, whereas the
share in terms of income of free-standing day hospital facilities is estimated at almost 5%. This
could be due to the fact that those facilities are at present more incorporated in the Australian
health care system than ITCs are in the health care sector in the Netherlands. This assumption is
supported by the finding that the development of free-standing day hospital facilities in Australia
had its peak some years before the growth of the market in the Netherlands, and free-standing day
facilities are thus more common in Australia.
With respect to the regulations applicable to and the supervision on free-standing day hospital
facilities and ITCs, the situation appears to be stricter in Australia. To illustrate, overnight stay in
a free-standing day hospital facility is not allowed in Australia, whereas ITCs are allowed to
provide treatments that require an overnight stay in the B-segment.
To conclude, the market for free-standing day hospital facilities in Australia has developed
some years before the market for ITCs in the Netherlands. Consequently, the market can
considered to be more mature. This can be concluded from the fact that the share in terms of
income on the hospital market is higher than in the Netherlands even though the share in terms of
number of facilities is lower. The market for ITCs in the Netherlands is not (yet) big business and
ITCs should specifically pay attention to their solvability and liquidity, but profit is made by the
majority of the ITCs included in the analysis and the flow of patients is stable to increasing
.
Discussion 89
J.E. Wagemans
Discussion
This Master thesis is primarily focused on the supply side of the market for ITCs. In order to
provide a more complete overview of this health care market, the inclusion of the demand side
would have been desirable. This could have been done by interviewing (potential) patients, as
well as general practitioners and health insurers as they are able to refer patients to ITCs. In
addition, it would have been valuable to conduct some interviews with executives of hospitals in
order to gain insight in their perspectives concerning the (future development of the) market for
ITCs and the impact of this market on the hospital market in general as well. However, the
cooperative research project was bound by time constraints and the first logical step in exploring
the unexplored, ambiguous market for ITCs appeared to be an investigation of the supply side as
the ITCs themselves are the point of departure of the development of the market.
A remarkable finding in the first phase of this exploratory study was that no Dutch institution
is in the possession of an overview of the ITCs in the Netherlands. Consequently, a large amount
of websites of institutions have been consulted in order to establish a complete overview of ITCs,
which was very time-consuming. The IGZ does provide a table of both ITCs and private clinics
on its website, but on inquiry it appeared that this overview was established by ITCs and private
clinics themselves on voluntary basis and no control of the IGZ preceded the publication on their
website. During the research carried out for this Master thesis, this overview of ITCs turned out
to be incomplete and partially incorrect. As a consequence, a lot of time was spent on the
retrieval of correct contact information of ITCs. In addition, in case an ITC had a website, a large
part of these websites provided summary information.
Due to the ambiguity of the market for ITCs and the changing rules and regulations, some of
the respondents of the structured questionnaires were not certain that the specific medical centre
in which they were employed indeed was an ITC, a private clinic or another type of health care
centre. In addition, it was not always possible to conduct the questionnaire from people involved
in the management of the ITCs. Consequently, the overview of ITCs presented in appendix 4
should be used with caution.
Discussion 90
J.E. Wagemans
Regarding the financial analysis, it should be noted that only 12 ITCs were included, which is
just well over 12% of the ITCs that can be observed in the Netherlands. This low number can
probably explain the fact that no significant differences over the years have been found with
respect to the index numbers and the operating results. However, with respect to the legal forms
of and the medical specialties provided in the ITCs, the ITCs included in the financial analysis
appear to be an adequate sampling. Another point of discussion concerning the financial position
of ITCs is that the results from the financial analysis deviate from the results of the in-dept
interviews. Possible explanations are that the ITCs included in the financial analysis are not the
same as the ITCs consulted for the in-dept interviews, and that the respondents tend to present
their financial position more positive than it actually is. In addition, the type of data in the
financial analysis and the interviews differ (e.g. solvability versus background information).
Due to the focus on the financial position of ITCs in this Master thesis, it was hard to make a
comparison between the Netherlands and Australia, which was perfectly attuned to the specific
theme of this Master thesis. It was not feasible to make a financial analysis of the free-standing
day hospital facilities in Australia as was done for the ITCs in the Netherlands. Consequently, the
comparison made between the two countries has a more general approach than it would ideally
have. With the more general approach as well, some difficulties were experienced since not all
the desired information concerning the market for free-standing day hospital facilities has been
found. However, the few sources found are considered to be reliable.
