The OZG wanted – according to its own recovery plan Ommelander on course – by 1 November, whether it will be possible to save that much money, but the hospital needs more time. That’s not bad, according to Sanders. ‘That it is taking longer is a positive sign; we are working towards an outcome. ‘
It should only be clear on December 1 whether the hospital will achieve its 2020 target. For the years that follow, another 6.5 million in necessary savings await.
Accountant already warned
The Scheemder hospital is in financial trouble. Last year, the Ommelander closed with a negative result of more than 2.3 million euros. In response to the 2019 annual report, in-house accountant KPMG already warned that the hospital should not only achieve better results for its continued existence; the hospital is also completely dependent on the willingness of financiers to continue the loans to OZG. The OZG no longer meets the financial obligations.
Lucky so far; financiers are reasonable
In order to be able to build the hospital in Scheemda, the OZG has taken out loans totaling 88 million with UMCG, province, ABN AMRO and Siemens. Last year, the hospital no longer met the conditions for the loans from the bank and Siemens. They then dealt with it generously.
This year the financial situation has deteriorated further. Under the same conditions, the bank and Siemens in principle have the right to demand the borrowed money immediately. In the recovery plan, the hospital board refers to this as ‘a very precarious financial situation in operation for some time now’.
Recovery plan must get Ommelander back on track
Halfway through this year, the hospital board therefore hastily wrote the recovery plan. It contains the measures to ensure that the hospital survives. The board wants to make a financial move in the short term by imposing so-called performance indicators, which are monitored weekly or monthly. For example, absenteeism must be reduced, the registration of care provided better, production increased, personnel must be more productive and waiting lists must be reduced. All of this should immediately improve business operations.
In addition, the hospital hopes to be able to sell the loans at a lower rate; Discussions are currently underway about this, which, according to Sanders, is going well. ‘It is worrying, but it has been positively received that we have involved stakeholders openly and at an early stage.’
From costs to benefits; everything is under scrutiny
To get that 3.6 million on the table, the hospital is looking at all options, according to Sanders, on both the income and expenditure side. As an example she cites the contribution from the Ministry for emergency care and obstetrics. ‘We get an availability contribution for this, because we are a’ sensitive ‘hospital, which is necessary to get a covering network in the region. We can’t stop doing that, so we are looking to see if this can be improved. ‘ At the moment the ministry is not yet around the table; health insurers do.
A further savings order of 5.5 million and one million for 2022 is then awaiting another year. That brings the total to more than ten million euros that the hospital has to play free somewhere to get the operation healthy. If this fails, the banks will be able to whistle for their money from 2024. Then the hospital can no longer make repayments.
How did it get this far?
According to the hospital, the current financial disaster is partly due to the corona crisis. The OZG was already looking for savings and thought it would even reach 2.4 million profit in 2020. According to the annual accounts for 2019, this should be achieved by reducing the number of employees, as well as the material costs (for example for ICT, logistics and food). At the same time, the hospital wanted to generate more income by taking over acute care from the Refaja hospital in Stadskanaal. According to the hospital, this process stalled when the corona virus reached the Netherlands.
OZG does not scale regular care despite corona
The corona crisis affects the results. This spring, regular healthcare came to a halt, resulting in less income. Compensation for this must come from health insurers; discussions about this are still ongoing. Regular care is now continuing, despite the second wave. As a result, revenues are now less affected by the corona crisis.
Corona patients are also only received short-term care in Scheemda. If they need more care, they will be transferred. The question is how long this can be maintained with increasing numbers of infections and increasing pressure on other hospitals. ‘In our situation it is a very special combination of circumstances,’ says Sanders.
‘Do not anticipate doom scenario’
Sanders does not want to discuss the scenario that rapid savings do not work and that ‘very drastic measures’ would be necessary. ‘We are still aiming for healthy financial management. It is too early to talk about it, given how well we are doing now. ‘
Will the OZG get enough time?
Lenders probably do not just let the hospital fall over, because of the function for the region. The province of Groningen, for example, lent ten million euros to the OZG in 2016, at an interest rate of seven percent. At the moment, the hospital cannot pay anything off. The province says it is in talks with the hospital ‘just like the OZG is with all its financing providers’.
The UMCG – the parent organization of OZG – has confidence in a good outcome, given the importance of the OZG for the accessibility of care in the region. “We believe that the hospital is indispensable and we trust that we all agree,” says spokesman Lex Kloosterman.
Just like the UMCG, Menzis sits around the table with the Scheemder hospital to look together at ‘the causes of and possible solutions to the problems’. Menzis does say that the Ommelander hospital itself is ultimately responsible for operational management.
ABN AMRO is watching
ABN AMRO does not discuss the relationship with specific customers. In general, a spokesperson would like to say that the bank will look at the whole picture of income and costs and how the hospital can meet its obligations again.
Chris van den Haak of BDO Accountants also thinks things are not going that fast. His company conducts a stress test among Dutch hospitals every year. The OZG scored a 4 in 2019 – just like in 2018 -, while other hospitals started to perform better financially. ‘But I know that there are many stakeholders involved who want the best for patients in the region and that everything will be done to keep the hospital up and running.’
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