The nursing home market - France

1.2 The European market

Europe's population is aging. In ****, the over-**s will represent more than a fifth of the European population. By ****, this proportion is expected to rise to almost a third. The European population aged ** and over is expected to rise from *% in **** to over **% in ****.

Proportion of the population aged ** and over Europe **, ****-****, in % Source: ****

The three European countries with the highest proportion of people aged ** and over are Italy (***).

Housing demand for seniors Europe, ****, in millions of people Source: ****

Europe's population is aging at an accelerating pace (***) rising from around **% in **** to an estimated **% in ****, and even **% in ****. As a result, the care needs of the elderly population are set to increase exponentially over the coming years, raising the question of how to finance them against a backdrop of public finance crises in all European countries[***]

Investment volume in retirement homes Europe, ****, in billions of euros Source: ****

The UK was the leading "European" country in terms of investment in retirement homes, with **.** billion euros in ****. Germany was in *nd place, investing **.** billion euros in ****. However, the gap between *nd and *rd place was quite wide, with the Netherlands investing just *.** billion euros in senior residences.

This can be explained in ...

1.3 A French market struggling to meet growing demand

In ****, ***,*** people will be staying in retirement homes in France.

Medicalized retirement homes account for almost **% of accommodation capacity for the elderly , with ***,*** people in EHPAD in ****.

Elderly care facility capacity and number of SSIAD places France, ****, in thousands Source: ****

In ****, France will have **,*** nursing homes. Between **** and ****, the number of EPHADs and "autonomous residences" increased by *.**% and *.**% respectively. conversely, the number of USLDs (***) fell by -*.**% and -*.**% respectively.

Number of residential facilities for the elderly France, ****/****, in thousands Source: ****

The market for nursing homes is therefore growing, but this growth is being held back by the mismatch between supply and demand. Supply is not growing fast enough to keep pace with rising demand, as can be seen from occupancy rates, which average **%.

The two market leaders, Orpéa and Korian, have seen strong sales growth since ****: Orpéa has quadrupled its earnings and Korian has multiplied them by * , to each reach over *.* billion in sales by ****.

sales trends in France for market leaders France, ****-****, in billions of euros Source: ****

Furthermore, according to an interview with Sophie Boissard, Korian expects to accelerate its growth and speaks of "reinventing the offer". Her words testify to the positive predictions for the ...

2.1 The aging of the population and the rise in elderly dependency

Many countries, particularly in the western hemisphere, are experiencing a structural trend towards an ageing population, due to combined declines in mortality and birth rates. In France, not only is the number and proportion of elderly people increasing, but also the number and proportion of dependent elderly people. This phenomenon, which has been observed for many years, is set to become even more marked in the years to come.

On the one hand, life expectancy continues to rise. Life expectancy for people born in **** is **.* years for men and **.* years for women. For those born in ****, it should be ** years for men and **.* years for women. [***]

In addition, the arrival in old age of the baby-boomers of the post-war boom years is contributing to this increase.

The proportion of the population aged over ** has risen from **.*% in **** to **% in ****, and should reach **.*% in ****. What's more,the proportion of the population aged ** and over rose from *% in **** to *% in ****, and is set to double by ****. There should be *.* million of them in ****, which implies an increase in the number of dependent elderly people, since the latter are often over **. [***]

Share of the population aged over ** France, ****-***** Source: ****

The increase in the ...

2.2. Typical resident profile: a majority of women and GIR 2 residents

Medicalized retirement homes are designed for individuals who are already dependent on care and therefore need permanent day-to-day support.

The female population is largely represented, with around **.*% of senior women residents in ****. This can be explained by the fact that men die earlier, so the proportion of women increases with age.

Residents generally suffer from Alzheimer's disease (***)[***]

The average age in nursing homes is falling : half of all residents are ** in ****, * months older than in ****. Only **.*% of residents are under **. The two age groups most represented in EHPAD are ** to ** (***)

Distribution of EHPAD residents by age group France, ****, in Source: ****

Demand for EHPAD and the level of support required are strongly determined by residents' level of dependency. This is measured by GIR(***) and corresponds to an elderly person's level of loss of autonomy. There are * different GIR levels, ranging from the most serious to the least serious level of dependence. Here are the CNSA definitions:

GIR *: "people confined to bed, whose mental faculties are seriously impaired, and who require the continuous presence of caregivers." GIR *: "people confined to bed or an armchair, whose mental faculties are not totally impaired, and who require care for most activities of daily living." GIR *: "people ...

2.3 Choosing a facility: quality of care and social ties as primary criteria

The quality of care and the quality of the social and emotional bond between staff and relatives are the main criteria taken into account when choosing an EHPAD for a relative. These two criteria are cited respectively by **% and **% of respondents, and are cited first by **% and **% of respondents.

