Care home tea party

The number of residential care home occupants currently stands at 426,000, according to Laing Buisson’s recent statistics. Those over 65 years of age make up 405,000 of the total; a figure which could reasonably be expected to rise given our ever increasing life expectancies. However, many care homes are now under severe financial pressure, and with up to a third facing the threat of insolvency, serious consideration needs to be given to the future of the care industry.

Staffing is the largest cost for care homes, amounting to roughly two thirds of total expenses. The industry has come under pressure in recent years due to reports of inadequate care and even abuse of patients, however filling rotas with competent staff is not an easy task. NHS training places for nurses have been reduced in the past 2 years, and currently no programme exists to enable care workers to train within the care homes themselves to become qualified nurses. The industry is therefore failing to attract enough young and career driven trainees, and is generally populated with staff and nurses who are considerably older than those in hospitals. Furthermore, establishments are increasingly forced to rely on more expensive agency workers to fill the gaps, increasing the overall staff costs.

Further problems are imminent with the introduction of the Living Wage. Staff numbers cannot be cut, due to rightly imposed regulations on staff-to-patient ratios. As a result, it is expected that the funding gap once the Living Wage is implemented could be as much as £2bn. Whether this deficit will be compensated by government funding remains to be seen, and should be revealed in George Osbourne’s statement on 25 November.

The care industry as a whole is now made up of mainly privately owned establishments. The residents are a mixture; some paying privately for themselves, others funded by the councils or government subsidies. 37% of homes rely on local authority funding, however, in recent years the amounts that councils are paying for care home places have diminished due to budget reductions. Additionally, the criteria to qualify for a care home place have been tightened, leaving some spaces empty. For smaller homes, sustaining these increased costs along with empty beds is not viable. Julian Evans, Knight Frank’s head of healthcare, has stated that some 7300 smaller homes, with less than 30 places, are in real danger of closing down in the near future.

Terra Firma, operators of Four Seasons Healthcare which is Britain’s biggest care provider has warned that unless something changes, it will be forced to start selling off or closing down a number of its homes. When Southern Cross collapsed in 2011, it was purchased privately, preventing a crisis whereby 37,000 beds could have been lost, but whether a buyer could be found if a similar situation occurred now that there is even more financial pressure on the industry remains to be seen. Even the companies which are currently successful will see their profits knocked by at least 4% based on a 7.5% wage increase.

It would spell disaster if the NHS were faced with housing the displaced occupants. Care home residents pay, on average, £563 per week for a room, whereas a hospital bed costs the NHS £260 per day. Drastic measures would be needed to find space and funding for thousands of patients displaced by insolvent care homes. It will be interesting to see what the Autumn Statement proposes as a solution - watch this space.

Charlotte Tasker
Practice Development Executive


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