Nursing homes raising prices after affordability reform introduced

Care home.
Care home. Source: ERR

Nursing homes have raised their prices following the introduction of a reform aimed at making places more affordable, increasing costs both for the state and individuals. Prices are expected to rise again in the future due to staffing costs.

The reform saw costs of care partly shifted to local governments. Before, individuals were required to pay 100 percent of their own fees. This should have made services more affordable for people.

However, many nursing homes have already, or soon will, raise their prices resulting in a bigger bill for clients and the state.

ERR spoke with several families with loved ones living in nursing homes. Based on their experiences, the differences in price between June and July range from €160 to over €300, dependent on circumstances and the municipality. In some areas, the co-payment amount decreased considerably.

Company Südamekodud has 10 nursing homes across Estonia. Meelis Mälberg, a member of the company's management board, told ERR prices will increase from September 1. He said this had been agreed at the start of the year before the reform.

Mälberg said it is hard to give specific examples of service prices as the company operates in over 70 municipalities and they all have different compensation rates. These can vary from €400 to €734, he said.

With the reform, local governments were given the right to set a ceiling for maintenance costs, and it depends on how much extra a person must pay.

"People's pensions also vary a lot, from an average of €700 and a bit, but there are also people with much smaller pensions and those with much larger pensions. It's very difficult to say in a nutshell how much someone has to pay extra. We look at each client on an individual basis, and the bill is based on the client's precise care needs," Mälberg told ERR.

Some customers are facing bills several hundred euros higher after the reform, he said.

Four components make up care costs: carers' salaries, training, work clothes, and personal protective equipment. Mälberg said the whole price increase will be used to raise caregivers' wages. 

Nursing homes will need 1,000-1,500 new employees

The board member said the reform introduced a limit on the number of employees a carer can have. He said this important change has received less attention but it means more care workers will need to be hired. The company has already started a recruitment drive.

"In Estonia, this means hiring 1,000 to 1,500 more care workers over the next few years. There is nowhere to find these people so no one is waiting to see where they can come from. They would have to come from somewhere else in the sector, but that also means pay rises – quite significant ones. In our case, this cannot come from anywhere other than the [service] price," he said.

Mälberg predicted this will significantly push nursing home prices up as wages make up approximately 60 percent of budget costs. It is also likely that salaries for other related staff members in local government will also rise.

"It will come purely from the customer's wallet, there's no getting away from it," he said.

Ilmar Köök, manager of OÜ Häcke, which runs nursing homes in Kohtla-Järve, Paide, and Rakvere, said their prices have risen because everything has become more expensive. But the price increase is borne by the municipalities, not the customers.

"As far as I know, customers who pay more have seen the price go down," he said when asked about the consequences of the care reform. "When we sent out the latest invoices, many of the private individuals who were paying more had a much cheaper price."

Köök gave an example that if the average bill is €1,000 per month and the municipality pays €500, and if €400 is added to the client's pension, then the increase will be €100.

"Before, a private person had a much higher bill," he said, adding that the situation varies a lot from municipality to municipality.

OÜ Häcke also plans to raise employees' salaries. Köök said calculations will be made in August and the exact amount is yet to be determined.

Both nursing home managers felt the reform was a step in the right direction.

Köök said, at least initially, the result will be positive, but the future will show exactly how much prices rise and whether municipalities will revise their compensation limits.

Mälberg said that more money coming into the sector is undeniably positive, but one of the best outcomes has been that more light has been shone on the sector and caring for loved ones. 

However, he said, if the state or local governments do not find significantly more funding, then relatives will have to cover a significant part of these costs in the future.

"Quality will certainly improve because there will be more staff and better wages, and hopefully they will be better motivated," Mälberg said, adding that the main victory achieved by the reform is the improvement of the level of care, which will also increase customers' demands.

Social Insurance Board investigates most extreme cases

This year, the state will invest almost €40 million in improving the availability and quality of the care sector. The allocation in the state budget will grow to €57 million in 2025 and €68 million the year after.

Taavi Audo, head of communications at the Ministry of Social Affairs, said municipalities set the cost limit which allows them to ensure people have a choice about their care services.

On Monday, newspaper Eesti Päevaleht reported that one person's bill for long-term care at Räpina Hospital in south Estonia doubled from €200 to €400 after the reform was introduced.

Audo said the nursing home increased its prices by 37 percent and became the most expensive institution of its kind in the region. But the service's price was in the hands of the municipality, who own the building.

Fees for places in nursing homes vary greatly across Estonia, ranging from €900 to €2,700, Audo said.

"The aim of the care reform is to reduce the monthly cost for people using the service, not the current own contribution of the municipalities," the official said. "The Social Insurance Board is currently monitoring the pricing of care homes, extreme cases are also being analyzed, and as a result, we can decide whether further interventions are needed."

Audo emphasized the need to improve the quality of the care sector, which was one of the goals of the reform. He said the increase in quality should be accompanied by rising salaries and new employees.

That a large number of new carers will need to be hired had been taken into account, Audo said, and many care homes have already met the expected staffing requirements.

"Wage pressures are mainly due to reducing the turnover of today's low-paid care workers. The rise in nursing home prices was not supposed to be a consequence of the nursing reform. A reasonable price increase is understandable in the context of higher energy prices and services, and the need to increase the wages of care workers, both of which have been taken into account in the financing of the care reform," Audo added.


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Editor: Helen Wright

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