With respect to the shortcomings of the cooperative research project and this Master
thesis, several recommendations for future research concerning the market for ITCs can be made.
First, it would be valuable to investigate the attitude of the demand side of the market for ITCs in
order to make forecasts concerning the future development of this market. This could be realised
by interviewing both (potential) patients and general practitioners and health insurers. In order to
investigate the impact of ITCs on the hospital market and to gain insight into the competitive
strategies developed by hospitals, executives from hospitals should be interviewed. Finally, it is
recommended to include more ITCs in the financial analysis (with respect to the analysis of
annual accounts as well as interviews with ITCs) in order to be able to make more reliable
statements concerning the sustainability of the existing ITCs
.
References 91
J.E. Wagemans
References
Australian Bureau of Statistics. (2007). Private Hospitals 2005-06 (4390.0). Retrieved. from
http://www.abs.gov.au. Australian Bureau of Statistics. (2007, p.42). Private Hospitals 2005-06 (4390.0). Retrieved.
from http://www.abs.gov.au. Australian Bureau of Statistics. (2007, p.43). Private Hospitals 2005-06 (4390.0). Retrieved.
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Appendix 1 – Glossary 96
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Appendix 1 – Glossary
AWBZ Exceptional Medical Expenses Act
CBz Board for Hospital facilities ( - 2006)
Board for Health care institutions (from January 1st 2006)
COTG Central Organisation for Health Care Tariffs
CIBG Central Information office for Health Care Professions
DBC Case-based payment
FB-system Function oriented Budgeting system
IGZ Health Care Inspectorate
ITC Independent Treatment Centre
IMSZ Institution for Medical-Specialist Care
NZa Dutch Care Authority
NMa Dutch Competition Authority
PLC Private Limited Company
VWS Public Health, Welfare and Sports
WBMV Special Medical Treatments Act
WMG Health Care Market Organisation Act
WTG Health Care Tariffs Act
WTZi Care Institutions Authorisation Act
WZV Hospital Facilities Act
ZBC Independent treatment centre
ZBO Independent Regulatory Agency
ZFW Sickness Fund Act
ZKN Organised interest group for Dutch ITCs and private clinics
Zvw Health Insurance Act
Appendix 2 – Structured questionnaire 97
J.E. Wagemans
Appendix 2 – Structured questionnaire
1. Is it correct that your centre is an independent treatment centre? How many locations does the
centre have?
2. Is the centre established by a hospital, specialist, or entrepreneur?
2.1. Which hospital?
2.2. What is the occasion for the establishment?
3. What is the date of establishment of the independent treatment centre?
3.1. When did the centre receive a license to become an ITC?
4. Which specialties are provided in your centre?
5. How many medical specialists are working in your centre? What amount of FTEs does this
concern?
5.1. How many specialists are working on a full-time and part-time basis in the centre?
5.2. Are the specialists employed in a hospital or (their own) practice as well?
6. Does the centre provide health care that is covered under the basic health insurance?
6.1. Does the centre provide health care in the A- and/or B-segment?
7. Does the centre provide health care which is not covered under the basic health insurance?
8. What is the legal form of the centre? (private limited company, foundation, both, partnership)
9. Who are the shareholders of the centre? (medical specialists, health insurers, hospitals,
investment companies, etc.)
10. Could you provide information concerning the amount of medical operations each year?
11. Do you have an annual report available? Could you please send this to us?
Appendix 3 – Interview questionnaire 98
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Appendix 3 – Interview questionnaire
I. General questions
1. What do you think of the emergence of ITCs?
2. What is your opinion on the statement that ITCs perform ‘cherry picking’? (no educational
activities in ITCs, no provision of complex care).
3. During our research, we had some difficulties with respect to the composition of a complete
overview of ITCs in the Netherlands. There is no institution that is in the possession of such
an overview. What is your opinion on the supervision of ITCs?
4. For what amount of time do you think the explosive growth of ITCs will continue? What is
the underlying rational of your prediction?
5. What is your opinion with respect to the establishment of ITCs by hospitals? Do you think
these centres are in favour with regard to totally independent ITCs? (cross subsidising).
6. The next questions concern developments on the market for ITCs
Porter 1. Internal rivalry
a. What do you think of the new development concerning the possibility of overnight stay in
the B-segment? (reduction of the differences between hospitals and ITCs)
Porter 2. Threat of new entrants and substitutes
b. In 2003, the rules and regulations for ITCs are simplified and relaxed in order to create
more possibilities for new entrants. The aim was to increase competition and the number
of health care providers. Examples of the relaxations include the abolishment of
restricting requirements and the simplification of the application procedure for a license.
o Was this an incentive for you to establish an additional location?
o Are you in favour of more relaxations of the laws and regulations?
