Costly nursing homes are not the best ones and there are great price differences among regions. Numbers of nursing patients will continue to rise, resulting in increased demand for professionals. Those are some of the conclusions from the "Pflegeheim Rating Report 2009 - Konsolidierung voraus!" ("Nursing Home Rating Report 2009 - Progress in Consolidation") by RWI, ADMED GmbH and HCB GmbH. The report also indicates that the economic situation of nursing homes is likely to remain stable in the long term, even though excess capacities still currently exist. One threat is seen in plans to introduce a minimum wage for the nursing staff. A higher minimum wage could result in a shortage of nursing facilities in the future, as cases of insolvency increase and a portion of the private equity is withdrawn from Germany's nursing care market.

Costly nursing homes do not necessarily provide better care: no statistical relationship can be established between price levels and service quality. More expensive homes do, in fact, have superior building facilities and offer better social activities, for instance. Yet in areas such as administering fluids and nourishment, enteral nutrition and dementia care, such homes are not shown to perform better. One reason may be that at present there is little recognizable competition among nursing homes with respect to quality standards. That is one of the conclusions presented in the current Nursing Home Rating Report 2009, in which, for the second time, RWI, ADMED GmbH and the Institute for Health Care Business GmbH (HCB) analyze the current situation in Germany's nursing care market as well as future trends. In order to investigate quality as a partial aspect, data provided by the Medizinischer Dienst der Krankenversicherung (Health Insurance Medical Service; MDK) of the German state of Rhineland-Palatinate was used. The study additionally evaluates data from federal and state statistical offices as well as the annual reports of more than 1,000 nursing homes.

Continued increase in the number of nursing patients and home beds

Rising numbers are typical for Germany's nursing care market. The percentage share of such services in overall healthcare expenditures rose from 8.6% to 11% between 1997 and 2007. Between 2005 and 2007 alone, the number of nursing patients increased by 5.6% to 2.25 million. With a dwindling number of relatives providing care, professional home and institutional nursing care is playing an increasingly important role. By 2020 the number of institutional nursing care patients is expected to increase by 36%, with this figure rising even further to 57% by 2030. Based on this scenario, it must be expected that almost 80,000 nursing professionals will be additionally required by 2020. Given constant employment and nursing patient rates, the capital reserves held by the Social Nursing Care Insurance Fund (Soziale Pflegeversicherung) will probably be used up by about 2021.

The number of nursing home beds has increased disproportionately in recent years. A drop in the degree to which capacities are utilized is to be expected by 2011. Nevertheless, compared to 2010 about 150,000 new nursing home beds will be needed by 2020 and a total additional number of 310,000 by 2030. It is to be expected that 27 billion euros will need to be invested in institutional nursing care between now and 2020. Significant price differences exist among nursing care institutions when compared at the regional level. Homes in the states of North Rhine Westphalia, Baden-Württemberg, Bavaria and Schlesig-Holstein are particularly expensive. In eastern German states and Lower Saxony, nursing homes are inexpensive. Price differences are expected to level out as a result of increasing transparency with respect to price and quality, a growing share of costs contributed by nursing patients, and greater competition.

Minimum wage could result in nursing care shortage

The economic situation of nursing homes has changed little since the Nursing Home Rating Report 2007. With respect to their financial situation, 13% of the homes are still in the "red" range, i.e. running a risk of insolvency, with 72% in the "green" range. One in seven nursing homes thus runs an increased risk of insolvency. Privately maintained homes, at 16% in the red range, show significantly poorer performance than non-profit or public institutions (each at 10%). This is probably due to the fact that a relatively large number of private homes are located in rural areas. With respect to the likelihood of insolvency, nursing homes are on the whole in a better position than hospitals and rehab clinics and are comparable to businesses in western Germany active in other sectors. The situation is likely to worsen by 2011 due to reduced utilization of capacities and the financial crisis.

In the long term, however, the situation in the nursing care market is expected to remain stable, with almost 70% of homes in the green range by 2020. This development is threatened by certain risks, including a higher minimum wage, a strong shift in demand as well as pressure on prices as a result of keener competition. By way of example, an hourly minimum wage increase to 9.68 euros would put providers in eastern Germany in a worse situation, as it would private homes and mobile service providers. In consequence, the likelihood of insolvency would rise within a few years. Lower interest paid on equity would additionally lead to private investors withdrawing in some cases. A shortage in nursing care services would be likely to result: with 100,000 nursing home beds lacking and 160,000 home patients without care by 2020, waiting lists and price hikes would follow. In this case nursing patients would be faced with total costs in the magnitude of at least 250 million euros.

The nursing home of the future will offer customized services

Nursing homes can count on growing demand in the years and decades to come. Yet, in particular homes located in areas with a high price level will have to cope with pressure on prices and, as a result, provide services more efficiently. Nursing home chains are therefore expected to be founded in order to utilize the potential offered by synergies. In addition, nursing homes should attune their services to the needs of specific patient groups. By way of example, it is conceivable for standard and premium packages, including additional services, to be offered depending on patients' budgets. Nursing homes should also strive for enhanced transparency in the quality of nursing care, utilizing this as a competitive advantage.

This press release is based on the study "Pflegeheim Rating Report 2009 - Konsolidierung voraus!". The report includes graphic charts on maps of Germany and nursing home benchmarks. The complete study can be ordered at a price of 230 euros incl. VAT from RWI Essen, HCB GmbH or ADMED GmbH (available only in German).

For further information, please contact::
Dr. Boris Augurzky, Phone:+49 201 8149-203, e-mail
Dr. Sebastian Krolop (ADMED GmbH), Phone: +49 2238 475-300
Sabine Weiler (Press Office), Phone:+49 201 8149-213, e-mail