Control of the ORPEA group

The aim of this chapter is to respond to point 6 of the mission letter entrusted to the General Inspectorate for Social Affairs and the General Inspectorate for Finance, which asks the mission to examine the “group’s financial practices with regard to the management of ‘care’ and ‘dependency’ grants for each care home, départment (“départements” are second-tier administrative subdivisions of France, below the regions) and overall, and the truthfulness of the information provided to the supervisory authorities”. In particular, this chapter examines, for the years 2017 to 2020:

• the legal framework, the changes in the public funding received by the group and how this was used with regard to payroll costs, purchases and surpluses;
• the budgetary procedures implemented by the Orpea group and how these impacted the facility managers’ control over expenditure;
• group headquarters’ structuring of the statements of income and expenditure (états réalisés des recettes et des dépenses (ERRD)) submitted to the pricing authorities for each of the group's facilities;
• the analysis of surpluses from public funding and how these were allocated by the group;
• the Orpea group’s use of non-revolving credit granted by the regional health authorities (agences régionales de santé (ARS)) for investments which contributed to residents’ care;
• the nature of the checks carried out in regard to the aforementioned points by the public actors involved.

The mission's work was slowed down by the difficulty of ensuring that the data submitted by the group was reliable. For example, the trial balance, which included all facilities for the years 2017 to 2019, was not submitted until March 7, 2022, following several iterations between the mission and the group. In addition, the silo structure of the head office divisions involved in the management of public funding and budget management (facility and medico-social service relations division, management control department, accounting department) meant that a significant amount of work had to be carried out to consolidate the data provided by each of them. Finally, accounting entries are based on tables transmitted by the various divisions, despite the accounting department not having all the supporting documentation, which undermines the use of accounting data in the context of the audit.

Upon completing its work, the mission’s findings were as follows:

• the total amount of care and dependency funding received by the Orpea group increased by 12.4% and 3.0% respectively between 2017 and 2020, mainly due to the merging of tariffs. During the same period, the total payroll financed using these budgets increased by 8.0% and 5.6% respectively;
• the budgetary procedure used by the group for each of the EHPADs involves, in particular: - “setting aside” a portion of the “care” funding that is not included in the facilities’ target budget to allow for the allocation of several expenses at the end of the year. The amount set aside corresponds to an average of €80,000 per EHPAD.

The report does not challenge the principle behind this setting aside of funding when the facility budgets are being prepared, but rather the amount of funding that is set aside, which exceeds the sums that can be retroactively allocated to care; - close budgetary monitoring of facilities through the regional divisions, with action plans updated on a monthly basis to ensure that the budgetary objectives set by the group are met; - restatement measures at the end of the fiscal year by the facility and medico-social service relations division (direction des relations établissements et services médico-sociaux (DRESMS)), resulting an increase in the expenses allocated to the facilities and declared to the pricing authorities in order to justify the use of public funding. These measures include, in particular: - using the facilities’ care funding to pay personal care assistants acting as assistant nurses, without evidence of their qualification(s), training or the activities undertaken; - redirecting, on an ad hoc basis, a portion of the payroll for personal care assistants when their number exceeds that provided for in the projected statement of income and expenditure, a measure that is carried out by headquarters without evidence of their qualifications, training or the activities undertaken; - agents’ incentive bonuses and bonuses that are not automatically integrated into pay (special work bonus, Covid bonus); - a portion of the group's taxes and duties (tax on headquarters salaries, territorial economic contribution, company social security contribution, employers' contribution to building and construction work, AGEFIPH3 contribution, civil liability insurance);

• the surpluses from public funding, which must be allocated to care and dependency expenses, come to a cumulative total of over €35 million, €20 million of which has been accumulated since 2017. These surpluses are not subject to any accurate4 accounting monitoring, and only 3% have been used by Orpea;
• non-revolving credit is monitored more closely, but is not spent to any greater extent, with the amount of non-revolving credit accumulated by the group totaling €6 million.
• the ARS have reported certain irregularities to Orpea since 2017 (personal care assistants expected to act as assistant nurses, inconsistent allocation of certain expenses such as civil liability insurance), but the group has not followed up on these other than by discontinuing the practices mentioned in the accounts of the specific EHPADs in question, even though these practices are widespread within the group.

It is the conclusion of the mission that the budgetary procedure chosen by the Orpea group results in the accumulation of surpluses from funding and makes it possible for the declared surpluses to be reduced by allocating expenses that should not be allocated. Achieving the target budgets set for the facilities involves careful management of the payroll and variable costs by the group's regional directors, which is likely to have an impact on the quality of care provided to the facilities’ residents.

It is the opinion of the mission that between 2017 and 2020, a total of €50.2 million was unduly paid by Orpea using its care funding:

• a portion of the group’s territorial economic contribution, estimated at €18.0 million by the mission;
• 70% of the remuneration paid to personal care assistants “acting” as nursing assistants, without evidence of their qualifications, training or the activities undertaken, to a sum of €27.8 million;
• the remuneration paid to some of the personal care assistants when their number exceeds that provided for in the projected statement of income and expenditure, to a sum of €2.35 million;
• payment of the company social security contribution, to a sum of €1.6 million;
• payment of insurance, particularly civil liability insurance, to a sum of €0.5 million.

These amounts equate to, for example, 1.5 full-time equivalent (FTE) nursing assistants or comparable staff members, including all expenses5, per year and per Orpea6 group facility. In addition, the mission found that the surpluses generated by the Orpea group from the funding it receives (€20 million since 2017) were not specifically monitored and are therefore likely to appear in the group's results, which goes against the principle set out in the French Code of Social Action and Families (code de l’action sociale et des familles) (article R. 314-244), which regulates how these surpluses are to be allocated. The amounts of the unused surpluses generated since 2017 equate to 0.56 FTE additional nursing assistants per year and per EHPAD. In total, if the awarded funding and the surpluses had been used correctly, the Orpea group's residents would have benefited from the work of two additional nursing assistants or comparable staff members per facility and per year.