In Belgium, as in most other European countries, the care home sector was ravaged by the pandemic. According to figures published by Belgium’s Scientific Institute of Public Health [1] care home residents represented 64% of Covid-19-related deaths during the first wave. Care home staff were completely overwhelmed. Without the appropriate equipment or any extra help, care home workers were forced to look after residents sick with Covid-19 who had been turned away from hospitals. Although Belgian hospitals did not reach saturation point as they did in other countries such as Italy and Spain, the decision was made to filter patients, refusing admission to care home residents. Thus, between the beginning of the outbreak and 1 August 2021, 74% of residents died from Covid-19 in Belgian care homes [2].

This unprecedented crisis, which has impacted heavily on both residents and workers, has revealed the structural dysfunctions of the senior care model as well as the detrimental working conditions that staff have been subjected to for a long number of years. The current situation is a direct result of austerity policies that have eroded the public health system.

The changing landscape of the care home sector is indeed illustrative of a trend towards the commodification of healthcare in Europe. According to estimates by the journalist collective “Investigative Europe”, 242,000 care home beds are owned by Europe’s five biggest transnational corporations [3]. The situation is the same in Belgium. Since the 1990s, three decisive factors have led to a radically changed landscape: the for-profit sector’s encroachment on the public and non-profit sector; several major investment groups’ domination over the sector, to the detriment of smaller companies; the growing presence of property investment players and the injection of government funds into the for-profit sector.

A shift towards the privatisation of the sector

Strictly speaking, “privatisation” is when an activity or a service managed by the public sector is handed over to the private sector. The primary goal of a public service is not to make profits, but to provide services which the whole population can access. One of the main goals of the private sector, however, is to make profits. The exception is non-profit organisations, which, under a 1921 Belgian law, are not allowed to conduct industrial or commercial operations. Yet since 2019, the Belgian Code for Companies and Associations (CSA) has authorised non-profit organisations to carry out for-profit operations. Although their members cannot directly benefit from the profits made from the sale of services, the CSA has nonetheless contributed to a commodification of the sector, which plays a key role in the operation of Belgian public services. Since the 1921 law, an increasing number of public sector operations have been entrusted to non-profit organisations, which now play a key role in Belgian state operations [4]. In the Belgian healthcare sector, most hospitals are owned by the non-profit private sector [5], which is not the case for care homes. These fall into three categories, depending on their legal status: public sector care homes, for-profit care homes (operated by Sociétés Anonymes, Sociétés Privée à Responsabilité Limitée – public limited companies, limited liability companies, etc.) and non-profit care homes (administered by non-profit organisations, some linked to health insurance mutual funds or other non-profit agencies).

In regards to the situation by region and by sector, according to the latest Belgian study [6], in the Flemish region, 25% of care homes are owned by the public sector, 54% by the non-profit sector and 21% by the for-profit sector. In the Walloon Region, however, 25% of care homes are owned by the public sector, 20% by the non-profit sector and 54% by the for-profit sector. In the Brussels Capital Region, the for-profit sector owns a bigger chunk of the market (61%), with only 17% of care homes owned by the non-profit sector and 22% by the public sector.

In terms of number of beds, over the entire Belgian territory, 29.5% of beds are owned by the public sector, 32.5% by the for-profit sector and 38% by the non-profit sector [7]. Regionally, however, the figures are quite different. In Brussels and the Walloon Region, the for-profit private sector owns the lion’s share (with 63% and 48% of beds respectively) [8]. Yet this has not always been the case.

The changing landscape of the senior care sector is indeed emblematic of the commodification of healthcare. The sector is completely unrecognisable to what it was just a few decades ago.
In Belgium, privatisation can also take several different forms [9], in addition to its dictionary definition: the drift of the public sector towards private management methods; the domination of the sector by several big players, to the detriment of smaller companies (both for-profit and non-profit); the growing presence of property players; and the injection of public funds into the for-profit sector. It seems pertinent to make a brief historical detour here in order to highlight the key changes in the sector, including an overview of the changing features of the for-profit private sector.

