Listening to providers across the board, one would think forecasting growth is simply a matter of predicting demographics. Add political and regulatory limitations and you’ve got a pretty accurate picture of how the market is going to develop. In actual fact, we think predicting growth is a far more complex equation, where growth limiters will play a far more prominent role than providers would have us think.

That demographic change is a substantial growth driver is contestable, though it is used by all players to predict the growth of bed numbers over the years. We think most markets could actually be over-bedded and that growth limiters could paint an entirely different picture of what the future might hold for nursing homes.

Even in France, where the market is licenced and growth in bed numbers has all but stopped, Europe’s second-largest group by revenue Orpea predicts bed numbers must grow by 25,000 before 2025. That’s over 4,100 beds a year, or yearly growth of under 1% on the basis of the current 590,000 beds on this market. This despite Orpea’s founder saying only 10-15% of citizens over 85 really need a bed – and France already providing a bed for 47% of this demographic per our calculations.

If occupancy rates are dropping, why build more beds? In Belgium, occupancy has dropped from 98% to 90% due to elderly people simply not wanting to go into a home, and alternatives now being available. Other options, or growth limiters, are surely increasing in both quality and prevalence. Better domiciliary care supported by ever-smarter technology is making its way onto this market and into the homes of those with high dependency needs.

Average length of stay (AVLOS) is also dropping alongside occupancy for the same reasons. In the Netherlands and Belgium, legal euthanasia has been increasing consistently and could be a practice that expands across Europe in the next decade, putting a further dent in growth forecasts. We think that despite growth in Alzheimer’s and the arrival of baby-boomer generations onto national markets, provision for just over a quarter of those aged 85 and over would be a reasonable ratio to lean towards. That would mean all markets bar Southern and Central European ones are currently over-bedded.

In licenced markets, there is little to suggest the public sector would give licences to for-profit providers for the growth that is needed – they are more likely to be given to public or not-for-profits which can provide beds to those who haven’t got the means to pay the average of at least €100 a day privately. By how much can for-profit operators reasonably grow then on such markets? It would seem that a more conservative approach to forecasts may more accurately reflect future trends.