More smaller nursing homes at risk of closure - report

07 September 2022

More nursing homes - especially smaller facilities in particular areas of the country - are facing closure because of higher costs, a report compiled by consultants BDO for Nursing Homes Ireland has concluded.

The report highlights the challenge facing providers in certain counties where payments made under the Fair Deal Scheme are lower.

The Fair Deal Scheme is a government financial support scheme where the individual makes a contribution to the cost of their long-term care, based on their means with the state paying the balance.

However, the fees paid to nursing homes vary from county to county with homes in Donegal receiving the lowest rate nationally.

The report notes that the average weekly rate of €955 in Donegal is €280 less per week than for residents in Dublin, which has the highest average weekly rate of €1,235.

Around 96% of respondents in a survey of 124 nursing home owners conducted as part of the report said they did not believe the Fair Deal rate covered the operational costs of the home.

The report notes a slight drop in the overall number of nursing home beds from 31,909 in 2020 to 31,743 in May which was mainly accounted for by a decrease in the number of public beds which went from 5,688 to 5,182.

Private and voluntary bed numbers increased from 26,221 to 26,561.

The report concludes that the overall net increase in beds in this category is due largely to the closure of smaller homes and opening of new larger homes or extensions to existing facilities.

The reduction in the number of homes with fewer than 40 beds, which are located mainly in regional areas, was largely due regulatory requirements for physical upgrades as well as rising costs, the report states.

"This is a worrying trend, not least for the more sparsely populated area where these nursing homes are integral in the community but are not sustainable," Brian McEnery, Partner & Head of Advisory at BDO and author of the report said.

"Typically, these areas have low Fair Deal rates, and this combined with rising costs, is undeniably putting at risk the survival of these smaller homes, with others inevitably set to close," he added.

Tadhg Daly, chief executive of Nursing Homes Ireland, said the report highlighted the extent to which the Fair Deal Scheme did not reflect accurately the reality of nursing home care costs.

"Within the current unprecedented cost environment, the failings of Fair Deal become compounded. The closure of smaller nursing homes is a manifestation of the squeeze being placed upon all nursing homes, with the fee payable ignorant of the reality of regulatory and resident care costs," he said.

The Minister of State with responsibility for Older People, Mary Butler, told Morning Ireland last week that she was aware of eight nursing homes that had closed in the last three months and four more that were in the process of deregistering their provision of care for older people.

Tadhg Daly told the programme that the nursing homes were not closing to become centres for housing refugees fleeing the war in Ukraine.

"Nursing homes are closing because they are being forced to close," he said.

Brian McEnery told Morning Ireland that in addition to the most recent closures, there had been at least nine closures in the sector in 2020.

He said there had undoubtedly been a trend towards consolidation.

Some of the more traditional owners, who had reached the age of retirement, were increasingly opting to exit the industry.

The gap is being filled to a certain extent by bigger, more specialised market players.

"Some that are coming into the market are multi-jurisdictional with operations in many countries across Europe. What is a worry is that rural and non-urban locations are seeing a reduction of supply in their communities," he explained.

He said that situation that was likely to have a further knock-on impact on the hospital system.

"We need to ensure that there is a healthy environment for operators to provide quality care and indeed a healthy environment to provide for reinvestment into the sector. It is becoming urban-supplied care. That's going to be a problem for older people," he concluded.

Read the full report here


Content adapted from RTÉ.

BDO is one of the leading advisory firms in the Healthcare sector. We have established a close working relationship with the HSE, the National Hospitals Office and many public and private hospitals in Ireland.

If you have any questions about the items raised in the report, or would like to find out more about BDO's Healthcare Team, contact Brian McEnery, Partner & Head of Advisory, at [email protected].