The drift of the public sector towards private management methods

The origins of care and housing for the elderly can be traced back to religious congregations in the Middle Ages, as well as hospices in the early 20th century. However, it was not until the 1960s that the first regulations were defined for the creation of establishments to house the elderly within hospitals, hospices and care homes. In Belgium, establishing these care homes required a big injection in public spending, which resulted, ten years later, in budgetary restrictions aimed at reducing healthcare costs linked to an increasing number of the ageing population spending time in hospital. The first nursing and care homes were established in 1982 [10], the main objective being to shorten the hospital stays of elderly persons requiring non-curative treatment, or to avoid them altogether [11]. New healthcare facilities were created by converting hospital beds into care home beds. By closing certain hospitals and merging others, this first major restructuring of the healthcare sector was a way to even out the checks and balances of the National Institute for Health and Disability Insurance [12] and restore financial health to public authorities [13].

From this point on, several factors prompted a number of legislative changes in the sector. These included social changes (such as women entering the workforce, with the effect of “doubling their workload”, resulting in an increased demand for services), economic changes (the service sector began to dominate other sectors, which were undergoing an overproduction “crisis”), shifting demographics, healthcare needs and budgetary requirements [14]. In 1991, a new fixed rate system was introduced, with a view to ensuring a certain number of care home staff depending on the number of residents and their degree of dependence [15]. In regards to safety, tighter infrastructure standards were also required. In addition to this fixed rate approach to healthcare, the sector was professionalised and wages were increased accordingly. Although private companies had always been present on the care home landscape, this new regulatory framework was decisive in prompting a major shift towards the commodification of the sector. For instance, in the Walloon Region, only 32% of care homes were owned by the for-profit private sector in 1985, whereas this figure jumped to 52% in 1992 [16]. As was the case with changes introduced in the 1980s, the new regulatory framework of the 1990s led to the closure of smaller private care homes (both non-profit and for-profit), which were unable to stay financially afloat [17], and an increasing number of mid-size and large for-profit care homes.

In an attempt to buck this trend, in the Walloon Region, under the government decree of 8 December 1998 on the enactment of the decree of 5 June 1997 on nursing and care homes, assisted living residences and day centres for the elderly, each sector was allocated a certain number of care beds. Under this new regulatory framework, 29% of beds were allocated to the public sector, at least 21% to the non-profit sector and a maximum of 50% to the for-profit private sector [18]. The number of beds allocated to the non-profit sector in Brussels, on the other hand, was capped at 63%.

According to the latest figures provided by Brulocalis and the Federation of CPAS (Centres Publics d’Action Sociale – Public Social Service Centres) [19] on the allocation of beds by sector and by region, in the Brussels region, 24% of beds are in the public sector, 13% in the non-profit sector and 63% in the for-profit sector. There is a similar trend towards privatisation in the Walloon Region, with 28% of beds in the public sector, 24% in the non-profit sector and 48% in the for-profit sector. The situation is different in the Flemish Region, however, where 30.5% of beds are in the public sector, 53% in the non-profit sector and 16.5% in the for-profit sector.

Encroachment of the for-profit sector on the non-profit and public sectors, leading to an increasingly concentrated industry

In the early 2000s, the for-profit sector began to muscle in on the public and non-profit sectors. This was carried out by Belgian companies from the local bourgeoisie, particularly family-owned companies and local firms which invested in what they viewed an an emerging sector. In a second step, financialised transnational investment corporations, French for the most part, also moved in on the market, tipping the balance towards a sector dominated by a few major private operators. This was achieved by acquiring the very first care homes, originally owned by local Belgians. These acquisitions then served as a vehicle for more complex investments. This has led to the situation that currently exists today where seven major investment groups own 40% of care home beds in the for-profit sector in Brussels and 18% in the Walloon Region [20].

Korian is the leading investment group in the care home sector both in Belgium and across Europe. The French group, listed on the stock exchange, owns more than 1,000 sites, scattered throughout France, Germany, Italy, Belgium, Spain, the Netherlands and the United Kingdom. The company’s Belgian subsidiary, Senior Living Group-Korian, established in 2014 from the merger between Korian and Medica and the acquisition of Senior Living Group in Belgium, currently owns 120 sites, including 114 care homes and 6 assisted living residences (a total of 13,138 beds) [21].

The investment group Colisée-Armonea comes in second, after Belgian company Armonea was bought out by French group Colisée in 2019. The group’s members include Belgian-Brazilian brewing company AB Inbev, billionaire Alexandre Van Damme and the investment group Verlinvest. Its main shareholder is IK Investment Partners. Armonea was originally a Belgian group, the result of a 2008 merger of two Flemish family-owned companies: Restel and Palmir. The group’s Belgian subsidiary currently manages 96 sites, including 74 care homes across the country [22].