The quality of supervision and security, as well as the quality of end-of-life support for the elderly person and the family's bereavement, are also considered very important criteria.

Finally, the quality of facilities (***), catering and entertainment are seen as important, but not a priority.

Criteria for choosing a home for the elderly in EHPAD France, ****, in Source: ****

Although not proposed in the previous survey, price is also one of the first criteria taken into account. In particular, it is probably an important factor in explaining why the French prefer to stay at home. In fact, the average monthly sum that the French would be prepared to pay to go into an EHPAD is * times lower (***).

Average monthly sum that the French would be prepared to pay to go into EHPAD France, ****, in %

Finally, according to the same IFOP survey, more than half of respondents (***) who think the State should act alone. Finally, ...

2.4 The poor image of nursing homes

Often referred to as "mouroirs" (***), nursing homes do not enjoy a good image in France. The scandal that brought to light situations of neglect and mistreatment at the leading EHPAD, Orpéa, in the survey "Les Fossoyeurs" published by Victor Castanet in January ****, exacerbated this poor image.

An Ifop poll carried out for Capgeris in **** confirms that the publication of this book has worsened the image of EHPADs for **% of respondents

Impact of the "Les Fossoyeurs" book revelations France, ****, in Source: ****

As a result, the proportion of French people wishing to see their loved one end their life in an EHPAD has dropped by * percentage points in * years: they were *% in **** compared with *% in ****.

In ****, **% of respondents had a poor image of nursing staff in EHPAD, compared with **% in ****. conversely, caregivers working in elderly people's homes enjoy a good image.

Perception of healthcare personnel/caregivers looking after the elderly France, ****, in Source: ****

Generally speaking, it's the way in which the issue of health and support for dependent elderly people is handled that is often considered unsatisfactory. In ****, only **% of those surveyed said they were satisfied.

Level of satisfaction with care for the elderly and loss of autonomy France, ****, in Source: ****

Improving ...

3.1. A fragmented market divided between the public and private sectors

Retirement home operators have one of three statuses:

Private not-for-profit (***). Private for-profit: residences managed by non-profit associations (***), establishments belonging to foundations, mutual benefit groups and congregations. Public: Establishments managed by the commune (***) or attached to a public hospital.

[***]

Differences in status also have a decisive impact on customers' choice of EHPAD. In particular, price is a major difference. According to the latest publication from the French National Council for Solidarity and Autonomy (***), the median price of an EHPAD is **** euros per month in ****, compared with **** euros in ****. Here is the variation in the daily amount depending on the status of the EHPAD in **** and their evolution compared to ****:

Public: **.** € / day (***) Private non-profit: **.** € / day (***) Private non-commercial: **.** € / day (***)

In France, the market for nursing homes is dominated in number by public EHPADs, which will account for almost half (***) of all EHPADs in ****. Not-for-profit EHPADs account for **%, while private commercial EHPADs make up **%.

Breakdown of EHPAD by establishment status France, ****, in Source: ****

Most EHPAD managers in France are French and operate exclusively in France, but some have also developed their business in other European countries, notably the most renowned commercial EHPADs, such as leaders Korian and Orpéa.

Capgeris distinguishes several types of ...

3.2. Imbalances between supply and demand

Tensions between supply and demand

In the coming years, the so-called "papy boom" phenomenon, a consequence of the "baby boom" that followed the Second World War, is set to accelerate the growth in the number of dependent elderly people. With an accelerated aging of the population, linked to the post-war baby-boom generation, the number of people over **, the average age of entry into retirement homes, will rise in France from *.* million in **** to *.* million in ****.[***]

However, the number of places in EHPAD is not growing as fast. With an average occupancy rate of **%, the market for nursing homes is characterized by tensions between supply and demand, which are set to worsen in the coming years if supply does not accelerate. [***]

Awareness of the challenges posed by dependency has been slow to emerge in France, as evidenced by the belated measures adopted in response to these tensions (***). This mismatch between supply and demand, and the fact that supply is lagging behind rising demand, can also be explained by the administrative procedures required for EHPAD construction projects. For each project, an authorization to open must be granted.at least five parties are involved, including the Ministry of Health, the Prefect and the President ...

3.3 The sector's main challenges

The nursing home market is characterized by a number of challenges, the most important of which are as follows:

Lack of image (***) Mismatch between supply and demand (***) Recruitment Financing Digitalization

Recruitment

According to the Drees survey, there will be ***,*** FTEs in all facilities for the elderly in **** , **% of whom will be women . In terms of staffing levels, EHPADs have a shortfall of ** FTEs per *** places, while USLDs have a shortfall of *** FTEs per *** places.

