Nursing home cuts hampered by long contracts

ATTEMPTS TO reduce the costs of the Fair Deal nursing home scheme are being hampered by long-running contracts with private nursing homes, some of which do not expire until 2016.

Documents released under the Freedom of Information Act show the Health Service Executive is tied in to contracts with 270 private nursing homes until October this year at the earliest, with some not due to expire until April 2016.

Last summer, after the temporary closure of the Fair Deal nursing home scheme, which funds long-term nursing home beds, Minister for Health Dr James Reilly said he would instruct the National Treatment Purchase Fund to “renegotiate prices” with private and voluntary homes. But at the time the HSE was tied in to more than 300 contracts that could not be renegotiated until their expiry, documents show.

The NTPF had adopted a policy of entering longer-term contracts with homes in 2010. More than 20 contracts currently in hand will not expire until 2016; 35 contracts will run out in late 2015; 71 contracts expire in 2014; and almost 100 will end next year, the majority in October.

The fees negotiated with the private and voluntary nursing homes range from €650 to €1,291 per patient per week. The variation can be attributed to factors including level of care, location and whether rooms are single or shared. The most expensive homes are in Dublin, Kildare and Cork.

In a letter to the secretary general of the Department of Health, Michael Scanlan, written in May last year, NTPF chief executive Pat O’Byrne said “a significant number of contracts have been agreed up to and including 2016. “This is to cater for a higher level of resident dependency envisaged in the coming years.”

He said 2011 was the first full year where the impact of higher standards for homes had materialised and the net effect of changes in 2011 would be to increase the scheme’s cost by €16.1 million.

A spokesman for the Minister for Health said yesterday that since the Minister indicated he wanted downward renegotiation of prices, “approximately 70” private nursing homes reduced prices. “This includes homes where the contract was up for renewal and in some cases homes where the contract has some time yet to run,” he said.

“It is not the case that the NTPF is precluded from applying downward pressure on prices in advance of the ending of a contract.”

He said there was a “rolling process of negotiation” and the NTPF was making clear to nursing home providers that “the best possible value must be achieved for the taxpayers in the context of the current economic climate”.

He also said the organisation was on the threshold of securing a new “forensic accounting capability to assist in the process of driving down prices. This will help an intensification of the process of achieving best value.”