Like many people I have direct experience of a family member in long-term aged care etched on my memory. For me it was my grandfather on my father’s side, Tom Williams. He entered care when I was about 11 and remained there for a number of years before dying. The care unit was run by the NHS and local authority in my South Wales Valleys’ hometown, Ystrad Mynach, and was a relatively small facility. In truth I used to hate visiting him there and feel some shame for that even today, albeit with sympathy for my childhood-self, as the context could be traumatic and so generally disturbing. On one turning point visit, his mostly deaf and totally blind neighbour, a very old man whom the staff called ‘The Angel’, became aware somehow that there were people in the communal room. That day I had brought my grandfather sweets, and so took one out and put it in the hands of the Angel, thinking it would cheer him up, the always placid but clearly very lonely man. He unwrapped it very quickly and greedily and was about to put it in his mouth when one of the care staff managed to grab his hand and took it off him. He was rushing to eat it before it was seen. She told me that he was diabetic and so he couldn’t have them, and then tried to soothe the now visibly distressed old man with no real ability to explain to him what had happened or why. My reaction, the exact details long-forgotten, was obviously significant enough to me for this to be remembered at all.
The staff there were universally caring for the patients and residents. Needless to say, they were almost all women, giving my grandfather the best care they could with what were very basic resources. The facility was old and somewhat worn out, but it was funded by the state in its entirety. While vulnerability and probably a great deal of fear were the hallmark of almost all the residents there, save those oblivious to their surroundings at the end of life, there was continuity of care, and the precarities of money, or ever-changing staff and surroundings were never issues for the residents or their families. This is the early 1980s.
This personal vignette introduces the second of my thread on neoliberalism, market failure and COVID, with the focus on what has transpired in many countries in terms of the systems set in place that provide for the long-term care of the elderly. I introduced it simply because vulnerability and the market are at the heart of this post and the second to follow tomorrow.
Again, I want to deliberately frame my discussion of aged care squarely in our recent collective history and some four decades of neoliberalism, austerity and privatisation. These aligned drivers have ushered in the market, now to disastrous effects in aged care in a time of pandemic crisis. I am uncertain whether a similar catastrophic human and systemic story is being played out in long term disabled care, or in residential mental health facilities. I certainly hope not, as it is clear now that mortality and suffering in our vulnerable elderly population has reached a level where the market and political leaders that have promoted it should be held accountable for what has been allowed to happen. But what has unfolded in the last months is the subject of the post tomorrow, it is how we got there that comes first today. This whole human mess has a back story, before we even get to COVID.
In the last thread I concentrated on historical waves of neoliberalism and their interactions with health in general, and alluded to how these have led to the numerous and very visible market failures we have experienced in recent months across the world. In many OECD countries the state has deliberately let the market into aged care by means of privatisation, outsourcing, and other modalities, a process dating back to the late 1980s and early 1990s. The process has also involved a reconfiguration of the state in terms of its regulatory function and its relationship with the private firms that have filled the holes left left by the governments that have retreated from social welfare provision. The state has changed who it is responsible for and to in terms of the care of the most vulnerable.
In the UK the process of privatisation is 30 years old. According to Amy Horton, in 1979 64% of long-term aged care is provided by UK local authorities, and by 2012 this is just 6%. In 1993, 95% of domiciliary care (the type my grandfather received for free) was provided by local authorities, and today this is just 11%. Where not-for-profits are present as providers today, 86% of the market is for profit, and in the form of companies of varying size. In Australia a similar process has occurred, with that country moving from the private sector being a rump service for the rich (providing an almost constant 27% of the total care provided in the Twentieth Century), to now accounting for well over 60% of services. Both countries undertook significant public sector and social and welfare service reforms from the 1990s onward, and opened-up the market for private firms to enter into long term elderly care. In many countries, as state provision shrank through waves of austerity and cuts, the windows of opportunity opened up and were supported by cash transfers to the budding private care industry. The US sees 70% of care being provided by for profit firms, albeit with a relatively strong faith-based care sector. The proportions vary from country to country, but the private sector is now firmly rooted in this area in most OECD countries.
