Nursing homes: is orpéa an isolated case? - France

The Orpéa affair has brought scrutiny to the EHPAD (nursing home) market in France, particularly highlighting the company's high profitability compared to its main competitor, Korian, and the negative net results of public and private non-profit EHPADS. The disparity between Orpéa and Korian, alongside allegations of cost-cutting measures such as understaffing raises concerns over the practices employed to achieve such margins. Moreover, the sector faces structural problems such as recruitment difficulties, with 44% of EHPADs experiencing challenges in hiring, exacerbated by the health crisis and resulting in longer vacancy periods for positions.

Scrutinizing the Performance and Challenges in France's Ehpad Market

In examining the French market for Ehpads (Etablissements d'Hébergement pour Personnes Âgées Dépendantes), which encompasses nursing homes catering to the elderly, significant trends and statistics have emerged. Private commercial Ehpads command a notable fee premium for accommodations, which can reach over €6,000 monthly, implying a price point between 40% and 55% higher than public or non-profit counterparts. Notwithstanding the higher costs, private establishments, particularly those under larger chains, surprisingly exhibit lower staffing levels, with autonomous public Ehpads staffing approximately 72.1 full-time equivalents per 100 spaces in comparison to the private sector's lower average of 52.3 full-time equivalents. The financial performance of key players in the sector presents conspicuous disparities.

Orpéa, a major brand in the market, operates close to 20,000 beds (near 20,000 specifically in France and the Benelux region), and achieves sales figures in the ballpark of €2.36 billion. Its closest competitor, Korian, while surpassing Orpéa in bed numbers with nearly 25,000, garners about 25% less in sales, highlighting a perplexing profitability gap. Notably, Orpéa's operating income ratio stands at a striking 11.9%, whereas Korian's ratio is significantly lower at 6.9%.

The broader financial landscape in the Ehpad sector reveals that public and non-profit Ehpads generally endure an average net loss of around -2%, underscoring the unusual financial results seen for companies like Orpéa. Furthermore, staffing shortages, accentuated by the unparalleled demands of the pandemic, have further stressed the sector, contributing to recruitment problems where nearly half of Ehpads face hiring challenges, with many positions remaining open for extended periods exceeding six months.

Despite these insights, the information provided in the text underscores the complexity of the French Ehpad market, highlighting the varying structures, financial performances, and operational challenges faced by different entities across the spectrum of public, non-profit, and private for-profit organizations.

Leading Entities in the French EHPAD Sector: A Landscape Shaped by Dominant Providers

In the intricate tapestry of the care sector, particularly within the EHPAD (Établissement d'Hébergement pour Personnes Âgées Dépendantes) market in France, several key players emerge as central to the narrative. These entities not only showcase the dynamic interplay of care provision and business models but also highlight variations in size, scope, and staffing within the industry. Let’s delve into the fabric of this sector by looking at the principal organizations that define its contours.

• Orpea: As one of the titans of the care market, Orpea has firmly established its presence not only in France but also beyond its borders into the Benelux countries. With a substantial number of beds under management, Orpea stands out for its expansive workforce and its strategic approach to upscale care services. This group's practices and financial outcomes, as seen through high operating income ratios, have attracted scrutiny and raised questions about the balance between quality care and profitability.

• Korian: Synonymous with competence and widespread reach, Korian is another vanguard of the care sector, wielding a greater number of beds than its counterpart Orpea. Despite this larger capacity, Korian exhibits a contrasting business model when benchmarked against Orpea’s profit margins, hinting at a different operational ethos or a divergent strategy in the marketplace.

• Colisée: With a strategic focus on the French market, Colisée is a noteworthy contender that enriches the diversity of the sector. Although the group maintains a smaller scale of operations compared to the sector's giants, its role is essential in providing another facet of care housing for the elderly.

• Domidep: As a more compact operation in the industry, Domidep is an example of a provider catering to the needs of the nation's seniors. This organization, despite its smaller number of beds and workforce, is integral to the mosaic of services contributing to the holistic framework of elderly care in France.

• DomusVi: Encompassing a significant number of beds and supported by a robust workforce, DomusVi is a substantial provider within the marketplace. This organization adds to the collective capabilities of the sector, contributing its share to the variety of services on offer across the country.

Inforamtion

• Number of pages : ~ 40 pages
• Format : Digital and PDF versions
• Last update : 03/02/2022

Summary and extracts

List of charts presented in this market study

• Profitability of the two leading Ehpad operators
• Price range for a single room in permanent accommodation, by legal status