The bankruptcy of care home operator Convivo caused a stir at the start of the year. Staff shortages and rising costs are putting family operators under pressure. But there are also reasons for their own responsibility.
The situation is catastrophic, warns Bernd Meurer, president of the Federal Association of Private Social Service Providers and operator of several nursing homes. Given the financial situation, more than two-thirds of the association’s member companies are concerned about their company’s survival. One of the main reasons is that nursing home operators can hardly find more staff.
Despite high demand, rooms are empty
Staffing shortages have led to a paradox that more and more nursing home rooms have to remain vacant despite high demand. The reason is that there is a lower limit on staff: nursing homes are only allowed to take in as many residents as required and provide caregivers. If there are no staff, the rooms will just sit empty—nursing homes can quickly run into financial trouble.
Requires good management and leadership
Many nursing home operators have complained about the rigid negotiation process of nursing and health insurers on care rate levels. In turn, health insurance companies refer to their statutory mandates to keep costs reasonable.
Carsten Brinkmann, chairman of the supervisory board at Terranus, said margins in the care industry are actually quite narrow. The national consulting firm from Cologne together with investors and operators of the social and health real estate market: “Compared to hospitals, however, nursing homes with long-term care of residents are very stable in operation and continuous business areas that are easy to calculate and manage leave.”
Isn’t it enough just to raise wages?
The obligation to pay collective agreements for employees of nursing homes and outpatient care services was introduced on 1 September 2022 under the Act on the Further Development of Essential Provisions. The minimum wage will also increase twice this year, to 18.25 euros from December 2023. According to the calculations of the ver.di trade union, a working week of 40 hours means a monthly basic salary of 3,174 euros.
But increasing wages alone won’t solve the staffing problem for aged care, warns Matthias Gruss, secretary of the ver.di trade union: “Compared to other industries, aged care has the highest prevalence rate. Apart from wages, Work organization and working conditions for many families need improvement.”
On average, a nice 2400 euros own contribution
As of January 1, 2023, according to the Association of Alternative Health Insurance Funds, in the first year of the family, the national average monthly payment will be 2,411 euros, which is 278 euros more than at the beginning of 2022. Totals include individual contributions for pure care and support. Unlike health insurance, long-term care insurance only pays part of the cost. For residents, there are also costs for accommodation, meals and facilities investment.
high profit real estate fees
According to Gruß, operators and investors profit from these real estate costs. Many nursing home operators do not own the homes and buildings, but only lease them out. Lease and rental costs incurred by nursing homes due to property can be passed on to residents on a one-to-one basis.
Gruss said there is a growing awareness of real estate renting out at premium prices. Many nursing companies are affiliated with real estate companies. “It’s not the surgical care business that’s really making money, it’s real estate.”
non-profit As a way out?
Alexander Schraml, president of the Federal Association of Municipal Elderly Facilities, demanded that the legislature must intervene. For example, private nursing home operators can only be approved on a not-for-profit basis: “Nursing homes are largely funded by mandatory contributions to nursing insurance. And the inability to deduct profit contributions from mandatory fees does not in turn make nursing homes benefit.”
Heinz Rothgang, a health economist and nursing researcher at the University of Bremen, also sees several adjustment screws to overhaul the system. “The path has to be to regulate private carriers so that they behave like not-for-profit carriers,” Rosgang said.
Pressure on the care system will increase
The number of people requiring care in Germany is increasing – and will continue to increase. Five million people in Germany will be receiving treatment by the end of 2021, the Federal Statistical Office said. The federal office estimates that number will rise to 6.8 million by 2055. In the coming years, more and more people needing care will have to be funded. The care system is stretched to its limits.