Real Estate, Contracts, Supply … Economic Model of Private Nursing Homes Under the Microscope

fall down. A few days later, Gravediggers Victor Castanets (Fayard) Orpea shares have unscrewed on the stock market and lost half of their value in a few sessions. “When we invest in this type of actor, we know that we carry a certain number of risks, including abuse, even if there are no more complaints in the private sector than in the public sector. We recognize Matilde Dufour, Director of Sustainable Development in Mirova, Orpea’s third shareholder, which accounts for 4% of the capital. However, I thought it was going well, and the CSR committee of the board suggested that Orpea was in the process of improving. »»

rather

Will scandals discourage investors from looking to this sector? “Useful, profitable and safe investment” ?? There is nothing for sure. “I have been investing in promising sectors for a very long time.Even if the dividend is low “Says Eve Loire, a small investor who bought Orpea shares five years ago.

→ Analysis.Olpair Scandal: Non-Financial Indicators in the turmoil

Other shareholders are taking the opportunity to increase their stake in the group. Therefore, BlackRock has passed the 5% mark.one “Mechanical effect” And no “Investment strategy”, Secure an investment fund. But for Raul Tashon, a consultant specializing in nursing homes, investing in a personal retirement home is still a significant amount. We promise that needs are inexhaustible while the baby boomer generation reaches the era of addiction from 2030. And companies in the sector have their real estate as their battlefield. That of Orpea reached a modest sum of € 7.2 billion.

Real estate, war sources

Real estate is at the heart of the lucrative private sector nursing home economic model. “Ehpad is subject to very restricted construction regulations. New construction will cost at least € 10 million, but it is a safe investment given the aging population.”Me Delphine Jaafar, a lawyer specializing in Vatier’s health law, explains.

→ Explanation. Sale of Orpea shares: What are the rules for shareholder managers?

A large group has developed a hybrid strategy in this area. Therefore, Orpea owns half of its elderly housing. The quarter Koreans, most of the rest, are owned by the real estate group Icade, a subsidiary of the Caisse des Dépôts. For Nicolas Mérigot, director of Korian France, who will announce its annual financial results on Wednesday, February 23, this system guarantees regular investment. “In recent years we have invested € 355 million in real estate and will invest € 500 million in renovations and € 200 million in new buildings over the next few years.”He says. “Ownering a wall gives them a cushion to borrow and invest, but selling some of it allows for self-financing.”MeJaafar is summarized.

Price according to the district

This real estate location explains that accommodation accounts for half the cost of Ehpad. In the private sector, tariffs are free, even if the state limits annual increases. “Prices are set primarily according to the solvency of the surrounding population.”, Raoul Tachon explains. Private nursing homes are often located in urban areas, so rents are high, ranging from € 2,500 to € 6,000 per month, compared to € 1,800 to € 2,500 for the public (residents can also get sectoral assistance). ). .. “But that doesn’t necessarily mean better service.”, Warn Raoul Tachon. A scandal over Orpea’s “Bords de Seine” nursing home in Nui shows this.

Therefore, due to the high rent, private nursing homes need to find savings. Inhabitant food is one of these means. Prior to the Parliamentary Social Affairs Committee, the former managing director of Orpea Jean-Claude Brdenk spent an average of € 4.73 per resident per day. According to him, the savings are: “On the same menu, a family of four spends over € 5 in a supermarket. »» In Corian, meals cost € 5 per day and per resident. “It has a popularizing effect: we prepare 33 million meals a year.”Emphasize Nicholas Merigot. “With the effort and ingredients, the cost of a meal is 13 euros.”..

Public funds

The other half of Ehpad’s budget is publicly funded and divided into two parts. It is funded by a local health agency that transfers funds from Care (30%), the National Solidarity Fund for Autonomy (CNSA, 5th Branch of Social Security). Dependencies funded by the department (also receiving funding from CNSA). With regard to care, the contract with ARS establishes the needs of each Ehpad every 5 years for each patient.Meanwhile, the department evaluates each resident’s dependencies to correct the facility’s donations. “It is public money that there is no profession to make a profit.”Virginie Magnant, Secretary of CNSA, explains.

Gravediggers Nevertheless, it showed how Orpea was able to create a margin in state grants. Especially about salary, which accounts for about 80% of medical expenses. This is because when social security funds a position, these are not always met.

“Optimized” HR management

Private nursing homes “operating”, Unqualified people can fill the vacant seats. Therefore, it was a less payment. “I know of a hospital serviceman who worked as a nursing assistant for 15 years without graduating.”Natalie Brasco, Corian’s representative of the Central CGT Union, is nevertheless unaware of the “fake CDI” system accused of Orpea and has allowed more cheaply paid fixed-term contracts. Admits that … This “optimized” administrative staff allows private nursing homes to reduce staff costs by about 45% of the budget (55% in other structures).

→ Maintenance. Ehpad: In the profitable private sector, you need to consider “cost of capital”

Always follow Gravediggers, Orpea also benefits from back margins, and the early work of accounting minions can have a negative financial impact. Each nursing home in the group actually purchases supplies from a central purchasing institution. If the ARS and the accounts provided annually to the department show normal rates, the plant will receive a year-end reduction (RFA) that benefits only the group. Financial management is regional or departmental, performed by Ehpad by Ehpad, and these gifts are not detected by state services …

Year-end discount

“Year-end discounts are very common in this sector and happen to me on certain contracts. Recognize the general manager of the associative group. The question is what to do with this money. I, I re-inject it into the facility, which makes it possible to improve the quality of care or keep the price down. »»

→ Chronicle. Ehpad, a super profitable investment

“Corian has no RFA”Guarantee Nicholas Merigot to explain “A reference center where our facility is not obliged to purchase their supplies”.. But it allows you to get a better price. Thanks to Corian’s purchasing ability, suppliers can, above all, benefit from experience feedback on their products and personalized management, with headquarters charging € 5.3 million annually. “This will enable us to raise funds for medical expenses that are not covered by social security, such as computerized patient monitoring.”Nicholas Merigot emphasizes that in care and dependency, Corian loses € 2 million a year compared to public funding.

“We shouldn’t throw too many stones into private nursing homes. Relativize the director of the association group. Sure, they’re fulfilling, but they’re also innovative. For example, Corian is investing in connected tools and new methods. »»

Private essentials

Without the private sector, France would not have succeeded in funding so many places for dependent elderly people. According to Me Jaafar, only the private sector can support the public sector, which is over-debt and has no means of covering the cost of major renovations. “52% of public parks are aging. This requires a huge investment. Lawyer explains.. That’s why all the major real estate companies invest in this sector. »»

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French private nursing home

At the end of 2019 7,519 accommodations (Ehpad) for the elderly dependents accommodated nearly 600,000 residents.

45% of the places depended on the public sector. 30% private non-profit organizations (mainly associations), 25% private commercial organizations.

In France, the main private groups are:

―――― Corian (304 offices, 25,232 beds in France, 71,465 beds worldwide), with sales of € 3.8 billion (profit of 65 million) in 2020.

―――― Orpea (223 offices, 19,716 beds in France, 63,442 beds worldwide), announced sales of 4.3 billion in 2021.

―――― DomusVi (211 facilities, 17,144 beds in France, 37,899 beds worldwide).

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