Nearly half (***) of EHPADs report recruitment difficulties. **% of EHPADs have had an unfilled position for a coordinating doctor for over * months, and *% of EHPADs are in the same situation with regard to the recruitment of care assistants.

Not only is recruitment difficult, but facilities are also struggling to retain staff: turnover in EHPADs is **.*% for nurses and **.*% for care assistants. [***]

This finding is all the more pronounced for private-sector EHPADs, half of which are experiencing recruitment difficulties. If **% of public establishments and **% of private structures find themselves in this situation, it is above all because there is "a problem of financial resources and above all of human resources to attract new healthcare professionals in these organizations", says Georges Fauré, former president of the Université de Picardie Jules ...

3.4 EHPAD business model

EHPAD managers are both property managers and service companies. They therefore have two activities: property management and EHPAD operations.

EHPAD operations encompass a number of activities, in particular residence design, activity management (***), occupancy rate monitoring, resident selection and care by the management team.lection and care of residents, for example; financing management; and development, which involves managing investments and deploying a real estate strategy.

Source: ****

According to a KPMG study carried out on a sample of *** facilities, total outsourcing is the preferred method. In this case, operators lease the buildings from a social landlord or private housing organization.

for information, Orpea owns around **% of the buildings it operates, while Korian holds **%. [***]

4.1 Offer typology

The different types of nursing homes are as follows:

Source: ****

Under the French law of January *, ****, establishments with more than ** beds and a GMP (***). As a result, the majority of MAPADs have become EHPADs. By misuse of language, no distinction is generally made between the two, the term EHPAD being used in both cases.

As a general rule, retirement homes provide accommodation and meals for senior citizens, as well as many other specific services such as linen care, entertainment and sometimes supervision. What's more, nursing home residents benefit from the permanent presence of paramedical professionals such as doctors, physiotherapists, psychologists and nurses.

According to Logement Seniors, rates can vary considerably from one establishment to another. In fact, the level of dependence of the senior citizen largely determines the costs for the establishment and therefore the price for the resident. The level of dependence is determined by whether the resident's state of health has been assessed using the national AGGIR evaluation grid , which partly determines the cost of a stay in a retirement home.

Generally speaking, the operating costs of a nursing home are divided into :

The accommodation rate: This covers the cost of accommodation, full board, laundry and bed linen, as ...

4.2 Prices

In France, the median monthly cost of a single room in EHPAD in **** is **** euros. The average cost is **** euros[***] According to the same source, it breaks down as follows:

An average daily accommodation rate : Single room: €**.** / day Double room: €**.** / day

Average daily care rate : GIR *-* : *.** € / day GIR *-* : **.** € / day DIR *-* : **.** € / day

This cost varies according to the status of the EHPAD. The average monthly cost in private establishments is higher. [***]

Median out-of-pocket expenses by EHPAD type France, ****, in euros Source: ****

There are geographical disparities in nursing home prices, as shown in the map below. In particular, Ile-de-France, Corsica and Provence-Alpes-Côte-d'Azur are the most expensive regions, with a median rate in excess of *,*** euros. Conversely, Pays de la Loire, Bretagne and Grand Est are the regions with the lowest median rates.

EHPAD median monthly rates by region

France, ****, in €

Source: ****

5.1 Current regulations

Law of January **, ****

Medicalized retirement homes are subject to EHPAD regulations, and therefore to the law of January **, ****.

In order to obtain the official designation of nursing home, an establishment must sign a *-year tripartite agreement with the Conseil Général du Département and the Direction Départementale de l'Action Sanitaire et Sociale.

In a nursing home, residents must enjoy optimum quality of life, and safety and hygiene must be impeccable. Residents must not lose their bearings, and their state of health must be closely monitored by the nursing home team.

The fundamental rights of residents are defined by article ***-* of the French Code de l'Action Sociale et de la Famille:

"respect for dignity, integrity, privacy, intimacy and security"; "free choice between home and residential services"; "individualized, high-quality care and support"; "confidentiality of data concerning nursing home residents"; "Access to information; "information on fundamental rights and remedies"; "direct participation in the care and support project".

The tripartite agreement

The tripartite agreement is a contract signed by three parties prior to the construction of an EHPAD facility. The implementation of an EHPAD-type accommodation facility is therefore governed by law, with the intervention of the ARS (***).

The aim of ...

6.1 Segmentation

The following segmentation of players is used:

• Korian Clariane
• Orpéa Emeis
• Domus Vi
• LNA Santé
• Maisons de Famille Groupe
• Emera
• Domidep
• Residalya (groupe DomusVI)
• Medeos
• Omeris Réseau
• SGMR « Les Opalines »
• Medica France
• Domani
• Medicharme
• DocCity