At least 40% of Dutch nursing homes and home nursing organisations are making a loss and overall profitability across the healthcare sector has more than halved, according to accountancy group EY.

EY researchers checked the 2016 annual reports of 469 nursing home and care groups and found 40% are in the red, compared with 25% in 2015.

The financial position of many hospitals and psychiatric care groups has also deteriorated over the past year, EY says. Net profit across the healthcare sector has gone down from 2.2% in 2012 to under 1% last year.’The results are, to put it mildly, shocking,’ EY said in a statement.

‘Such low returns can lead to financial agreements with banks being revised, with higher interest rates, tough controls and potential bankruptcy as a result,’ said EY partner Rob Leensen.’There is a real risk that care providers will start making cuts and stop investing in innovation.’

The main cause of the financial problems facing nursing homes is wage costs following agreement last year on extra payments for irregular hours. A reduction in contributions from local councils and health insurance provisions has also had an impact, EY said.

Lower prices

In order to win local authority contracts, nursing home groups are offering the same level of care for a lower price and this is forcing many into serious financial difficulties.

And because the elderly are being encouraged to live at home longer, nursing homes are dealing with the very frail elderly who need considerably more care, EY said.

Together, the care groups made a combined loss of €37.5m last year, EY calculates.

However, junior health minister Martin van Rijn told the Volkskrant he did not consider the report to be worrying because most care organisations have sufficient reserves to absorb any losses.