Financial viability of residential care sector under increasing pressure

Topics covered: Ridouts professional advice

According to research conducted by ResPublica in association with Four Seasons Health Care, HC-One and GMB by 2020/21 there will be a gap in funding of elderly residential care of £1 billion which is equivalent to the loss of 37,000 privately provided residential care beds.

The anticipated shortfall in the number of care home beds would fall onto the NHS and would cost an estimated £3 billion to fill the void. The formal report of research conducted will be published in the New Year and continues the narrative of a care sector in need of immediate and far-reaching reform to avoid collapse.

The cost of providing care will increase with the introduction of the National Living Wage in the New Year. This is a cost which will have to be absorbed by the already squeezed residential care home sector which would have little room to manoeuvre even if staffing costs remained at today’s rates.

The report will also speak on the funding crisis in the residential care sector which is borne out of the public sector failing to adequately remunerate care home businesses for the services they provide.

Commenting on the initial findings of the report Justin Bowden, National Officer for the GMB union said:-

“It is one minute to midnight for the care sector. Just as GMB warnings that Southern Cross would collapse were ignored again and again by government, history looks set to repeat itself unless George Osborne acts now. This time however we are not just talking about the largest care home provider collapsing, but the entire publicly funded care home and domiciliary care sectors.

This is not some unexpected, overnight phenomenon catching everyone unawares, this has been a slow motion collapse and somebody’s mum or dad or granny – our elderly and vulnerable – will be the biggest victims. “Local authorities are unable to act as ‘lenders of last resort’ and step in, so the NHS will be forced to try and fill the giant hole created by 37,000 less beds in the care sector for our elderly and vulnerable – equal to 28% (or 1 in 4) of all available NHS beds. The effects will be immediate and crippling.”

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