Thesis Master Health Policy, Economics & Management

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

1. Introduction 9

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.

2. Independent treatment centres 14

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).


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).


J.E. Wagemans

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


J.E. Wagemans

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


J.E. Wagemans

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


J.E. Wagemans

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.).


J.E. Wagemans

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


J.E. Wagemans

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).


J.E. Wagemans

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).


J.E. Wagemans

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


J.E. Wagemans

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


J.E. Wagemans

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


J.E. Wagemans

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.

3. Financial analysis of independent treatment centres 32

J.E. Wagemans

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.


J.E. Wagemans

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,


J.E. Wagemans

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


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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


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


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 %


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.


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


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


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 %)


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0

10

20

30

40

50

60

70

80

90

'04 '05 '06

year

solvability (%)




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 %)


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


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


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


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


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


J.E. Wagemans




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 €)


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


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.


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


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.


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.


J.E. Wagemans

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


J.E. Wagemans

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.

4. Free-standing day hospital facilities in Australia 61

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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


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


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


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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


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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.


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)


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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


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)


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%).


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)


J.E. Wagemans

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)


J.E. Wagemans

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


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.


J.E. Wagemans

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


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.


J.E. Wagemans

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


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.


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

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evolution of the market in the Netherlands. A comparison with the United States., Maastricht University, Maastricht.

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http://www.surgeons.org/Content/NavigationMenu/FellowshipandStandards/AustraliaDaySurgeryCouncil/Day_Surgery_Developm.htm

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http://www.zibb.nl/



http://www.zn.nl/

http://www.zn.nl/dossiers/dbcs_ziekenhuizen/achtergrond.asp

Appendix 1 – Glossary 96

J.E. Wagemans

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

J.E. Wagemans

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?


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?


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?


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?


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?)


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.)


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


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


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


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).


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


Epsilon(a)


Approx. Chi-

Square df Sig.

Greenhouse


YEAR ,101 9,154 2 ,010 ,527 ,547 ,500


Source Type III Sum

of Squares


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


J.E. Wagemans


Epsilon(a)


Approx. Chi-

Square df Sig.

Greenhouse


YEAR ,884 1,230 2 ,541 ,896 1,000 ,500


Source Type III Sum

of Squares


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


Epsilon(a)


Approx. Chi-

Square df Sig.

Greenhouse


YEAR ,378 2,921 2 ,232 ,616 ,752 ,500


Source Type III Sum

of Squares


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


J.E. Wagemans



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)


Approx. Chi-

Square df Sig.

Greenhouse


year ,162 18,184 2 ,000 ,544 ,558 ,500

Table 5 SPSS results for the net annual turnover

Education

Thesis Master Health Policy, Economics & Management