December 5, 2021

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'Part of Youth Care Providers Excessive Profit'

‘Part of Youth Care Providers Excessive Profit’

Six out of ten youth care providers make a big profit. This includes a profit of at least 10 percent, while 3 to 7 percent is the norm in the healthcare sector. This is evidenced by an analysis of the 2019 annual accounts of 2,107 youth care providers. Analysis performed by Kurtosis upon request Local Administration.

Even more than 40 percent of the service providers made more than 20 percent profit. This mainly concerns service providers with a turnover of between 100,000 and 1 million euros. “These companies generate the highest profits, with outliers of 50 percent or more,” said Walter Van Dam, partner at Kurtosis. “It often concerns dyslexia providers, care farms, and family homes.”

According to Van Damme, the normal profit indicates that the money is already spent on care. For example, service providers with a turnover of more than 1 million euros generated an average profit of 2 to 3 percent. “It has to do with the so-called system providers, such as institutions that provide mental health care, crisis assistance, or youth care with accommodations,” Van Damme says.

For nearly three-quarters of service providers, less than 70 percent of all expenditures were spent on employee wages. Fabulous, says Van Damme. “Healthcare is a very labour-intensive sector. You can expect the bulk of the budget to be spent on wage costs.” Again, this mainly concerned providers with a turnover of 1 million euros.

Irregularities and financial risks

Not only high profits are recorded. One in five health care providers was found to be illegal and 13 percent identified a financial risk. The combination of high profit and low wage costs can indicate such illegality.

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The nature and extent of the problems varied. For example, a number of service providers did not correctly or incompletely complete annual accounts, while other service providers scored poorly on, for example, the ratio between wage costs, earnings and manager salary.

NOS Stories previously made this video on youth care, where young people were discussed: