A Growing Crisis: Over 1,200 Care Homes and Services Facing Insolvency in Germany
Over a thousand care facilities facing bankruptcy or shutdown. - More than a thousand nursing homes have faced bankruptcy or shut down.
The financial stability of care facilities in Germany is on a downturn. According to the Employers' Association for Care, a staggering 1,264 care homes and services have filed for insolvency or closed down between January 2022 and the present, as reported by the association's managing director, Isabell Halletz, to the German Press Agency in Berlin. "This is a major headache, as we're witnessing the loss of vital care placements amidst a rising demand," Halletz explained.
One high-profile case that recently made headlines is care conglomerate Argentum. Its four holding companies filed for insolvency under self-administration at the local court in Bad Homburg on April 1.
"Hospices are dying" persists
The Employers' Association for Care had already highlighted the sector's dire predicament in a "Germany map of hospices dying" it created at the beginning of 2022. The association documented over 800 insolvencies or closures in long-term care at that time. "And the hospice dying continues, regardless of whether it's a family-run care home, a church social station, or a high-performance care company," said the association's president, Thomas Greiner.
Reform remains elusive
Despite the growing problems and increasing care needs in an aging society, the then acting health minister, Karl Lauterbach (SPD), announced a care reform in the fall. However, no improvements were made before the coalition government's collapse.
Halletz blames the industry's poor financial situation on the poor payment practices of health insurers. Services provided by care homes are often not paid promptly, adding up to six- to seven-figure sums for care companies. Cash-strapped health insurers are using care providers as their personal bank. "Care companies are being exploited as the bank of health insurers," Halletz added.
It also takes a long time for social services to cover co-payments for needy people - often only after months of waiting, Halletz criticized. "This affects even larger companies," she noted.
Now, the parties negotiating the next government in Germany are being called upon to take action. "The erosion of structures should serve as a major wake-up call to politics," warned Halletz. To avoid care companies from appearing as "beggars" toward care insurance funds, the association demands strengthening of the care sector. As stated by the Federal Statistical Office, Germany currently houses 11,250 nursing homes with full-time long-term care and 15,549 home care services.
Insights from the Market Environment
In 2024, many sectors in Germany faced economic headwinds, such as high input costs, interest rates, and insufficient regulation, leading to a surge in insolvencies by 19%. However, this trend is projected to stabilize in 2025 and decline in 2026 as the economy improves. Other sectors like construction and hospitality also experienced an increase in insolvencies. Changes in the business environment, pandemics, and geopolitical tensions contributed to a challenging landscape for companies in vulnerable sectors.
To better understand the challenges faced by care facilities specifically, further targeted research is necessary. However, the broader context suggests that economic pressures, regulatory changes, and operational challenges could be significant contributors to financial problems across various sectors.
- The financial troubles of care facilities in Germany are partially attributed to the delayed payments and poor payment practices from health insurers, according to the Employers' Association for Care.
- In 2024, multiple sectors in Germany, including care facilities, experienced a surge in insolvencies due to high input costs, interest rates, and insufficient regulation.
- To support the care sector and prevent care companies from functioning as "beggars" toward care insurance funds, vocational training programs might be crucial in improving the industry's financial stability and helping care providers adapt to the challenging market environment.
