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ACM prohibits proposed merger between two Dutch hospital groups

The Netherlands Authority for Consumers and Markets (ACM) has not approved the proposed merger of two hospital groups in the southwestern part of the Netherlands, near the cities of Dordrecht and Gorinchem: Albert Schweitzer Hospital and Rivas Zorggroep. At this point, these two hospital groups are strong competitors of each other. With this prohibition, ACM has prevented potential negative effects on patients and the insured such as higher prices, reduced quality, or less innovation. This marks the first time that ACM prohibits a hospital merger. Anita Vegter, Member of the Board, explains: “If a merger may have negative effects on patients and the insured, we will block it.”

The Albert Schweitzer Hospital offers hospital care in several locations in and around the city of Dordrecht. Rivas Zorggroep offers hospital care in Gorinchem (the Beatrix Hospital), and, in addition, various other care services such as residential care and nursing homes, home care, and maternal and child health centers.

What is the problem?

ACM has found that, as a result of this proposed merger, a considerable amount of competitive pressure on both parties would be taken away, despite the presence of several other hospitals in the region. This follows from, among other sources, ACM’s investigation into patient flows, a survey among GPs, and information from health insurers. Competitive pressure acts as an incentive for market participants to offer higher quality at a lower price, and to innovate.

ACM also explored the possibilities of patients and health insurers to discipline the merger hospitals. ACM has found that these options are insufficient. Patients have limited options ‘to vote with their feet’ and to switch hospitals. ACM’s investigation also revealed that, after the merger, health insurers would have insufficient alternatives to negotiate good prices and quality with the merger hospital. ACM’s conclusion matches the assessment made by the health insurers themselves. This means that there is a potential risk that the merger hospitals would, for example, raise prices or reduce quality by investing less in innovation, customer-friendliness or hygiene. That would harm patients and the insured.

ACM has therefore decided not to grant a merger license to the applicants. This means that the Albert Schweitzer Hospital and Rivas Zorggroep are not allowed to merge. These hospital groups have the opportunity to file an appeal against ACM’s decision with the District Court of Rotterdam.