Why are retirement homes so expensive?

Why are retirement homes so expensive?

This is the question everyone asks: “But why is it so expensive?” ” In France, the median cost of a single room in a nursing home is 2,004 euros per month. An amount much higher than the average pension which does not exceed 1,400 euros net per month. Only 24% of residents can cover their living expenses with their current income. Others have to dip into their savings, get help from relatives – often food debt holders – or sell part of their real estate. The median out-of-pocket cost for residents, in other words the cost of the establishment less the allowances received, amounts to 1,850 euros. Its reduction is one of the objectives of the “aging well” bill, supported by the presidential majority and debated in the National Assembly from Monday, November 20. The opportunity for Pilgrim to dissect the bill for a nursing home.

1. One price but three services

The cost of nursing home care is divided into three areas: accommodation, care and dependency. The care rate represents approximately 30% of the establishment’s costs. It is used to pay nursing and care staff, as well as part of the medical care. It is reimbursed by health insurance and has little impact on the resident’s bill. The dependency rate (around 10% of the bill) covers the costs linked to assistance for people losing their autonomy. Finally, the accommodation rate (around 60% of the total) is entirely paid by the resident.

2. Fixed costs and variable costs

Like all places of residence and stay, nursing homes face fixed costs: rent, depreciation of the building, but also the salaries of maintenance or administrative staff, who represent on average 45% of the workforce. Variable costs are added: inflation and soaring energy costs have a direct impact on the gas or electricity bill. Other items of expenditure still weigh heavily: air conditioning, laundry or catering. Since most establishments use external service providers, the bill can add up quickly.

3. Different needs depending on dependency

The “dependency” rate can reach up to 30% of the total bill. The cost of support and necessary equipment depends on the degree of autonomy. Upon arrival in a retirement home, each resident is associated with a “GIR” level, that is to say with an “iso-resource group”, which classifies them according to their degree of dependence. From GIR 1, the strongest level of dependency for which continuous personal assistance service is necessary, to GIR 6, the weakest level and for which help with daily activities is not necessary.

€2,004 monthly median cost of a room in a nursing home.

4. Private or public, the status that changes everything

The daily price of a room largely depends on the status of the establishment. Three types of structures can be distinguished:public establishments, private commercial establishments, And private non-profit establishments such as associations or congregations. Unlike the public or the association whose prices are set by the departmental councils, the for-profit private sector freely sets its prices. And the differences are staggering. On average, the daily rate in the lucrative private sector is 55% higher. With deep territorial disparities. For example, at Paris, where the share of lucrative private structures is higher, the average price is around 3,600 eurosor twice as much as in Cantal where the price is less than 1,800 euros.

€1,400 net average monthly pension.

5. A bill reduced by aid

Fortunately, the overall monthly bill is not always the one paid by individuals. Two financial aids can be granted to the resident or his/her maintenance obligations. If the elderly person is classified in GIR category 1 to 4, the departmental council can pay a personalized autonomy allowance (APA). And for individuals with the most modest resources, thesocial assistance for accommodation (ASH) can also be paid. All public nursing homes are eligible, but not all private ones. Finally, a tax reduction of 25% of expenses up to 10,000 euros per person accommodated is possible. To your calculations!

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