The crisis in care: The urgent need for responsible investor action in nursing homes

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Summary

COVID-19 has illuminated and exacerbated many underlying issues in the nursing home sector. It shone a spotlight on the interconnected issues of poor working conditions, quality of resident care and financial sustainability. This briefing documents global evidence of these issues in the sector and lays out a case for investor attention.

Business case

The concerns at nursing homes are highly relevant to investors from the perspectives of: human rights responsibilities, commitments to gender and racial diversity, and a clear-cut business case.

From a human rights perspective, ultimately with COVID-19, the lives of residents and staff are at risk. There are also human rights concerns with health and safety, living wages, and freedom of association and collective bargaining.

For investors committed to addressing gender and racial diversity, the sector is highly relevant. Women represent more than 90% of the workforce. With the low wages in the sector, raising wages would be an impactful way to address societal gender pay gaps. There is also a disproportionate impact of the poor conditions along racial lines for residents and staff.

There is also a clear-cut business case for improving standards. The sector is people-centred, depending on workers to deliver the purpose of the business to deliver quality care for residents. Failing to do so harms corporate reputations which can create challenges attracting residents, and ultimately can also create legal risks.

High-profile bankruptcies from HCR ManorCare to Southern Cross illuminated the financial risks in the sector long before COVID-19. But the pandemic has heightened these risks. Nursing homes and analysts reported dire financial forecasts following the pandemic. Occupancy rates have already dropped – from loss of lives of residents and the reputational impact on the industry.

Nursing home chains also face significant legal risks from the poor management of the pandemic. Many chains are facing legal actions including lawsuits in Canada and the US, and lawsuits and criminal investigations in Spain and Italy.

The sector is also facing increasing regulatory scrutiny. During the pandemic, regulators have even taken over operations of care homes or stripped some of their licences.

Operationally, the looming crisis of workforce shortages risks holding back the sectors’ growth to meet the demographic needs. The number of care workers will need to increase by 60% by 2040 to keep the current ratio of carers to elderly people, but the sector is struggling to attract and retain workers due to the poor quality of jobs.

Collaboration details

Type
Information sharing
Status
Ongoing
ESG theme
  • Social
Created on
Geography
Australia, Belgium, Canada, Czech Republic, France, Germany, Italy, Japan, Netherlands, New Zealand, Poland, Spain, Switzerland, United Kingdom, United States
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