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Summary of the Orpéa affair A global leader in nursing homes, Orpéa has been seriously shaken by the publication of the book "Les Fossoyeurs". In this book,…
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A global leader in nursing homes (EHPADs), Orpéa has been seriously shaken by the publication of the book "Les Fossoyeurs". In this book, the result of a three-year investigation, journalist Victor Castanet paints a troubling picture of the group's practices. According to the journalist, practices such as rationing meals and medical supplies and maintaining chronic understaffing were organised by the company to maximise margins. The publication of the book led to the dismissal of the group's chief executive Yves le Masne, as well as the opening of an investigation by the ministry responsible for autonomy.
The investigation aims to determine whether the problems detailed in Victor Castanet's book are isolated failings or systemic symptoms caused by a purely financial policy. To better understand the affair, we therefore decided to examine Orpéa's finances and those of its competitors. Analysing them may help us establish whether Orpéa's results were abnormally high compared with the rest of the sector.
Table of differences between the public and private sectors
Nursing homes have three sources of revenue:
Private for-profit nursing homes are the only ones free to set their room prices. Orpéa, a group that has focused on the "premiumisation" of its offering, very often charges more than €6000 per month. There is therefore a considerable difference between the prices charged by private for-profit operators and those of public or private non-profit nursing homes:
France, 2018, €/day
Source: CNSA
Permanent single-room accommodation in a private commercial nursing home is therefore 40 to 55% more expensive than in other nursing homes. In theory, this difference is justified by better staffing, more luxurious facilities and more personalised care. However, looking at average staffing levels in nursing homes reveals that the most expensive facilities (private commercial nursing homes) are often the least well staffed: according to the CNSA, independent public nursing homes have 72.1 full-time equivalents per 100 places, whereas the private commercial sector averages only 52.3 full-time equivalents. In summary, private commercial nursing homes often cost 50% more than public ones, but have almost 50% fewer staff.
This difference becomes even more pronounced when looking at the various types of private commercial nursing homes: according to the CNSA, "EHPADs backed by an organisation managing several facilities (multi-EHPADs) appear to have generally lower staffing ratios than EHPADs run by a single-facility operator"
Now let us look at the financial data of the main operators to see whether Orpéa's financial performance might have pointed to practices very different from those of its competitors:
| Orpéa | Korian | Colisée | Domidep | DomusVi | |
| Number of nursing home beds in France | 19 922 | 24 960 | 7634 | 6741 | 18 205 |
| Total workforce | 65 500 | 57 500 | 16 400 | 5 200 | 40 000 |
| Revenue | 2.36 billion (France and Benelux) | 1.9 billion | 1 billion | 400 million | 1.5 billion |
| Operating margin | 11.9% | 6.9% | n.a. | n.a. | n.a. |
Net profit margin of public and private non-profit nursing homes: -2%
A profitability gap between the leaders that raises questions
Now let us look at the financial data of the main operators to see whether Orpéa's financial performance pointed to practices different from those of its competitors:
| Orpéa | Korian | Colisée | Domidep | DomusVi | |
| Number of nursing home beds in France | 19 922 (France and Benelux) | 24 960 | 7634 | 6741 | 18 205 |
| Total workforce | 65 500 | 57 500 | 16 400 | 5 200 | 40 000 |
| Revenue | 2.36 billion (France and Benelux) | 1.9 billion | 1 billion | 400 million | 1.5 billion |
| Operating margin | 11.9% | 6.9% | n.a. | n.a. | n.a. |
The first notable difference lies in the gaps in revenue and bed numbers: Korian, Orpéa's main competitor, has around 25% more beds but generates 25% less revenue. The profitability gap is just as large: Orpéa's operating margin is almost twice as high as Korian's.
France, 2020, thousands of euros and %
Source: Orpea and Korian annual reports, Businesscoot analysis
Although non-profit nursing homes do not aim for profitability, they provide a second point of comparison. According to the CNSA, public and private non-profit nursing homes have, on average, negative net profit margins (-2%). Orpéa's alarming figures were therefore abnormal. Even its closest competitor does not have similar results.Although the revenue and margins generated by Orpéa raise real questions about the company's practices, it is important to bring nuance to this complex subject. Indeed, one of the practices denounced in Victor Castanet's book (and verified at the macroeconomic level using CNSA figures) can also be attributed to structural difficulties in the sector. Offering relatively low wages for highly demanding jobs that are often psychologically taxing, the health and social care sector faces major recruitment difficulties. According to the Ministry of Solidarity and Health, 44% of nursing homes face recruitment difficulties, and vacancies usually remain unfilled for more than 6 months. The health crisis has not helped, as the sector has repeatedly had to replace sick staff and then face a wave of departures affecting the entire healthcare sector. This has even led to pay rises, needed to address the shortage.
Thus, although Orpéa's abnormally high margins inevitably raise questions, it is impossible to determine whether the failings described in "Les Fossoyeurs" are organised by a system seeking to maximise profits at any cost. Our main aim here is to provide additional ways of understanding the issue. If you want to learn more about the nursing home market, take a look at our study of the sector: