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As a result of the agreement on a new elderly care reform, several initiatives are expected to be implemented with the overall aim of freeing up the elderly care sector so that citizens can choose providers and solutions that better suit their individual needs. Among other things, the reform is expected to result in a new Elderly Care Act, a new type of nursing home, and the possibility of establishing more private independent nursing homes.
On 18 April 2024, the Danish Parliament passed a new elderly care reform. The reform focuses on self-determination and holistic care and is expected to expand citizens’ opportunities to freely choose solutions and providers for elderly care. It is also intended to create opportunities for a completely new type of nursing home – local nursing homes. These will be publicly owned, but will have the same degree of freedom as private, independent nursing homes. Finally, the reform creates the possibility for more private independent nursing homes to be established.
According to the political agreement, DKK 1 billion will be allocated annually from 2028 to improve the quality of care for the elderly in municipalities. This amount is in addition to the funds for demographic development included in the government’s 2030 plan. In addition, funds will be allocated for the implementation of the elderly care reform and related initiatives.
As part of the reform, the parties have agreed to adopt a new Elderly Care Act, which will set the overall framework for future elderly care. The new Elderly Care Act, which is expected to take effect on 1 July 2025, focuses on three core values: (i) self-determination of the elderly, (ii) trust in staff and management, and (iii) close cooperation with relatives, local communities and civil society.
Until now, citizens have been able to choose between two types of care: (i) municipal nursing homes or (ii) private independent nursing homes. Municipal nursing homes are generally owned and operated by municipalities, while private independent nursing homes are generally privately owned and operated, although some are operated with public subsidies.
In line with the elderly care reform’s goal of liberalising the elderly care sector, from 1 January 2025, municipalities will be free to establish or convert municipal nursing homes into a new type of nursing home: local nursing homes. Local nursing homes will be run with more local autonomy and greater involvement of civil society than municipal nursing homes, and residents in local nursing homes will have more freedom of choice in terms of lifestyle.
The local nursing homes will be set up as businesses and will be characterised by the following: (i) they will be municipally owned, (ii) but as private independent operating units, they will be managed by their boards of directors who will be responsible for the finances and operations of the local nursing homes, and (iii) they will have to allow citizens to purchase options that go beyond basic assistance.
The local nursing homes will thus have the same degree of freedom as private independent nursing homes, although they will be municipally owned. It will be up to each local council to decide whether to establish local nursing homes.
As a result of the general increase in the number of elderly people needing help and care, and in order to achieve a sufficient number of alternatives to traditional municipal nursing homes, the agreement aims to double the number of alternatives to municipal nursing homes by 2030, which corresponds to approximately 3,000 new nursing places in private independent nursing homes and local nursing homes. Based on the current number of nursing home residents, the agreement estimates that approximately 84 additional nursing homes will need to be established.
This will be achieved by enabling the establishment of local nursing homes, as mentioned above, and by improving the possibilities for the establishment of private independent nursing homes.
The latter will include, among other things: (i) introducing a fixed overhead rate for private independent nursing homes and private home care providers to ensure equality between private and public providers, (ii) increasing the annual quota for state-subsidised private independent nursing homes to 400 homes, (iii) including private independent nursing homes in areas where the market conditions require support in the scheme of 100% state-guaranteed loans and bonds for financing public housing, and (iv) establishing a private independent control unit to support the correct calculation of transfer prices for private providers in the elderly care sector.
Conversely, the idea is that private independent nursing homes, like municipal nursing homes, should not be able to reject citizens without objective reasons in order to create a level playing field with municipal nursing homes in this respect.
Gorrissen Federspiel has been very active within the private nursing home segment since the adoption of the Act on Private Independent Nursing Homes and has experienced the frustration of the sector with regard to the considerable differences between municipalities in the administration of the Act. A recurring theme over the years has been pricing, which is incomprehensibly low in some municipalities. For the market players, the elderly care reform will therefore be a positive step towards more transparency and objectivity in the setting of daily rates.
A bill to amend the Act on Private Independent Nursing Homes as a follow-up to the agreement on the elderly care reform was submitted for consultation on 26 August 2024, and Gorrissen Federspiel will be following the process closely.