Two hospitals declared bankrupt in one week

Written by Stephen Swai

It is the end of the road for two hospitals, MC Slotervaart and IJsselmeer Hospitals, after both were declared bankrupt in the same week. IJsselmeer Hospitals Group included hospitals in Lelystad, Emmeloord, Urk and Dronten and a midwifery practice. Both of the bankrupt hospitals belonged to the same owners, healthcare entrepreneurs Loek Winter and Willem de Boer.

According to Mariska Tichem, CEO of MC Slotervaart, the hospital in Amsterdam would not be able to make a fresh start. “The bankruptcy is fi nal, there is no salvation,” said Tichem. The bankruptcy was declared after financiers had lost confi dence in the hospitals and therefore refused to support them any longer, following fi nancial and administrative problems that have plagued them for some time now. Both hospitals had received millions of euros of support from various parties over the past ten years and there were already major fi nancial problems when they were taken over by Winter and De Boer. When the hospitals were unable to pay salaries to their staff, it was done. Following the bankruptcy announcement, many are talking about the reason for their downfall. Some believe it was mismanagement; others speculate that the number of patients was insuffi cient to keep the hospitals running.

Where it all started

The medical staff of MC Slotervaart in Amsterdam already feared that bankruptcy in May 2018, due to management practices. Instead of focusing on adding more treatment services and patients, management focused on the salaries and expense claims of the staff. In a letter dated 8 May, titled “Crisis situation: serious worries,” the medical team declared that it was seriously worried about MC Slotervaart, especially after losing confi dence in the shareholders. The staff was of the opinion that the management approach to the hospital would lead to bankruptcy. This fear was further exacerbated by the accountant’s reports about the fi nancial health of the hospital. Although in 2016 MC Slotervaart recorded a profi t of € 3.4 million, in 2017 it reported a loss of € 1.5 to 3 million. The truth was that the hospital hardly had any cash to absorb fi nancial setbacks or unexpected problems. The situation was made worse by the fact that the owners of MC Slotervaart also owned the struggling MC Flevoland with hospitals in Lelystad, Emmeloord and Dronten. These institutions were also in fi nancial diffi culties, after the Flevoland MC Group struggled to repay a loan of € 6 million to ING. It was clear the healthcare sector was suffering when a report by BDO Audit Group came out in early October, showing that fi fteen Dutch hospitals were facing serious fi nancial problems and two were on the edge of bankruptcy. The fifteen hospitals which were under “increased risk monitoring” had fi nancial problems, ranging from diffi cult negotiations with health insurers about prices of treatments to increased cost of medicines. Because of the red alert regarding the two hospitals, Herman Bellers, director of the guarantee fund for the healthcare sector (WZF), said at the time: “we would not be surprised if we were told at a given moment that the plug had been pulled out.”

Staff action

Shortly after the announcement of the bankruptcy of MC Slotervaart, several staff decided to keep the ailing hospital open. Some gathered in front of the main entrance holding banners with words like “Hands off our hospital. Who pays our rent/mortgage? Do not let our hospital disappear.” “In one go, everything is taken away under your eyes,” said one employee. “I still do not get it,” another responded. “It’s a bitter pill, I’ve been working here for fi fteen years.” “Patients are crying around me, this is really a bad thing,” said a nurse from an outpatient clinic with tears in her eyes. “We get calls from patients with questions, but we stand with our backs to the wall. There is talk of ‘a controlled reduction’ of the care. But I do not really see how this would work out.” 1200 people worked at the Slotervaart hospital.

Closing doors and patient transfers

The bankruptcy does not mean that the hospitals will close their doors immediately. According to MC Slotervaart, the insurers, under the direction of Zilveren Kruis, would make money available for a “dynamic and controlled reduction of care.” This was the result of a constructive meeting between the administrator of MC Slotervaart and the health insurers. Inpatients and outpatients of the hospitals would be transferred to other hospitals. According to a spokesperson for Amsterdam VUmc, the hospital had suffi cient capacity to take on patients. “It should be possible within the Amsterdam region,” said the spokesperson. Hospitals in the vicinity of the IJsselmeer hospitals, including those at Harderwijk, Zwolle, Sneek and Almere, were also expected to take on patients. The municipality of Lelystad, the province of Flevoland and the municipalities of Almere, Noordoostpolder, Urk, Dronten and Zeewolde said it was unacceptable for the hospitals to cease operations. According to the municipalities, the long distances between hospitals the provinces would make it hard for ambulances to arrive on time. Mayor Ina Adema of Lelystad said that her municipality was doing everything to take care of the residents of the city, calling for health insurers and trustees to try and relaunch the IJsselmeer hospitals.

