The increasing level of dependency of the elderly population for the working-age population, as well as the rising number of chronic health conditions, puts strong pressure on European social care budgets. As a consequence, many governments are seeking ways to cut costs by either putting pressure on care home tariff fees or reducing care home-usage. This, in turn, has squeezed operators’ profit margins and triggered significant consolidations and footprint expansion amongst the industry to reach a sustainable scale.

The three largest operators remained the most expansionist. Early this year, Orpea made a noted entrance in the Irish market by acquiring consecutively, TLC and 50% of Brindley Healthcare – becoming the second largest operator in Ireland. Last year, Korian entered the Spanish market (Seniors – 1,300 beds) and the Dutch market (Stepping stones – 580 beds) and expanded its leadership in Germany (Schauinsland – 420 beds) and France (Omega – 1,000 beds). Recently, Korian reached an agreement with Ontzorgd Wonen, the major care home operator in the Netherlands, to acquire five facilities (240 units). An additional acquisition of seven facilities (240 beds) is currently under discussions with the vendor. DomusVi, the third largest operator, strengthened its position in France by acquiring Residalya (2,730 beds) last year.

Covid-19 is directly affecting the care home sector due to its very nature. Should the pandemic last long and no vaccine be found rapidly, we expect rising financial difficulties amongst some operators. This will provide large and solid operators with some further M&A opportunities. We expect consolidation strategies will continue until the end of the year and next.

Surging government costs and funding challenges may also give the private sector more room in the future for new development. On average across Europe* the private sector accounts for approximately 30% of the total bed capacity, with very large differences between countries.

_{Read the articles within Spotlight: European Care Homes below.}