Private nursing homes will close if funding ‘crisis’ not addressed, report warns

One in three private nursing homes lost money last year, according to a report which claims more homes will close unless a funding crisis in the sector is addressed.

In contrast, all homes were profitable just six years ago, states the report, commissioned by industry group Nursing Homes Ireland (NHI).

Operational costs have risen 36 per cent since 2017, and the cost of developing a bed is up 47 per cent, the study by consultants PwC states, but income from the State for residents on the Fair Deal scheme has increased only marginally.

The report says nursing homes are under pressure as they deal with the complex needs of residents and incur rapidly rising costs due to infection control, inflation and industry-wide staffing shortages.

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Over the past three years, more than 30 nursing homes have closed, with the loss of 915 beds. This week, one facility in Cork left the Fair Deal scheme in a row over State funding, which comes from the Health Service Executive via the National Treatment Purchase Fund (NTPF).

[ Cork faces nursing home bed losses if Fair Deal rates not increased, warns operator ]

[ Families urge Government to provide extra Fair Deal funding as Cork nursing home exits scheme ]

Declining profitability in the sector due to increasing costs and insufficient revenues coupled with rising interest rates, construction costs and land prices has meant that the business case for new nursing homes is no longer commercially viable, while there is “no incentive” for existing home owners to upgrade premises, according to the report.

Nursing home owners also point out that due to changing demographics and increased use of home support services, staff are now caring for residents that have more complex needs, including being older, of higher dependency and requiring a greater number of care hours.

[ The Irish Times view on the Fair Deal nursing home scheme: time for a proper review ]

Immediate short-term action is needed to stave off a further wave of nursing home closures, the report says, including reform of the pricing mechanism for Fair Deal rates.

“The sector is in a state of crisis and contraction, with more and more homes and beds closing and not being replaced,” NHI chief executive Tadhg Daly claimed. “This has been particularly prevalent among smaller operators in rural areas to date, but will encapsulate medium-sized and larger operators if the status quo prevails. Urgent intervention is required.”