Appendix 3 – Interview questionnaire 99
J.E. Wagemans
o Do you think there is enough room for new entrants or do you still observe entry
barriers?
Porter 2. Threat of new entrants and substitutes
c. Up until now, ITCs are not allowed to have a profit motive. What do you think of the
intended development that allows health care providers to have a profit motive?
Nonetheless, for every prohibition it is possible to create a legal construction to skirt the
prohibition. For example, by means of the combination of a foundation and a PLC, it is possible
to attract investors. Our analysis shows that many ITCs indeed have a PLC. Profit that is made
can be transferred to this PLC. What do think of this phenomenon?
Other effects --> lack of quality control
d. Although the government provides licenses quite easily, no control of the quality occurs
in advance. What is your opinion about this?
Porter 1. Internal rivalry
e. Do you expect a common level playing field between hospitals and ITCs in the intended
system? (several entry barriers can be distinguished: no reimbursement of the capital
expenses for ITCs, no obligation to contract for health insurers, and the financial safety
nets for hospitals are not applicable to ITCs)
Porter 3. Threat of buyers
f. What is your opinion on the influence of buyers (health insurers and patients) on the
development of ITCs?
Porter 1. Internal rivalry
g. Do you observe internal rivalry on the existing market?
Porter 2.The threat of new entrants and substitutes
h. Do you observe a threat of new entrants and substitutes?
Appendix 3 – Interview questionnaire 100
J.E. Wagemans
i. The provision financial analysis created the impression that a considerable amount of
ITCs is loss-making. Do you subscribe this impression?
What is the cause of this financial position? Do you expect a change? What do you think
the future of ITCs looks like?
II. ITC specific questions
1. How does your ITC perform financially?
Is the profit made or the loss suffered considerable of negligible? (Is 2005 a bad year?)
Questions concerning remarkable aspects of the annual accounts
2. Which trend do you observe since the first year of establishment? (an upward or downward
trend?)
3. What is your forecast for the future? What is the basis for this forecast? Where are the
challenges situated?
4. Could you explain the choice for the legal form of your ITC?
5. Who are the shareholders?
6. Could you give an impression of the allocation of the profit? (shareholders, medical
specialists, the ITC)
7. Could you give an impression concerning the flow of patients since the establishment?
(stable, upward/downward, fluctuating)
8. Can an effect be observed in case of increasing media attention concerning ITCs?
Porter 4. Threat of suppliers
9. How does your ITC receive its patients? (via health insurers, referring specialists,
advertisement, etc.)
Porter 3. Threat of buyers
10. What is the relationship between the ITC and health insurers? (can any restraint be observed
concerning the contracting?)
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J.E. Wagemans
11. Are there any contracts concluded with health insurers? Which ones?
12. How do you determine your prices?
13. What is the motivation of specialists to work in your centre? (salary, specialisation,
autonomy, quality of the care, etc.)
Porter 1. Internal rivalry
14. Who are the competitors in the region?
15. What is the market share of the ITC on the relevant product market?
16. Can competition between hospitals and ITCs be observed? On which aspects?
Cooperation
17. Is there a form of cooperation between the ITC and one or several hospitals?
a. If so, on which aspects?
b. If so, why is there cooperation on these aspects?
c. If so, which agreements are concluded?
d. If not, why not and do you intend some cooperation in the future?