Employees urged to continue working

In case of bankruptcy, employees are usually discharged from duty. However, it was reported that the staff of IJsselmeer hospitals would continue working for six weeks. Employees of outpatient clinics were urged to continue working despite the fact that their salaries were not paid. “Of course, emotions run high, but people are always professional and will carry out their tasks,” said Alice van der Schee, curator of the IJsselmeer hospitals. Gynecologist Giel van Stralen, who spoke on behalf of the medical staff, said: “Of course people are sad, depressed and shocked by the bankruptcy, but we are all professionals. Care has to be delivered, as we have sworn, and we are proud of this as medical staff.”

Relaunch?

Unlike MC Slotervaart, which is closed permanently, IJsselmeer hospitals may relaunch. According to Van der Schee, several candidates have shown an interest in taking over the hospitals. “Not the whole hospital, but parts of the care. We will talk seriously with all the candidates to see what their plans are.” Cees de Bruin, chairman of the MC Group’s client council, also talked of a possible candidate to take over IJsselmeer hospitals. “At the moment we are talking to a very serious party to continue this, but several interested parties have also shown an interest”, he said. According to De Bruin, they were working on a plan that would serve as a basis for continuity for the hospitals. Although he didn’t want to give specifi c details about the acquisition, he said that a party wanted to invest in the hospital. About a possible relaunch of the hospital, he said: “This is an organization that has been around for a long time, so if you make a new start, you will review everything.” Should the emergency departments and acute obstetrics departments in Lelystad close permanently, this will have consequences for the Westfries Gasthuis in Hoorn, since it would be obligated to keep its own departments open to prevent Flevolanders from travelling more than 45 minutes to get medical attention. Berend Jansen, GP in Swifterbant, said that he had confi dence in a restart of the IJsselmeer hospitals. “The restart will only be more diffi cult if all of us now run away.” According to Ingrid Letsch, GP and chair of Huisartsengroep Lelystad, patients should not cancel all appointments or make plans at other hospitals. She thought that it would be possible for GPs to continue referring patients to the bankrupt hospitals.

More bad reports for hospitals

According to an annual benchmark published by BDO Audit Group in October this year, which compared 64 hospitals, Medisch Spectrum Twente (MST) and ZGT in Hengelo were 61st and 62nd respectively. Behind them were the IJsselmeer hospitals, that were declared bankrupt, and Zuyderland hospital in Limburg. The report looked at operating loss and a number of incidental losses in the 2017 fi nancial year. However, bankruptcy was ruled out in the case of MST, ZGT and Zuyderland, because they were heading for a modest positive result in 2018. While the average solvency of hospitals in the Netherlands rose to 25.6 percent, the percentage of debt capital in relation to equity at MST was 10.8 percent. ZGT did slightly better with 17.9 percent. In reaction to the fi nancial report of BDO, ZGT and MST rushed to say that they were working hard to improve their results.

Far-reaching effects

BAM, one of the construction companies working on MC Slotervaart, has been affected by the bankruptcy. BAM confi rmed that it was working on mechanical engineering work for the renovation of a fl oor. The work had been completed and three quarters of the payment had been received. “For the remaining fee, the possible fi nancial damage to BAM is extremely limited,” said the spokesperson of the company. According to Head of Technical Services at Slotervaart hospital, Jack Verhoeven, at the time of the bankruptcy, the hospital was working on around ten construction projects. “From projects worth millions to projects running in the tens of thousands of euros. Some projects were in full swing, others were about to start. The bankruptcy completely overwhelmed us and we are now busy keeping the building alive for the tenants,” said Verhoeven.