Orpea SA takes third place. The company has been been an active operator of care homes, healthcare clinics and psychiatric clinics in France since 1989. The group manages a network of 1004 sites worldwide, located in France, Germany, Austria, the Netherlands, Spain, Switzerland, Portugal, Italy, Poland, the Czech Republic, Luxembourg, Brazil and China. Its main shareholders include Canada Pension Plan Investment Board, with a smaller stake owned by the very influential investment corporations BlackRock and The Vanguard Group, well known to be vulture funds [23]. The subsidiary Orpea Belgium, which began operating in Belgium in 2006, owns 61 care homes and 21 assisted living residences in the country’s three regions, accounting for a total of 6,200 beds, 951 in care homes, 37 in assisted living residences and 73 in short-stay units.

Then there’s the Flemish group Vulpia, a long-established player in the sector of healthcare, care homes and assisted living residences in Belgium, and which has been operating since 1996. The company, which has a strong presence in the Flemish Region, owns 65 facilities including 31 care homes [24]. In fifth place is Vivalto Homme Belgium SA, subsidiary of French company Vivalto Santé, the third largest group of private clinics and hospitals in France. The company owns 32 care homes in Belgium, scattered throughout the country’s three regions [25].

Anima, in sixth place, is a subsidiary of Belgian holding company Ackermans & van Haaren [26] and operates in several business sectors (marine engineering and contracting, private banking, real estate and senior care, energy and resources and growth capital). Anima was founded in the Flemish Region in 2007 but is currently present throughout the country with 23 care homes, 8 assisted living residences, 10 short-stay units, 4 certified convalescent care homes and a senior day centre, with a total of 2,539 beds [27]. Lastly, the Belgian healthcare group Care Ion, founded in 2015, owns 14 care homes throughout Belgium, accounting for a total of 1,600 beds [28].

The latest report published by a senior care watchdog agency in Brussels [29] notes “a number of “shifts within the sector”; “a significant presence of grouped management/conglomerates and an increasing number of care facilities owned by corporations” and a “steady increase in basic accommodation prices.”

The increasing presence of property players

The financialisation [30] of the care home sector has been built on a merger-acquisition strategy and care home operating activities.Two main players are driving this trend: investment groups managing care home operations, and property investment groups in the healthcare sector focussed on leasing infrastructure to the operators mentioned above.

Generally speaking, their business model is based on dividing the care home sector into two closely related activities: operating the care home sites themselves and real estate. As Rico [31] explains in its analysis on the “winners” in the care home business in Spain, it is common for large groups involved in care home merger-acquisitions to sell their real estate assets, separating their property companies from their operating companies (in the language of finance, this is known as the “opco/proco” strategy [operating company/property company]). In this scenario, sale and lease back operations are a very common practice whereby the sale and rental of the property are carried out simultaneously over a very long period (20-25 years). For companies focussed on care home operations (operating companies), selling property assets is a way of reducing debt incurred in the acquisition of competitors and thus frees up cash in order to make further acquisitions. For property companies, this type of investment is attractive in that it enables them to increase their asset portfolio and ensure a stable and profitable income over the long term by way of rental contracts. These types of growth strategies, focussed on the sale and/or repurchase of property assets, is another factor that has led to increased concentration in the industry, largely dominated by private equity funds and transnational corporations.

In Belgium, three of the seventeen regulated real estate companies (SIR [32]) listed on the stock exchange and active in the health care sector (care homes and assisted living residences) together own more than 245 of the 1,600 care facilities currently in operation. This figure has been steadily increasing, undeterred by the Covid-19 pandemic. The SIR Cofinimmo has a four billion euro "healthcare" portfolio comprising more than 190 sites in Belgium, France, Spain, Germany and the Netherlands. In 2019, its total market capitalisation reached 2.6 billion euros and its real estate assets boasted more than 1,000,000 m² [33]. Its shareholders include BlackRock, the world’s largest investment fund. The following case is an example of the way in which SIRs operate in the healthcare sector. In May 2019, Cofinimmo signed an agreement for the acquisition of 15 care homes in Belgium (a total of 1,576 beds). During the second wave of Covid-19, in February 2021, the company expanded its healthcare portfolio, purchasing all the shares of a company that owned building land in Genappe (in the province of Walloon Brabant) on which a new care home will be built and operated by Senior Living Group. Cofinimmo’s strategy is increasingly focussed on healthcare property and, in early 2021, the company purchased two care homes in Brussels and three in Liège, in spite of the pandemic [34].