Aspects:
o rent of operating rooms
o usage of equipments
o medical specialist(s) working in both the ITC and the hospital
o agreement in case of medical complications, pre care and follow-up care
o quality, usage of the same protocols
Appendix 4 – List of included ITCs 102
J.E. Wagemans
Appendix 4 – List of included ITCs
1 Academische Zorgvernieuwing Leiderdorp
2 AlNatal (Alant Medical) Nieuwegein
3 Alant Vrouw (Alant Medical) Zeist
4 Andros Mannenkliniek Arnhem
5 Antonius Behandelcentrum Nieuwegein
6 Askleipion Valkenburg
7 Bariatrisch Centrum Leeuwarden Leeuwarden
8 Behandelcentrum Extramurale Specialisten, Buitenveldert Amsterdam
9 Behandelcentrum Extramurale Specialisten, Osdorp Amsterdam
10 Behandelcentrum Extramurale Specialisten, Socratesstraat Amsterdam
11 Behandelcentrum Extramurale Specialisten, Halfweg Halfweg
12 Berg & Bosch, Kliniek Bilthoven
13 Bergland Kliniek Tilburg
14 Bergman Medical Care Bilthoven
15 Bilthoven, Medisch Centrum Bilthoven
16 Blaak, Polikliniek de Rotterdam
17 Bosch & Duin, ZBC Bosch en Duin
18 Braamkliniek Assen
19 Cardiologie Geervliet Amsterdam
20 Cardiologie Heelsum Heelsum
21 Cardiologie Landsmeer Landsmeer
22 Cardiologiecentrum Zuid, Amsterdam Amsterdam
23 Cardiologiecentrum Zuid, Utrecht Utrecht
24 Care Vision Amsterdam Amsterdam
25 Care Vision Den Haag Den Haag
26 Care Vision Rotterdam Rotterdam
27 Dermatologiepraktijk Eendenburg-Nanninga, Hogeweg Amsterdam
28 Dermatologiepraktijk Eendenburg-Nanninga, Reguliersgracht Amsterdam
29 Dermatologische Polikliniek De Weegschaalhof, De Haringvliet Rotterdam
30 Dermatologische Polikliniek De Weegschaalhof, De Putsebocht Rotterdam
31 Dermatologische Polikliniek De Weegschaalhof, De Weegschaalhof Rotterdam
32 Dermatologie Uden Uden
Appendix 4 – List of included ITCs 103
J.E. Wagemans
33 Diabeter Rotterdam
34 Diagnostisch Centrum Amsterdam Amsterdam
35 Diagnostisch Centrum Den Haag Den Haag
36 Diagnostisch Centrum Maastricht Maastricht
37 Dialysezorg Nederland Almere
38 Dianet Dialysecentra, Amsterdam-AMC Amsterdam
39 Dianet Dialysecentra, Amsterdam-Buitenveldert Amsterdam
40 Dianet Dialysecentra, Utrecht-Diakonessenhuis Utrecht
41 Dianet Dialysecentra, Utrecht-Lunetten Utrecht
42 Echografiepraktijk Het Scheepvaarthuis Almelo
43 Eye Centre de IJssel Gorssel
44 Eyescan Houten
45 FeM-poli Zwolle
46 Flebologisch Centrum Oosterwal Alkmaar
47 Geertgen De Mortel – Gemert
48 Gewicht op Maat / Obesitas Kliniek (Vitalys) Velp
49 Gezicht Noord-Brabant Oosterhout
50 ’t Gooi, KNO Hilversum
51 Groot Haaglanden Amsterdam, Kliniek Amsterdam
52 Groot Haaglanden Rijswijk, Kliniek Rijswijk
53 Groot Haaglanden Utrecht, Kliniek Utrecht
54 Haaglanden Kliniek Den Haag
55 Heelkunde Instituut Nederland, Heerenveen Heerenveen
56 Heelkunde Instituut Nederland, Venlo Venlo
57 Heelkunde Instituut Nederland, Vlaanderen Vlaanderen
58 Henneman, Professor Kliniek Spijkenisse
59 Holystaete, Moshe Yemin Kliniek Vlaardingen
60 Holystaete Heerenveen, ZBC Kliniek Heerenveen
61 Hooghe Birck Kliniek Doetinchem
62 Huidkliniek Zuidplein Rotterdam
63 Hyperbaar Zuurstof Centrum Rijnmond Zwijndrecht
64 Hyperbare Geneeskunde Hoogeveen, Instituut voor Hoogeveen
65 Hyperbare Geneeskunde Rotterdam, Instituut voor Rotterdam
66 Kindertherapeuticum Utrecht
67 Kinderwens, Medisch Centrum Leiderdorp
Appendix 4 – List of included ITCs 104
J.E. Wagemans
68 Klein Rosendael (Medinova), Kliniek Roozendaal
69 Kolbach Kliniek, Dokter Maastricht
70 Lairesse, Kliniek de Amsterdam
71 Lange Voorhout, Kliniek Den Haag
72 Mauritskliniek Den Haag Den Haag
73 Mauritskliniek Nijmegen Nijmegen
74 Mauritskliniek Utrecht Utrecht
