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Care Homes Closure Warning

Thursday, March 19, 2015

GMB Support Warning From Providers That Care Funding Cuts Are Unsustainable And Will Lead To More Elderly Care Home Closures

Four Seasons, Bupa and HC-One, the three largest operators in the UK’s £24bn care home market, are warning that the system is in crisis says GMB

GMB, the union for care home staff, support the warning from Britain’s biggest providers of care homes for the elderly that cuts to public funding for residents are “unsustainable” and that more homes will close unless the situation improves. See notes to editors for copy of report in the Financial Times dated 18th March.

Justin Bowden, GMB national officer for social care, said" GMB support the warning from Four Seasons, Bupa and HC-One, the three largest operators in the UK’s £24bn care home market, that the system is in crisis.

The repeated warnings from GMB that Southern Cross would collapse were ignored again and again by government.

Warnings that the entire care sector is in a slow motion collapse, albeit for different reasons to Southern Cross, are falling on the same deaf ears.

If we are not prepared to learn the lessons of history, we are destined to repeat them."

End

Contact GMB Justin Bowden 07710 631 351 or GMB press office 07974 251 823 or 07921 289880

Notes to editors

Article in Financial Times dated March 18, 2015

Care home owners warn on spending cuts

Gill Plimmer

Britain’s biggest providers of care homes for the elderly have warned that cuts to public funding for residents are “unsustainable” and that more homes will close unless the situation improves.

Four Seasons, Bupa and HC-One, the three largest operators in the UK’s £24bn care home market, all told the Financial Times that the system was in crisis.

Their warning comes amid growing concerns about health and social care funding ahead of the general election in May. According to Age UK, the UK’s largest charity for older people, government spending on care homes for the elderly was slashed by nearly a fifth between 2010 and 2014.

Richard Bowden, UK managing director at Bupa, which looks after 40,000 residents in 280 homes, said: “Local authorities are passing on next to no increases for care homes. Costs continue to rise and there is more public pressure to deliver quality of care?.?.?.?If we can’t get the funding pressure right, home by home, we’ll make those decisions [to close].”

The care home market is highly polarised between lucrative self-pay homes, mostly in southeast England, and those with local government-funded residents, which are struggling.

About 36 per cent of residents are solely council-funded, with 7 per cent paid for by the NHS and an additional 13 per cent supported by their local authority but with some sort of third party top-up. Another 44 per cent of care home residents are fully self-funded.

Most operators with local authority residents depend for their commercial viability on cross subsidy from private payers. They say this will be threatened next year when care homes will be forced to make their fee details public.

William Laing of LaingBuisson, a healthcare consultancy, says that once privately paying residents in mixed homes see that they are paying significantly more than those who are state funded, there is a risk that they will leave for fully private nursing homes.

At the same time, the industry has come under pressure from increased regulation in response to a wave of scandals about poor quality care, as well as higher energy, food and labour costs. In some cases, operators say they could make more money if they sold their properties for housing.

According to Care England, which represents care home providers, local authorities are paying about £395 a week per resident, equating to about £2.35 an hour for accommodation, meals and care.

Research by LaingBuisson in 2013 found average council fees remain between £31 and £130 a week below the minimum calculated as necessary to offer investors and operators a reasonable return.

All three of the biggest providers are highly exposed to state-funded residents, while many smaller ones have already been forced out of the market after they struggled with tougher regulation in the wake of the collapse of Southern Cross in 2011.

Southern Cross, the biggest care home operator in the UK at the time of its collapse, went to the wall after an increase in its annual rent bill and a cut in fees paid to care homes by local authorities.

Demand for care home places is expected to grow for the next 50 years, with the number of over-65s forecast to rise from 10.6m in 2010 to 16.1m in 2035.

But, at the same time, the average length of stay in a care home has fallen from about two years to 12 months because councils are applying stricter criteria and people are going into care later in life.

The Department of Health said it had “taken steps to protect social care services by giving an extra £1.1bn to councils and we have made absolutely clear that commissioners should pay fair prices for care and think about the sustainability of the market as a whole.

 “We’re also working with councils to help people live independently for as long as possible and our £5.3bn Better Care Fund will go even further,” it added.

But Age UK said its research showed neither the Better Care Fund nor the extra £1.1bn would compensate for the gaps left by the cuts.

Ian Smith, chairman of Four Seasons Health Care, Britain’s biggest provider, which has shut 18 homes in the past 15 months, said the environment was “tough”.

“Unless there is change in the funding regime, the shortfall in care homes beds over the next decade will be in tens of thousands at least, based on a combination of beds lost and increasing demand.”

Chai Patel, chairman of HC-One, which runs 208 properties, said the cuts risked “damaging our health and social care system irreparably”.

The Local Government Association said the coalition government needed to address the issue. “Sadly this is symptomatic of a social care system that continues to be chronically underfunded and why the LGA is calling for the chancellor to urgently address this in the next Budget,” it said.

This article has been amended to clarify that the rise forecast in the elderly population refers to over-65s and not to over-85s, as the article originally stated.

 

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