“Insincere” financial documents, surpluses generated on allocations from the health branch “… The investigation report on Orpea, expected for days, was published on Tuesday April 5, after a game of ping-pong between the management of Orpea and the government. The 524 pages of the investigation by the General Inspectorate of Social Affairs (Igas) and the General Inspectorate of Finance (IGF) on the management of the Ehpad group are overwhelming, even if a certain number of passages have been amputated following the group’s refusal to lift business secrecy. This administrative investigation had been ordered in the wake of the publication of the investigation book “Les Fossoyeurs” by Victor Castanet.
What does it confirm? That “financial performance”, in other words the maximization of profits, is exercised well at all levels of Orpea, with its 228 establishments in France, 14,000 employees and nearly 27,400 residents at the end of 2021. The investigators clearly note excesses that may explain certain rationing. What has always denied under oath its new CEO, Philippe Charrier, before the Senate.
As a reminder, the annual turnover exceeds 4 billion euros in 2020 and Orpea receives 360 million euros of public funding each year, two thirds of which come from the health branch of Social Security and one third from departmental councils.
20 million euros surplus on public allocations
First notch of the report: over the period 2017-2020, Orpea generated a surplus of 20 million euros on the grants paid by the public authorities to take charge of the care and dependency of its elderly residents. These surpluses “are not subject to any precise accounting monitoring”, so that a part could, “if necessary”, be “distributed to shareholders”, according to the inspectors.
Second anomaly: “The group’s internal budgetary process organizes the setting aside of part of the care packages received by nursing homes”, we read. A kitty corresponding to “more than a month’s remuneration for all caregivers”. In other words, money which could have financed additional positions, but which was set aside and “corresponds to almost a month’s remuneration for all the staff financed on the care section”, notes the report . A “reserve” of nearly 14 million in 2018, which would have “used for non-compliant expenditure or the constitution of surpluses”.
VIDEO. Ehpad employees on strike to denounce the mistreatment of the elderly
Establishments filled to 103%, 105%, even 110%
The investigators also confirm the opacity of the commissions paid by suppliers on purchases, reclassified in the accounts as end-of-year rebates (RFA), also subject to “undeclared surpluses”. The group kept these amounts in its accounts, while the supplies were entirely financed by public money.
The report dismantles a well-oiled optimization mechanism in the management of establishments. A “very centralized organization and management methods that can lead to abuses concerning in particular the respect of reception capacities”, advance the investigators.
According to several former leaders, Orpea filled some of its establishments to 103%, 105%, even 110% of its capacity, the objective being to create a maximum of beds to collect public money. A practice of exceeding the reception capacity identified in the report with 11% of nursing homes in the group in 2019. It also notes situations of overcrowding in 25 nursing homes in the group to the detriment of the quality of reception.
“Average management rates lower than those of the sector”
In this system, school principals do not really have a free hand. They must make a “daily budget report to meet the objectives set in terms of payroll, net income or even occupancy rate”, note the authors. This pressure could explain the high turnover of operating managers (between 10 and 15% per year). Half-yearly bonuses of up to 6,000 euros over the year as well as a bonus also reward financial performance, the report states.
Optimization practices which also shed light on another point of the report: “a lack of human resources”. Orpea “presents in 2019 average management rates lower than those of the sector”, with, in 2019, 61.6 employees per 100 beds, against 62.1 on average. “A rate that affects the quality of care,” said the investigators.
The government announced on March 26 that it was going to file a complaint against the Orpea group “with regard to serious dysfunctions”.