DENMARK – Since the Act on Social Services changed in 2013, a wave of bankruptcies in the home care sector has left many without care from one day to another, causing insecurity and distress amongst the clients and the municipalities.
by Jan Indra and Trine Nielsen
Even though she might be trying to hide it, you can hear a sense of concern in her voice. After breaking her legs last year, 77 year old Else Dahl has been depending on personal home care, receiving help with dressing up and personal hygiene.
Else has been a client of Hjemmehjælpen Aarhus ApS, a private for-profit company providing home care, for over a year. But a couple of weeks ago, on May 8, to the surprise of Else and to the dissatisfaction of hundreds of other clients, Hjemmehjælpen Aarhus declared bankruptcy. And while this bankruptcy has been the most recent one, it is likely only a continuation of a bankruptcy trend in this sector, spanning across the whole of Denmark.
“It came as a shock! My regular helpers have been fired. It’s terrible. I don’t know anything. I don’t know if anyone is coming to help me, and I cannot take care of myself. Just because I’m sitting in a wheelchair does not mean I’m worthless,” she says.
The bankruptcy of Hjemmehjælpen Aarhus has eventually left 1100 people without care. Under the Danish Act on Social Services, the provision and organisation of home care for the elderly is being conducted by the municipalities. Aarhus municipality then has to find a solution for the issues the bankruptcy creates.
Immediately after the bankruptcy, the municipality has guaranteed that Hjemmehjælpen Aarhus ApS will continue to provide care for 300 clients for the next two weeks. The other 800, however, are forced to find a new provider as soon as possible.
Sitting in her nicely decorated living room, with family pictures spread all around on the shelves, Else admits that she has already switched to a different company, Aleris, the last remaining private provider of home care in Aarhus. However, as well as many other people in her age group, this sort of a change presents an inconvenience on a very personal level.
Being used to seeing familiar faces who deal with sensitive aspects of one’s life commands a certain level of trust. That trust often has to be earned, and it cannot be taken for granted. Jette Skive, the alderman of the Aarhus municipality in charge of the Department of Health and Care, agrees.
“It’s an annoying situation for the elderly who have chosen the provider and are used to seeing a familiar face. It’s not like a visit to the grocery store, it’s people who come into one’s home. We initially help especially those who need personal care,” states Jette Skive in a press release.
It was a lack of trust which influenced Else’s decision to choose Aleris rather than a public provider of home care, as she experienced a conflict between her late husband and one of the employees from the public sector a few years ago.
“I had municipal help because my late husband got terminal cancer. And the two young girls who were employed by the public provider stood in the kitchen and argued about who was to sweep the floor. And my husband stood in the next room. And he never cried, but he stood there crying and said, “I can’t believe we have to go through this as well.” Then I told them that they needed to go, and they should not come back.”
Else claims that she was satisfied with the quality of services of Hjemmehjælpen Aarhus. Regardless, that did not prevent the company from severe financial losses.
According to the available business data, the company’s financial situation started deteriorating about three years ago. Up until 2013, the company declared profits, yet in 2014, the company had to withstand a loss of 1.5 million DKK, followed by an even worse blow in 2015, when the company lost 3.5 million DKK.
The financial results of Hjemmehjælpen Aarhus ApS year by year. Up until 2014, the company’s official name was Privatplejen ApS. Data source: datacvr.virk.dk. Interactive infographic.
At the address of Hjemmehjælpen Aarhus, across from a shopping centre Storcenter Nord, employees have slowly started clearing out the building. Company cars are still standing in the parking lot. Admittedly, not for long. The employees have refused to comment on the whole situation.
“We are not allowed to talk to anybody about what has happened,” says the Aarhus branch director Helle Pedersen.
Two companies down, one remaining
In January 2015, Aarhus municipality has published results of a tender that allowed three private companies to provide home care services. The companies were Aleris, Hjemmehjælpen Aarhus and BR Service. Two and a half years later, two of these companies are gone from the market.
Two years ago, BR Service was the first failing business. It went bankrupt on May 31st, 2015, less than six months after winning the tender. Now that Hjemmehjælpen Aarhus has followed, the tender organised by the Aarhus municipality raises questions regarding its conditions. For in an effort to open the home care market to private entities, the municipality is likely to be facing more costs and complications than it initially thought to be getting rid itself of.
