Private nursing homes lodge State aid complaint with EU

Nursing Homes Ireland claims Fair Deal nursing home subvention scheme confers ‘illegal’ competitive advantage on public nursing homes

The representative body for private nursing home owners has lodged a State aid complaint against the Government with the European Commission over the State’s subvention scheme for nursing home care.

Nursing Homes Ireland has lodged the complaint with EU competition officials in Brussels, claiming that the State confers more favourable funding on public nursing homes under the Nursing Home Support Scheme, better known as the Fair Deal scheme.

In a sharp escalation of the sector’s grievances about State support under the scheme, the group has also complained about “unfair cross subsidisation” of public nursing homes from other parts of the public health service.

Private nursing homes have long complained about the financial disadvantage that they claim the scheme confers on HSE-run public nursing homes over private care facilities.

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Using HSE data, NHI argues that public nursing homes on average benefit by €627 per week per resident more than private homes under the scheme.

This year, the group says that the average private paid under the scheme per resident in private and voluntary nursing homes has been €1,047 per cent compared with €1,674 per week per resident paid on average to public nursing homes.

It claims that the scheme distorts competition in the way it is administered because public nursing homes are given selective advantage by receiving higher reimbursement rates and more favourable financial arrangements compared with private nursing homes.

NHI has said in its complaint to EU competition officials in Brussels that the scheme and other cost advantages benefiting public nursing homes amounts to State aid that is illegal under EU law.

It maintains that about 30 per cent of the overall budget of the scheme goes to public nursing homes despite providing care to less than 20 per cent of the residents covered by the scheme.

The NHI complaint also argues that State’s National Treatment Purchase Fund negotiates the prices paid under Fair Deal with private nursing homes, while the HSE determines the cost of care for each nursing home.

“There is a complete lack of transparency around how this cost of care is determined for public nursing homes,” said NHI in a circular sent to its members about the complaint, which was lodged with the EU in October.

The commission is engaging with the Government on the complaint.

NHI argues that private nursing homes must cover their capital costs from their own budgets along with other costs such as commercial rates, while public nursing homes are covered by the HSE’s capital budget and are exempt from commercial rates.

The group claims that higher start costs and cross subsidisation of public nursing homes have “a marked impact” on private nursing homes, including during the Covid-19 pandemic and the recent “hyperinflation” with rising costs.

Private nursing homes have stepped up a campaign seeking more financial support from the State, running national advertisements calling on Taoiseach Micheál Martin to intervene to address surging costs that have led to the closure of 17 smaller nursing homes this year.

The Fair Deal scheme is open to any older person who has been living in the State for at least a year. Individuals make a contribution towards the cost of their care and the Government pays the balance under the scheme.

In operation since 2009, the scheme costs just over €1 billion a year.

Older people typically contribute 80 per cent of their income towards the cost of their care and 7.5 per cent of the value of any assets every year.

Where assets include land and property, the contribution based on these can be deferred until after death under a nursing home loan. The 7.5 per cent annual contribution from the asset value of the family home is charged only for three years.

Simon Carswell

Simon Carswell

Simon Carswell is The Irish Times’s Public Affairs Editor and former Washington correspondent