Second in line on the healthcare property market is SIR Aedifica (the company owns 500 sites in Belgium, Germany, the Netherlands, United Kingdom, Finland, Sweden and Ireland), and in third place is Care Property Invest. These two companies (Aedifica and Care Property) enjoy an advantageous tax status [35] based on an investment rate in the sector of 84 and 100% respectively. In addition, as long as they comply with SIR regulations, the three companies are exempt from corporate income tax.

Development of the government-subsidised for-profit sector

The privatisation process also involves the use of public funds which private investment groups directly benefit from. In Belgium, the care home sector relies on two sources of direct funding: government funding in the form of subsidies, and private funding, in the form of fees, paid by residents for their accommodation and additional services. There are three main types of direct government funding, which since 1 January 2019, have been entirely managed by federated entities [36], the funding of care staff at a fixed daily rate [37], and funding of additional staff aimed at easing the work’s arduousness and improving the quality of services under the “social Maribel” scheme. Lastly, the Walloon Region also offers infrastructure subsidies for the construction and development of infrastructure.

Before 2018, the funding mechanisms in the Walloon Region were different for each sector. However, following the 2018 decree [38], the Walloon government granted the for-profit private sector access to subsidies to fund infrastructure. This new funding criteria meant not only that public sector providers must prefinance investments, but also that for-profit providers have access to new mechanisms that enable them to grow and expand thanks to public funds.

As for private funding, residents’ contributions take the form of fees for their stay in the home as well as additional costs incurred (medical expenses, medications, pedicures, etc.) Prices are set by the homes and controlled by the competent government authorities. However, according to a study on the cost of care homes in Wallonia over the 1998-2008 period [39], there was a sharp increase in prices throughout the sector between 2013 and 2018. The rise in real prices was, however, greater in the for-profit sector than in the public and non-profit sectors: 11.2% in the public sector (20.1% nominal increase); 18.7% in the non-profit sector (28.2% nominal increase) and 22.3% in the for-profit sector (32% nominal increase). The study also shows that the price increase far exceeded the 8% increase in the health index [40] over the same period. According to Rombeaux [41], among the various factors driving this increase, four should be highlighted in particular: the rise in property and land prices, the increasing presence of major investment corporations, the tightening of architecture standards and better-quality equipment.

Lastly, public players are playing a role in the sector’s financialisation by facilitating public-private partnerships, which represents another form of funding. In the Walloon Region, studies [42] suggest that the decree of 14 February 2019, encouraging new forms of collaboration between the public and the for-profit sector, is an indirect way of fostering the development of for-profit homes. A public sector operator can assign the management of its beds to an operator from another sector without this affecting its quota, as defined by the Walloon Regulatory Code for Social Action and Health. In other words, this is a way of getting around the current limit set for the for-profit sector (50% of beds), enabling it to access a bigger share of the market in the Walloon Region.

The business of the silver economy

The expansion of the rest home sector and it’s gradual privatisation is happening against a backdrop of major social, political and economic upheaval. From the 1970s, the tertiary sector began to occupy a more prominent role in the economy [43]. The growth of this sector, which took hold in a neoliberal context, is largely due to the development of so-called market activities such as tourism, commerce, finance, communication and personal services. This "tertiarisation of the economy" required a huge number of women to join the workforce (many of the sector’s jobs were seen as “women’s work”). The workload of women consequently doubled, resulting in an increased demand for services, particularly care for dependents (children, the elderly, etc.). Along with longer life expectancy and state disinvestment (or, at least, the structural lack of investment), this increasing demand was an opportunity for corporations to put their capital into new investments. Care homes represented a profitable business opportunity, with a greater proportion of them owned by large corporations. Indeed, in a neoliberal context, the privatisation of public services has fostered the tertiarisation of the economy, the care home sector being a prime example. The main features of the privatisation process in Belgium include a drift of the public sector towards the private, an increasingly concentrated sector dominated by a handful of major corporations, to the detriment of smaller companies, the increased presence of property players and the injection of government funds into the for-profit sector.

Maria Cecilia Trionfetti, Natalia Hirtz