75 MCD Clinic Assen Assen
76 MCD Clinic Nieuwegein Nieuwegein
77 Melles Hoornvlieskliniek Rotterdam
78 Middellaankliniek Velp
79 Molenhof Etten-Leur, Medisch Centrum Etten-Leur
80 Molenhof Rucphen, Medisch Centrum Rucphen
81 MRI Centrum Amsterdam Amsterdam
82 MRI Centrum Den Bosch Den Bosch
83 MRI Centrum Rotterdam Rotterdam
84 Multicare, ZBC Hilversum
85 Multiple Sclerose Centrum Nijmegen Nijmegen
86 Nederlands Proctologisch en Bekkenbodem Centrum Leiderdorp
87 Oogheelkunde Rijswijk Rijswijk
88 Oogheelkunde Vianen, Polikliniek Vianen
89 Oogheelkunde Warmond Warmond
90 Oogheelkunde Zonnestraal, Hilversum Hilversum
91 Oogheelkunde Zonnestraal, Lelystad Lelystad
92 Oogheelkundig Medisch Centrum Amsterdam Amsterdam
93 Oogheelkundig Medisch Centrum Haarlem (Medinova), Kliniek Haarlem
94 Oogheelkundig Medisch Centrum Noord Groningen
95 Oogkliniek Visser-Zandbergen Amsterdam
96 Oogvisie Zuid-Limburg Geleen
97 Oogzorg Opticus Amstelveen
98 Orthopedisch Centrum Maxima Eindhoven
99 Paulus van Loo, ZBC Hilversum
100 PolDerma, Emmeloord Emmeloord
101 PolDerma, Steenwijk Steenwijk
102 Prevalis Rotterdam
Appendix 4 – List of included ITCs 105
J.E. Wagemans
103 Psoriasis dagbehandelingscentrum Midden-Nederland Ede
104 Regentesse, Medisch Centrum Den Haag
105 Reinaert Kliniek Maastricht
106 Rhijnauwen, Medisch Centrum Bunnik
107 Rugpoli Twente Delden
108 Rugpoli Veluwe Velp
109 Silhouet, ZBC Breda
110 Stichting tot de bevordering en ontwikkeling van de dermatologie,
venerologie en flebologie
Rotterdam
111 Terp, ZBC de Capelle aan de IJssel
112 Tilburg Mentaal Tilburg
113 Transpaarne Heemstede
114 Velthuiskliniek, Eindhoven Eindhoven
115 Velthuiskliniek, Enschede Enschede
116 Velthuiskliniek, Hilversum Hilversum
117 Velthuiskliniek, Rotterdam Rotterdam
118 Veluwekliniek Hattem
119 ViaCura Venray
120 ViaSana Mill
121 Visie Oogheelkundig Centrum Utrecht
122 VisionClinics Amsterdam Amsterdam
123 VisionClinics Bussum Bussum
124 VisionClinics Delft Delft
125 VisionClinics Den Bosch Den Bosch
126 VisionClinics Velp Velp
127 VisionClinics Zwolle Zwolle
128 ZBC voor mondziekten, kaakchirurgie en implantologie Nijmegen
129 Zestienhoven (Medinova), Kliniek Rotterdam
Appendix 5 – Repeated-measures design 106
J.E. Wagemans
Appendix 5 – Repeated-measures design
The null hypothesis applied in the one-way repeated-measures ANOVA states that there are no
significant differences between the index numbers and the operating results of the ITCs over the
period 2004-2006.
With the one-way repeated-measures ANOVA, the assumption of sphericity is of importance.
Sphericity refers to the equality of variances of the differences between treatment levels (Field,
2005). It should be noted that at least three conditions are needed for sphericity to be an issue.
Since the financial analysis is performed over a period of three years, sphericity is an issue in this
analysis.
When sphericity is violated, the Bonferroni method is recommended. Therefore, this method is
selected with a significance level of 0.05. In addition, when performing the analysis, the
‘repeated contrast’ is used since this is useful in repeated-measure designs in which the levels of
the independent variable have a meaningful order (Field, 2005). An example of such a design is
the measurement of the dependent variable at successive points in time. This suits the financial
analysis of the ITCs, which considers the operating results and the calculation of the index
numbers of three consecutive years.
Whether the condition of sphericity is met can be tested in SPSS by means of Mauchly’s test.
