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Major funding deficits leading to regional disparities, pandemic related infection control challenges and closures of smaller homes – BDO/Nursing Homes Ireland Survey

Wednesday April 28, 2021
  • Survey shows 75% growth in number of beds over past two-decades, but viability of many smaller homes now threatened due to capital and operation expenditure deficits
  • Staff costs surge by 23.5% since 2014 but Fair Deal rate increases by 13.3%
  • Fair Deal rate to support residents in Dublin, Wicklow & Kildare up to 33% more than other regions

Wednesday 28 April 2021:  The Irish nursing homes sector is facing major challenges in the years ahead, with the viability of many homes becoming increasingly threatened and closure inevitable, the latest BDO/Nursing Homes Ireland Survey published today reveals.

Increased operating costs together with heavy capital investments to meet HIQA standards, significant regional inequalities in bed supply and other regulatory requirements are among a raft of issues identified in the 2019/2020 survey into private and voluntary nursing homes.

The report has given a unique insight into a sector that, according to its lead author Partner and Head of Advisory at BDO Ireland Brian McEnery, requires an estimated investment of over €500 million (public and private sector) alone to address unmet challenges, if there isn’t to be a significant loss of beds.

The survey puts a spotlight on the positives, not least huge progress made in expanding the sector over the past two decades to meet growing requirement for specialised nursing home care for expanding older population, with in excess of 26,000 beds now provided. This is up by 17.4% since 2014 when the report was last conducted and a 75% increase since the founding report in 2003.

However, it also highlighted significant issues right across the board for the sector. In particular, fees payable under the Nursing Home Support Scheme (Fair Deal) increased by on average just 13.3% since 2014 but staff costs surged by 23.5% in the same period, a gap that is not sustainable, CEO of Nursing Homes Ireland Tadhg Daly states.

Regional disparities in terms of the average Fair Deal rate to support residents’ stay in homes has threatened the viability of some more than others, with homes in Dublin – the county with the highest rate (March 2021) receiving on average one-third more per resident weekly than in other counties. This amounts to a difference of up to €15,000 per resident per annum when compared with Clare and Donegal, the counties with the lowest rate at this point. Unsurprisingly in that context, the North West of Ireland has the highest population of over 65’s per nursing home bed (43.9 persons per bed) and Dublin, Kildare & Wicklow has the lowest (24.2 persons per bed).

The report concludes that in a number of locations around Ireland, it is not economically viable to develop new nursing homes on the Fair Deal rates granted to new facilities.  It states that there have also been a number of nursing home closures, with the registered provider advising that the financial model underpinning a small nursing home was difficult to sustain, particularly in the context of increasing operating costs and also where extensive investment may be required to ensure regulatory compliance into the future.

Mr McEnery said that compliance will be a particular challenge for public nursing homes, in particular. “HIQA standards requires at least 80 per cent of supply to be single en-suite rooms from next January. Our survey indicates that 77 per cent of accommodation in the private voluntary sector are single rooms and, therefore, it largely appears that the private and voluntary sector will meet the physical environment requirements set by HIQA. It is, however, thought that the challenge will prove much greater for the public sector as the stock of long-term care facilities is older and has seen less investment that the private and voluntary sector in recent times. The experience of Covid19 will expedite the requirement to reduce multiple occupancy accommodation and increase the necessity for bedrooms to be en-suite,” he said.

The closure of nursing homes that offer a smaller, homely setting is concerning, the report states. If it continues, this could impact on the choice of setting available to older people and their families in the future, and particularly so in non-urban locations.

The cost of developing a nursing home bed has a range of between €150,000 and €200,000 and this level of investment significantly reduces the potential for traditional ownership structures to prevail into the future. For this very reason, large specialist operators with significant capital capabilities are growing their market share in comparison to the owner-operator and voluntary cohorts.

BDO sees this trend continuing, as well as an ongoing reduction of nursing home beds in homes with less than 40 beds. Overall nursing homes are getting bigger, the investment required to develop them is larger and the smaller older homes are falling out of the sector. This is why there has been a 75 per cent increase in bed supply with only an 11 per cent increase in the number of nursing homes, the report adds.

“A health and social emergency of gross magnitude will present if reform of the funding of nursing home care is not addressed as a priority,” said NHI CEO Tadhg Daly.

“State apathy around this specialised care cannot continue to persist. The State has acknowledged nursing home fees are not commensurate with the reality of costs incurred for people requiring the specialised, round-the-clock care provided by nursing homes. The shortcomings identified in the Fair Deal pricing mechanism with the review of the scheme six years ago have never been tackled. Successive Governments have turned a blind eye to this crisis in our health services. Covid 19 focussed attention on the nursing home sector and presents impetus to address the discriminatory practice that exists in the funding of nursing home residents under Fair Deal,” he added.


Watch: BDO/Nursing Homes Ireland Annual Survey preview here.

Download: BDO/Nursing Homes Ireland Annual Survey 2019/2020 here.