Construction BUSINESS

A newly released report from the Economic and Social Research Institute sheds light on the increasing reliance of Ireland’s nursing home sector on a limited number of profit-driven international operators, marking a substantial transformation in the industry since the onset of the Covid-19 pandemic.

According to the report’s findings, 38% of all long-term residential care (LTRC) beds are now under the control of 15 medium to large operators, with 14 of them backed by private equity firms. This dominance by operators with at least five nursing care homes has surpassed the contribution of family-run and independently owned care homes, which now supply just 35% of the country’s long-term residential care beds.

The report underscores that these larger operators have shifted from being “passive price acceptors to strong negotiators,” potentially influencing an increase in prices. It also advocates for more stringent oversight on private equity ownership within the sector.

Predictions based on current trends suggest that the number of beds supplied by medium and large operators is poised to increase, contributing to regional inequalities. The report emphasizes that profit motives may drive private providers to establish homes in high-demand areas, exacerbating existing inequalities in LTRC supply.

Nursing Homes Ireland CEO Tadhg Daly emphasizes the urgency of establishing a sustainable long-term care system, stating that the report highlights the sector’s critical juncture. Daly criticizes the Department of Health for overlooking warnings about the sector’s sustainability, stressing the threats posed by disparities in funding and rampant inflation in costs.

The report notes a decline of 336 LTRC beds in Ireland post-Covid-19, disproportionately affecting rural counties with a relatively low supply of beds. While closures of smaller private LTRC homes in rural areas contributed, the predominant factor was the closure of 693 beds in public care homes. In contrast, urban areas like Dublin, Kildare, Louth, Meath, and Waterford saw an increase in bed numbers due to the opening of large LTRC homes by private equity-funded owners and operators.

The report predicts further regional inequalities, citing plans for private equity-funded owners and operators to open large facilities by the end of 2024 in counties with already high bed supply. It highlights a marked shift towards consolidation of LTRC homes under larger operator groups, with many medium and large operators entering the Irish market financed by international private equity.

The report underscores the sector’s close link to international economic conditions, exemplified by the ownership of the largest LTRC operator in Ireland, Orpea, being effectively owned by the French state. The involvement of Real Estate Investment Trusts (REITs) is noted, presenting a new landscape where ownership and care provision are separated. The report calls for a robust regulatory framework centered on resident care and operator transparency, emphasizing the need for a balance between financial viability, regulatory compliance, and strategic planning to meet demand.

While the 2021-2030 National Development plan proposed a shift towards a 20:80 public-private split in LTRC provision, the report highlights that the dominance of private provision has increased to 83%. The government’s commitment to greater public sector involvement and a needs-based funding model is acknowledged, aiming to provide stability and long-term growth.

Minister for Mental Health and Older People Mary Butler welcomes the report, acknowledging the challenges faced by the sector. The government’s commitment to greater public sector involvement and a needs-based model for funding and pricing aims to provide stability and long-term growth.

In examining the impact of Covid-19 on the LTRC sector, the report notes that 65% of all homes had at least one outbreak. No significant difference was observed between public and voluntary/private homes in the probability of experiencing an outbreak. However, larger homes were 3.5 times more likely to have an outbreak compared to smaller ones. The report identifies being located in a county with high community Covid-19 rates as the largest determinant of having a Covid-19 outbreak in an LTRC home.

Source: RTE