UK’s leading care home company states more money alone won’t solve care home crisis

Topics covered: Ridouts professional advice

The leader of the largest care home operator in the UK has stated that additional funding within the sector will only partially solve the issues that riddle the sector.

The care home sector in the UK comprises of 487,000 beds in 18,000 care homes. The largest provider in the UK has over 450 homes with 20,000 beds; the numbers are quite staggering with the largest operator accounting for 25% of the available beds in the country but only a little over 2% of the number of care homes. It is worthwhile understanding that the majority of care homes are owned by smaller owner managed businesses, some of which may struggle to cope with the increased cost pressures of the living wage and lack of willingness to pay a fair amount for the provision of care by local authorities.

The largest care home operator has been at the centre of the debate around private investment in care homes with a seemingly over leveraged business ladened with debt; the head of the company states that this assertion is false. The company still faces financial challenges, as all homes do, but is also improving the quality of service it provides across all homes. He also states that only three of the operator’s homes have an embargo in place which stops them from receiving new residents. This represents the lowest figure in the company’s history.

Further losses in its portfolio of homes will only come about if the local authorities fail to pay rates which allow the provider to survive. The leader of the group stated that some local authorities pay less than it would cost to stay in a premier inn for a week at £330/week; he suggests nothing less than £400/week is viable in today’s care market.

Financial pressures reign supreme across the industry and this is despite the increased funds given to local authorities by the 2% increase in council tax for adult social care, which has been taken up by 90% of local authorities. Initial reports suggest that this will not be enough to plug the gap as whilst more funding is clearly available the final decision often lies with the commissioner as to how much they are willing to pay for services.

Granting local authorities increased access to funds to pay for care is a good start; what is required is a fairer commissioning process which provides adequate funding to care operators to allow the business of care to be sustainable.

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