In Canada, as in France, the UK and Australia (and probably other nations) the models for finance and regulation have changed as the relationship between firms and governments evolved, these shifts reflecting the different historical waves of the mutating epiphenomena that is neoliberalism, and how it reconfigures institutional and social relations. It starts with a move to outsourcing in the late 1980 or 1990s, depending on country, with firms and not for profits tendering for government funds to provide care. By the late 1990s, we see the rise of user fees and higher eligibility thresholds for assistance. These are combined with continued cash transfers from the state to the now burgeoning private sector. We see the term ‘aged care industry’ being used for the first time, a combination of words that speaks much to the marketisation logic increasingly present, and the dawn of big multi-site firms. Southern European countries, where traditional models of women caring at home were eroding as women started to join the workforce in greater numbers, also saw a new private care sector emerge, albeit often only for the wealthier.
The bar of eligibility for state assistance for residential or home care has been progressively raised in the UK, US, Ireland, Spain, Italy, Canada and other nations. User fees and out of pocket payment are the new normal for many residents, as families eat into pensions or equity and transfer cash to the providers. Yet many states and local authorities still spend vast amounts of money on care homes, and much of the private industry in countries such as the UK and Canada receive revenue from government in via the outsourcing of care and direct cash transfer. The state has only withdrawn services, and not financial support. Even after austerity and cuts, the sums involved are vast as the elderly population has grown each decade.
As well as a financer, the state has become largely a regulatory player, seeking to assure quality of care for residents and standards of training and staffing in a sector within which routine care and supported environments can blur with medical assistance for acute or chronic conditions. States have regulated by the usual go-to models such as industry self-regulation or self-reporting, accreditation, and inspection and licensing. Despite this, through a disturbing mosaic of cases in many countries over recent decades we see routine reporting of elder abuse, neglect, dehydration and malnutrition, and so on, in care homes. These cases all point to the fact that regulation of aged care is often a net with big holes, and firms become adept in gaming the system to mask deficiencies arising through lack of care or downward cost pressures. The attempts to assimilate private firms into social care via regulation while not completely failing, are clearly not working to provide universal quality care. The problems with regulating the market system are endemic and perhaps insoluble.
Before focusing on the most recent historical wave of neoliberal healthcare, we should also consider what has happened to the frontline-workers (although few have clapped aged care workers it has to be said). Feminist Political Economy is the most obvious lens for viewing this. The aged care sector and the staff that work in them, in almost any OECD country you choose to pick (bar the Scandinavian nations and some other outliers), is defined by the presence of a highly gendered, racialized and marginalised workforce, who are poorly paid for what they do for all of us. They undertake this work so that social reproduction can continue in the wider economy, and family members can continue to work while not having to give care to parents. They provide care at the same moment that their own social roles as ‘unskilled’ and under-valued carers are also socially reproduced. The more recent historical switch from an already heavily gendered child-care and aged-care functions being undertaken by women at home in many countries, to women working and joining the formal economy, has required the social reproduction and marginalisation of a largely female care workforce. Care has become commodified at the same time as the state withdraws and women enter the economy, showing just how agile and silent neoliberal capitalism can be, as it ostensibly liberates women while simultaneously reconfiguring their roles with respect to the economy and each other.
It is also clear that in many countries that many of these carers are from migrant communities, or are undocumented and illegal workers, as has proven to be the case in Ireland and the USA. The Irish Times recently reported that some 5000 illegal workers were present in that countries aged care sector, often living with their charges. In general, many of the workforce are on zero hour or tenuous contracts, and in some countries trained medical attendants, such as registered nurses, have been replaced or downgraded in care facilities, and the ratio of assistants to those left has ratcheted upwards. Assistants cost less than trained nurses. Staff also rotate between facilities to make up hours or money, with implications for infection control and patient familiarity and continuity of care. In Canada many of the states that went private saw many staff in existing facilities lose their jobs, or have their contracts renegotiated downwards. These staff are viewed as being easily substitutable as they are unskilled, while at the same time the industry is plagued by huge staff turnover and routine workforce gaps. It seems aged care staff have also been thoroughly commodified, are under-valued and treated as part of a logic of profits and loss rather than the care they give. As much as I dislike this term, the workforce is defined by its position in terms of a set of intersectional challenges generated by neoliberal capitalism, including those posed by the class and economic precarity of the workforce. In Spain the average wage of an aged care assistant is €1000 a month, and in the UK the average hourly wage in 2019 was £7.81, tracking below the levels paid to supermarket workers. In the USA the average annual salary is $52,000 for care assistants.