Jette Skive denies any mistakes or deficiencies on the side of the municipality, stating in a debate that all its actions were conducted accordingly. According to her, three “myths” have arisen regarding the issue (infobox).
Denying that the municipality has made any mistakes, Mrs Skive points to the notion that the centre of the issue lies at the legislation level, and that the Parliament has to be the first official authority to act.
”Bankruptcy in home care causes great insecurity for the elderly and for the employees. We must put an end to this and if we still want the elderly to be able to choose between different suppliers in addition to the municipality, we have to make a constellation that is not as fragile as it is today. I have asked the politicians at Christiansborg to make a proposal,” she states in the same debate.
So far, no clear solution has been put forward, and the bankruptcy wave continues to sweep through Denmark.
Twice the risk of bankruptcy
Since 2013, 41 companies providing home care in the country already have declared bankruptcy. According to konkursindex.dk, a database maintained by the journalists from the trade union FOA, more than 6,000 citizens and more than 2,000 employees have already been affected by the bankruptcies. Almost half of all Danish municipalities have experienced at least one case of bankruptcy.
Over 40 Danish municipalities have had to deal with a bankruptcy in the home care sector. Two municipalities, Aalborg and Odense, lead the list with 5 bankruptcies. Data source: FOA, konkursindex.dk. Interactive infographic.
While the public providers still play a major role in the system, the private sector has expanded considerably since 2002 with the adoption of the so-called “Free Choice” scheme.
The scheme’s purpose was to introduce market forces in the provision of home care. Municipalities are required to encourage for-profit providers to operate, and they have to set the quality standards that the providers must meet.
Bankruptcies started piling up in the course of 2013, shortly after the Parliament passed an amending bill to the Act on Social Services. The new bill was expected to lead to municipal savings and better opportunities for the private providers. Local authorities were expected to put more contracts out to tender, improving the market conditions for private for-profit providers.
The number of bankruptcies has significantly increased since 2013, correlating with the passing of the bill amending the Act On Social Services. Data source: FOA, konkursindex.dk. Interactive infographic.
While the bill’s proponents arguments were that the municipalities would gain more flexibility, the critics voiced a concern about putting too much emphasis on the price competition.
“The risk of bankruptcy in home care is twice as high as it is in all the other industries and companies in Denmark. And I believe it is going to get worse. When we look at how many municipalities have tried price competition, it is half of the municipalities. So there is a potential of at least 50 municipalities that have not yet competed for the price. If the next 50 municipalities want to test the price competition, there is a risk. And the municipalities are under pressure regarding their finances right now, so they are probably going to try it out to save money,” says Dennis Kristensen, Union President at FOA, Denmark’s third largest trade union.
With 41 bankruptcies in the last three years, the critics of the current legislation such as Mr Kristensen have a strong argument for yet another revision of the law.
“The parliament must enter and amend the Act on Social Services, so that the municipalities will have limited ability to weigh the price so high. In addition, the government must also set mandatory requirements for bank guarantees. Thus, companies can provide a guarantee that corresponds to the size of the task economically so there is a likelihood that the municipalities can cover the costs if they are to take over the task at such short notice in case of a bankruptcy,” says Kristensen.
For FOA and others, the need for change is apparent. In the short-term, municipalities need to have a clear idea of how to tackle the bankruptcies. Taking into account the long-term outlook, however, the urgency of the issue increases even further.
Towards an ageing population
According to Statistics Denmark, there is about 1.4 million people over the age of 60 living in Denmark. Future projections estimate that this number is set to rise rapidly in the upcoming decades: by 2030, the same segment of Danish population is projected to be about 1.75 million people.
While the retirement age will be pushed further to adjust for the balance between the people inside and outside of the labour force, the ageing population will still put an increasing pressure on the social system and its capabilities. More people are simply going to be in need of home care. It is therefore up to the government to create a stable regulatory framework.
Danish population is going to age significantly in the coming decades. The projection model is carried out by the DREAM group, an independent semi-governmental institution which conducts a variety of statistical and descriptive analyses of the Danish economy. Data source: Statistics Denmark. Interactive infographic.
A nation-wide issue, an uncertain future ahead – all this does not really concern Else. For her, the future is now. While the prospect of a new provider might be somewhat comforting, trusting the official authorities is simply not what the recent events have led to.
“I’ve changed to the last private company in Aarhus. I don’t know when that company will go bankrupt, but if it does, then I’ll have to go to the black market and find someone.”
The concern is still there.