A boarding house for the elderly caught in a dispute

The structure of the network of medical clinics EMC Igor Shilov, which manages an elite boarding house for the elderly in Malakhovka near Moscow, has a conflict with the regional authorities. The company unilaterally tried to terminate the agreement with the administration of Lyubertsy, according to which it should provide some of the places to beneficiaries at low rates. But officials managed to declare this step by the operator of the geriatric center illegal in court. The problem of low tariffs is systemic for the industry, experts say, and the conflict may affect investors’ desire to invest in similar projects in the future.

“Senior Group Malakhovka” (SGM; part of the EMC group and manages a boarding house for the elderly in the village of the same name in the Moscow region) on February 1, 2024, filed an appeal against the decision of the court of first instance, found “Kommersant” in the file of arbitration cases. As follows from the case materials, in December 2023, the first instance upheld the claim of the administration of Lyubertsy, which demanded that SGM’s unilateral termination of the agreement to provide 28 places in a boarding house for beneficiaries from among residents of the region be declared illegal.

SGM entered into an investment contract with the administration of Lyubertsy in 2014, pledging to build a social service facility for the elderly in Malakhovka. In 2017, upon completion of the construction of the boarding house, the parties signed two additional agreements, according to which the authorities were assigned 28 beds (the entire facility is designed for 140 people). The authorities, for their part, had to compensate for the costs of maintaining preferential places at the expense of tariffs established in the region.

SGM is included in the regional register of social service providers, which indicates that by 2021 such services were provided by the company to more than 250 people. However, in June 2023, the SGM notified of a unilateral refusal to fulfill the agreement on social support for the population of Lyubertsy and the termination of the agreement on interaction with the city and the Moscow region. The company cited the reason for this decision as insufficient subsidies for services.

The first instance, which satisfied the authorities’ claim, considered that SGM was actually trying to “attribute its business risks” to the Lyubertsy administration and the regional Ministry of Social Development, which did not violate their reciprocal obligations. The matter is complicated by the fact that 14 premises of the boarding house are owned by the administration of Lyubertsy and leased from SGM, but the provision of social services is not payment for rent. Consequently, the court decided, the agreement cannot be considered a compensation contract, but only such an agreement can be unilaterally abandoned.

The SGM, EMC, and the Ministry of Social Development of the Moscow Region did not respond to Kommersant’s request. The administration of Lyubertsy confirmed that the first instance court recognized all agreements as valid.

Partner of the Arbat Bar Association, Alexey Simonenko, points out that the agreement between the administration and the SGM still provided for a unilateral refusal to fulfill obligations. Despite this, SGM’s chances of winning the dispute on appeal, according to ProLex managing partner Konstantin Lushnikov, are “extremely low.” The company, having entered into investment relations and accepted obligations for social support, was aware of the associated business risks, the expert explains.

According to the NGO “Fund 60+”, in Moscow and the region the number of beds in public and private hospitals is 3–3.5 times lower than the current needs. At the same time, private boarding houses are not very willing to work with the state social service system due to low tariffs or problems with subsequent receipt of subsidies from the budget in the form of compensation for services provided, explains the head of the NGO Vadim Barausov. Care in a boarding house in the Moscow region of a high price range, according to him, can cost 6-10 thousand rubles. per day, while the tariff established in the region covers costs by only 2 thousand rubles.

Of the ten large boarding houses in Moscow, the Moscow region and St. Petersburg, eight are on the profile register, but in fact they receive a minimum of targeted funds from the region or do not receive them at all, notes Eqiva CEO Daria Shubina. According to her, state boarding houses still remain the main service providers. Vadim Barausov believes that problems with subsidies affect the desire of investors to build new geriatric centers.

Polina Gritsenko