The Silver Economy Gets a Covid Reality Check
The company has swiftly appointed a new CEO and denied the accusations, which include the rationing of adult diapers, and hired two outside firms to conduct an independent inquiry. But the reputational risk has already rattled the sector, with rival Korian down 37% in sympathy. Orpea faces financial and administrative probes from Emmanuel Macron’s government, which has echoed the shock and disgust of angry relatives.
The sector is no stranger to such allegations, but they cut deep after Covid-19’s cruel toll on the elderly. Badly staffed and under-funded care homes were the source of tragic and avoidable deaths during the pandemic, with the sector accounting for 40% of total Covid deaths, according to the OECD.
What’s different here is the doubts hitting Orpea are spreading to the premium end of the care market, just as retirees face longer-term economic challenges in a world of rising inflation and care-staffing shortages after omicron. What really rankles the French public are accusations of mistreatment within a company offering rooms for 7,000 euros per month. This is a firm targeting aging societies with high purchasing power.
The disturbing family testimonials cast a grim shadow over the money made by investors and management during the company’s breakneck expansion over the past decade, as it swelled from 43,003 beds in five countries in 2013 to 111,800 beds in 23 countries in 2020. Despite extra costs and complexity, the company still managed to maintain its underlying profit margins and pay increased dividends thanks to what analysts called a structured and efficient organization.
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