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Many nursing homes raise prices and make decent profits

Väätsa nursing home.
Väätsa nursing home. Source: Olev Kenk/ERR

Since the nursing home reform last July, costs have climbed 28 percent and waiting lists have grown. Most nursing homes however are profitable, based to their accounting records.

Nursing home costs were previously paid by the person, but since July 1, they are divided by the local authority and the person who needs the service.

However, many nursing homes increased their prices after the reform, and while not all price lists are public, many of those that do show the cost of a place have had the current price exactly since July 1.

The Ministry of Social Affairs reports that the average price of care homes is now €1,235 and the cheapest ones start from €1,000.

Meeli Tuubel, an advisor at the Ministry of Social Affairs' social welfare department, told ERR that not all nursing homes have raised their prices substantially, but the 55 nursing homes whose prices are known increased their prices by 28 percent over the year.

"This is about eight percent higher than projected, but it does not mean that the government miscalculated costs. Price increases would have occurred even without the reform," Tuubel said.

She said that the price rises are inevitable due to wage pressure, general price hikes, and pricing adjustments. As part of the reform, certain municipal nursing homes have made their service rates cost-based, when before they were indirectly supported from the municipality's general costs and the price list.

Many nursing facilities made a profit last year, according to their financial statements. Last year, nursing home turnover hiked from €4.6 million to €8.2 million and net profit was €1.46 million.

Lõuna-Eesti Hooldekeskus made €586,000 on €9.5 million in turnover, whereas Maarjamaa Kodud OÜ made €154,000 on €1.73 million. Pihlakodu turnover climbed almost two million to €19.7 million last year, but it lost €429,000.

Care reform increased queues

Tiina Luts, the manager of Paide nursing home that joined the Südamekodu chain on September 1, said that they have not increased the price this autumn, but they cannot stay at the current price indefinitely.

"In nursing homes, prices vary dependent on care needs and we are heading in that direction," she said about the price increase.

She said that caregivers' salaries is the main reason for the price rises, but also to general price rises.

Väätsa Nursing Home. Source: Olev Kenk/ERR

Luts said that the care reform has increased waiting times, but they also vary by patient condition. She also said the reform was most beneficial to staff by raising thier compensation.

"The pay rise will also allow us to get better hires, with better pay comes more experienced staff," she said,  adding that care home workers must ultimately be respectful of  their job and the people they care for.

Luts said that Paide Südamekodu's patients' pensions and local government subsidies cover most of their expenses.

The daily newspaper Eesti Päevaleht reports that a two-bed room at the Pihlakodus costs €1,970, up 53 percent from €1,290 a year earlier. The institution's management however cited quality improvements.

Maimu Noorhani, a member of the board of directors of the Lõuna-Eesti hooldekeskus nursing home, which oversees six nursing facilities, told ERR that they have not hiked their fees since the care reform.

"When 2027 comes, with the new pressure on the obligatory ration of care workers to the client, we will also have this concern," he said about the forthcoming price hikes.

Speaking about the impact of the reform, Noorhani said that the burden on loved ones is certainly alleviated to a degree, but the reform will be deemed successful if it does not fail, and it is too early to rejoice.

"The number of people wanting to become carers has definitely gone up, so there are more carers available," Noorhani added.

Ministry of Social Affairs: Nursing home practice is still settling down

Meeli Tuubel, from the Ministry of Social Affairs, said that there are only a few unsuccessful examples, while for most people the situation has eased.

"In some municipalities, for example, 50-80 percent of people living in a nursing home no longer need the support of families to pay for the service," she said.

The fee may rise if price differentials between people with different levels of care needs have been eliminated, as at Pihlakodu. Tuubel said that this is partly due to the municipality threshold, which also takes into account a single level.

She said a nursing home with separate divisions for different care requirements and more staff can lower care expenses.

However, "Most of the time, nursing homes have a mix of people with normal and higher care needs," Tuubel said, adding that changing care demands make it difficult to adjust staffing levels.

It is too early to draw any fundamental conclusions about the effects of the care reform, Tuubel says, because the changes have been so big that time has to be given. The ministry plans to carry out a more in-depth impact assessment in 2026.

Väätsa nursing home. Source: Olev Kenk/ERR

The Ministry of Social Affairs is not considering any legal changes, but the adviser said that the Social Insurance Board can review whether the public part of nursing home costs has been calculated according to actual costs.

"We track all comparable data. In September, the Social Insurance Board (SKA) provided a summary of nursing home pricing and care costs. Price rises are difficult to compare because such precise data was not recorded in earlier years. She claimed nursing homes were not required to post their place pricing on their website or distinguish between care and place costs.

Tuubel said the state needs to take a long-term view because at least two factors are affecting the current price rise: how quickly home-support services improve and how many new places are created, which will reduce pressure on nursing home services.

"Municipalities need to be given time to improve the availability of home services to support people who can still live at home," she said.

Some municipalities have to increase their financial contribution

The agency (SKA) monitors the municipalities' contributions to see whether the cost of the place and the cost of care are disclosed, and which costs are included in the part of the costs covered by the public sector, i.e. the cost of care.

However, the law does not allow all the costs to be counted as care providers' costs; for example, the costs of staff who are not directly involved in care work should not be counted in.

"Also, municipalities that previously contributed less to the service, or have more people in nursing homes than the Estonian average, will have to increase their share of expenditure now more than expected," Tuubel said.

She said the reform presumed local authorities would continue to fund and grow their contributions as they would without the care reform.

The Ministry of Social Affairs and municipalities have decided to use the equalization fund to balance revenue and expenditure. While the fundamental premise is to allocate money based on the number of old persons, the equalization fund also considers the actual number of care facility residents.

For example, in the second half of 2023, the general care service will cost €25 million more than the state has allocated, €39.2 million, leaving €14 million for reform and other services. She said that the 2024 general care service cost €54.3 million, with the state contributing 58 million and €3.6 million for other services.

Local authorities must first cover general care costs and then allocate any remaining funds to other services, she added.


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Editor: Kristina Kersa

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