The current historical phase of neoliberalism will not be a surprise to many who have studied the aged care sector or health more widely, yet it is still shocking to recount. Aged care in a few countries, most especially the UK and the US, becomes financialized from the mid-2000s onwards, a process that accelerates after the GFC. This means that aged care becomes the terrain of investment firms and hedge funds, of junk bonds, the offshore extraction of profits to tax havens, of debt, property leverage for loans, and complex ownership structures.
We can look to the UK where the story has been most visible for me, and where the outcomes in terms of COVID are also clear. On the 8th November, 2019, The Guardian carries an article that outlines the structure of the private health care industry in the UK and persistent problems it encounters. Of the 5000 aged care homes in the UK, the private sector now has 94% of the beds. It reports from a Centre for Health and Public Interest study, one of many coming from Amy Horton in recent years. In the UK, care home operators report an annual profit of £1.5 billion, but this it appears is just the profits that are reported as such, and there are other sources of extraction occurring from the £15 billion per annum sector. Many of the bigger multi-site operators are now owned by hedge funds and the profits are taken offshore to tax havens such as the Cayman Islands and Guernsey. Other means of extraction from the care homes involve high yielding investment bonds (apparently the industry average is now 12.5% on maturity), high rents, and fee and debt repayments. Another favoured tool is for the investers to sell on the properties and land assets of the homes, and do this while still operating from them with many of the residents are aware of what is going on underneath and around them. One sixth of revenues goes to debt recovery by investors, and between 15 to 32% on high rents (as compared to 6% on remaining local authority facilities). This is a process of extraction, pure and simple. And despite huge cuts in social care budgets since the GFC, local authorities spending on aged care still account for 50% of the revenues, a process of transferring public money to capital, pure and simple. Money that should be going to the workforce and the patients is being swallowed by firms and investors.
Two cases are worth considering in terms of this unpalatable circus. In 2006, the private provider Four Seasons was bought up by the hedge fund Quantum (Four Seasons meet Quantum). Four Seasons has 17,000 residents across the UK and was worth £1.5 billion on sale. But the nature of the debt recovery and extraction, combined with downward cost pressures and impending bond yields, all means that Quantum sells to investment group Terra Firma for just over £850 million in 2012. Terra Firma proves less than firm; and it seems that accumulated debts and bond yields are its undoing. Debt holders H/2 Capital, a major US hedge fund, enforces administration in 2017 and Four Seasons closes. I have not got the time to check on what happened to the residents, but is likely that local authorities and families socialised the human loss in some shape or form until alternatives could be found. Of course, Terra Firma walks away to fight another day.
This has precedent in the UK. In 2011, the multi-site provider Southern Cross collapsed with 30,000 residents on its books. The New York based hedge fund Blackstone bought the business in 2004. It is worth noting that Blackstone split the company into two, a property arm and the nursing arm, claiming that it would become "the leading company in the elderly care market". Blackstone sold Southern Cross and its 750 care homes saddled with an impossible property rental agreements and leaseback arrangements, and the provider entered administration in 2011. Blackstone is the alternative equity firm that funded Trump’s inauguration, has a former Canadian Prime Minister and former US Senator on its board, and has been criticised by the UN rapporteur for housing for aggressive rent hikes and evictions. But hedge fund investment is still part and parcel of the care home economy, and they are little challenged to date by any government in power.
Similar patters of ownership and investment characterise the US and Australia, and I am sure that if one unpacked other yet countries in which health has been financialised a fuller picture would emerge. We have developed a system where profits are transferred from the public purse to profit making providers and investors, and placed the care of our elderly in a system which is based on profit and not on principles of providing the highest quality care irrespective of the ability to pay, or the bottom line of business. This system is fragile and tumultuous as is the case with much of frontier capitalism, with closures and turbulence increasing in aged care firms across the Western world. Those that are vulnerable and who that system is ultimately supposed to serve must live with the increasing additional fear and sense of doubt about their futures.
With regards to COVID the present crisis was long in the making. I will end this piece for today and take it further tomorrow or this evening with a quote from a recently published edited collection, The Privatisation of Care: the Case of Nursing Homes (Routledge, 2012) edited by Armstrong and Armstrong:
‘As Michael Sandel (2019) argued, there is a need for serious public debate about the role that markets and market reasoning should play in society. The market system has become so firmly entrenched that, despite its evident inherent and volatility, its suitability as a way of organising long term care is seldom challenged.’
In short, we were set up for catastrophic market failure to affect the very priority population so much effort has only recently been directed at protecting. A case of too little too late, and far too much market.