If Mauchly’s test statistically is significant, the assumption of sphericity is violated as there are
significant differences between the variances of the differences. In these instances, the F-ratio
calculated should be interpreted with caution and a correction should be made to produce a valid
F-ratio. Both the Greenhouse-Geisser and the Huynh-Feldt correction can be used. Since the
Greenhouse-Geisser is more conservative, it is advised to use this correction. When the F-ratio is
not significant, the null hypothesis should be accepted (Field, 2005).
Appendix 5 – Repeated-measures design 107
J.E. Wagemans
Mauchly's Test of Sphericity
Epsilon(a)
Within Subjects Effect Mauchly's W
Approx. Chi-
Square df Sig.
Greenhouse
-Geisser Huynh-Feldt Lower-bound
YEAR ,101 16,034 2 ,000 ,527 ,538 ,500
Tests of Within-Subjects Effects
Source Type III Sum
of Squares
df Mean Square F Sig.
Sphericity
Assumed
76251,630 2 38125,815 1,284 ,304
Greenhouse-
Geisser
76251,630 1,053 72392,786 1,284 ,292
Huynh-Feldt 76251,630 1,077 70817,568 1,284 ,292
YEAR
Lower-bound 76251,630 1,000 76251,630 1,284 ,290
Mauchly's Test of Sphericity
Epsilon(a)
Within Subjects Effect Mauchly's W
Approx. Chi-
Square df Sig.
Greenhouse
-Geisser Huynh-Feldt Lower-bound
YEAR ,101 9,154 2 ,010 ,527 ,547 ,500
Tests of Within-Subjects Effects
Source Type III Sum
of Squares
df Mean Square F Sig.
Sphericity
Assumed
407,444 2 203,722 1,028 ,393
Greenhouse-
Geisser
407,444 1,053 386,782 1,028 ,360
Huynh-Feldt 407,444 1,095 372,180 1,028 ,362
YEAR
Lower-bound 407,444 1,000 407,444 1,028 ,357
Table 1 SPSS results for the rotation time of debtors
Table 2 SPSS results for the solvability
Appendix 5 – Repeated-measures design 108
J.E. Wagemans
Mauchly's Test of Sphericity
Epsilon(a)
Within Subjects Effect Mauchly's W
Approx. Chi-
Square df Sig.
Greenhouse
-Geisser Huynh-Feldt Lower-bound
YEAR ,884 1,230 2 ,541 ,896 1,000 ,500
Tests of Within-Subjects Effects
Source Type III Sum
of Squares
df Mean Square F Sig.
Sphericity
Assumed
,015 2 ,007 ,005 ,995
Greenhouse-
Geisser
,015 1,793 ,008 ,005 ,992
Huynh-Feldt ,015 2,000 ,007 ,005 ,995
YEAR
Lower-bound ,015 1,000 ,015 ,005 ,947
Mauchly's Test of Sphericity
Epsilon(a)
Within Subjects Effect Mauchly's W
Approx. Chi-
Square df Sig.
Greenhouse
-Geisser Huynh-Feldt Lower-bound
YEAR ,378 2,921 2 ,232 ,616 ,752 ,500
Tests of Within-Subjects Effects
Source Type III Sum
of Squares
df Mean Square F Sig.
Sphericity
Assumed
41689,200 2 20844,600 ,803 ,481
Greenhouse-
Geisser
41689,200 1,233 33815,566 ,803 ,439
Huynh-Feldt 41689,200 1,505 27702,943 ,803 ,456
YEAR
Lower-bound 41689,200 1,000 41689,200 ,803 ,421
Table 3 SPSS results for the current ratio
Table 4 SPSS results for the cover of interest
Appendix 5 – Repeated-measures design 109
J.E. Wagemans
Mauchly's Test of Sphericity
Tests of Within-Subjects Effects
Source
Type III Sum
of Squares df Mean Square F Sig.
Sphericity Assumed 77160731474
4,385 2
38580365737
2,193 2,956 ,073
Greenhouse-Geisser 77160731474
4,385 1,088
70900007321
1,939 2,956 ,109
Huynh-Feldt 77160731474
4,385 1,116
69151757675
9,541 2,956 ,108
year
Lower-bound 77160731474
4,385 1,000
77160731474
4,385 2,956 ,114
Epsilon(a)
Within Subjects Effect Mauchly's W
Approx. Chi-
Square df Sig.
Greenhouse
-Geisser Huynh-Feldt Lower-bound
year ,162 18,184 2 ,000 ,544 ,558 ,500
Table 5 SPSS results for the net annual turnover