There are currently over 460 registered nursing homes in Ireland catering for more than 25,000 residents.² Occupancy rates are at or above 90%. An estimated 45,000 additional nursing home beds are expected to be required to fulfil current projected demand, based on population changes alone, by 2031.³

One recent commitment to capital investment for the sector comes from the HSE’s commitment to pay €24 million a year to Equisik, the joint venture appointed to design, build, finance and maintain seven community nursing which will provide 530 new nursing home beds.⁴

Based on demographics alone and the current proposed capital investment commitment, there is likely to be a significant supply shortage of nursing home beds in the medium term.

Regulation

In order to operate a nursing home in Ireland, you must be registered with the Health Information and Quality Authority (“HIQA”) under Section 48 of the Health Act 2007.

HIQA is responsible for ensuring that nursing homes meet the National Quality Standards for Residential Care Settings for Older People in Ireland. HIQA regularly inspect nursing homes to ensure they meet the applicable standards for quality and safety. During 2020, HIQA conducted 392 inspections of nursing homes, with this number increasing to 555 inspections in 2021(the latest year for which information is currently available). Five nursing home centres were closed by the Chief Inspector between the beginning of 2020 and the end of 2021.⁵

HIQA is increasingly active in fulfilling its inspection and enforcement roles. The impact of enforcement by HIQA in relation to nursing homes which do not meet the required standards is not factored in to the supply needs for nursing homes. We consider that the increased regulatory environment is only likely to create more pressure on supply as poor standard accommodation is taken out of the system.

Structure of the Sector

Currently nursing home provision is provided via the public, voluntary and private sectors. The nursing home sector in Ireland has become more consolidated in recent years, with a recent audit of the sector finding that 15 nursing home groups own 40% of all private nursing home beds. This audit outlines that 10,720 of all private beds in Ireland are owned by global nursing home groups and investment firms, alongside a few Irish operators.⁶

Paying for Nursing Home Care – the Nursing Home Support Scheme

In Ireland, the cost of nursing home care is supported by the State under the Nursing Home Support Scheme (“NHSS”) (often referred to as the “Fair Deal” scheme), introduced through the Nursing Homes Support Scheme Act 2009 (the “2009 Act”). The NHSS is open to any citizen who has been living in Ireland for at least a year and meets the relevant care assessment standard for long term residential care.

Under the NHSS, residents contribute 80% of their assessed income and 7.5% of their assets (including any principal private residence) to the cost of the provision of nursing home care. The State makes up the shortfall. The 7.5% “asset” contribution can be deferred through “Ancillary State Support”. This is effectively a loan from the State in return for a charge granted in favour of the State against the relevant asset (generally the principal private residence) which is then realised from the estate of the resident following their death. The NHSS applies to all registered nursing homes regardless of whether it is supplied by the public/voluntary or private sector.

The HSE is responsible for administering the NHSS. The resident is obliged to make payment of his/her contribution to the cost of care directly to the relevant nursing home. The balance is paid by the HSE to the nursing home directly. Once an individual is approved for nursing home provision, the resident is entitled to the State support for its nursing home care for the duration of their stay. (A resident’s care needs can, however, be the subject of re-assessment). HSE funding for the NHSS currently exceeds €1 billion.⁷

The agreed cost of a nursing home bed for a single room ranges from approximately €980 per week to €2,200 per week (current as at March 2022). Rates are specific to each nursing home. These costs are agreed between the National Treatment Purchase Fund which is authorised under the 2009 Act to negotiate these rates on behalf of the State with the individual nursing homes. The average rate as of May 2022 under the Fair Deal scheme for accommodation in private and voluntary nursing homes was €1,057 per week per resident.⁸

The nursing home sector has come under serious strain due to cost increases on the foot of COVID-19 pandemic, the ongoing energy-pricing crisis and recruitment/retention issues in the sector. In response to these pressures the Department of Health have announced a number of support mechanisms and sectoral reforms, including the Temporary Business Energy Support Scheme (“TBESS”) to alleviate pressures faced by businesses experiencing significant increases of 50% or more in electricity or natural gas costs⁹ and the Temporary Inflation Payment Scheme (“TIPS”) pursuant to which €10 million in further funding has been made available to support private and voluntary nursing homes with the costs of energy inflation.¹⁰ Despite the introduction of these measures, Irish nursing home operators signed an open letter to in December 2022 calling for immediate Government intervention in the form of a stabilisation fund and reform of the Fair Deal scheme in order to address the realities of the extreme cost pressures faced by the sector. In this open letter the NHI criticises the Fair Deal scheme as unable to meet the reality of resident care costs, citing such as discriminatory towards residents and staff in private and voluntary nursing homes and warning that the consequences of inaction would be further nursing home closures, in addition to the 17 nursing homes forced to close in 2022.¹¹

Under this backdrop Nursing Homes Ireland (“NHI”), the representative body for private nursing homes in Ireland, have lodged a state aid complaint with the European Commission in respect of the State’s operation and administration of the Fair Deal scheme, claiming an unfair financial advantage for public nursing homes. NHI claim that the state run nursing homes receive 73% more funding under the Fair Deal Scheme than private nursing homes, with the Fair Deal scheme argued to benefit public nursing homes on average by €627 per week per resident more than private nursing homes, approximately €35,000 extra per year per resident.

The Department of Health have cited as a priority for 2023 the introduction of reforms to the NHSS and the enhancement of the nursing home regulatory framework in line with recommendations from the Nursing Home Expert Panel,¹² however it is unclear whether these changes will happen in sufficient time to alleviate the strain on the nursing home sector.

Why Arthur Cox?

Arthur Cox is a leading law firm in Ireland. Pursuing opportunities in the social care sector requires legal support from a multi-disciplinary group with expertise in areas such as property, healthcare regulation, infrastructure development, corporate, finance, tax and employment law. Our multi-disciplinary team is the leading group of its kind in Ireland with a long tradition of advising in the healthcare sector. In each of the key areas we have market leading lawyers who have a deep understanding of the sector and who devise commercial solutions to align with client goals.