Analysis

How care homes are being short-changed

As care homes struggle to make ends meet, research shows those who pay for their own care may also be topping up fees for state-funded residents.
Care_Crisis

As care homes struggle to make ends meet, research shows those who pay for their own care may also be topping up fees for state-funded residents

Four in ten care home residents in England pay the full cost of their care. But new research from analysts LaingBuisson suggests they may also be paying for the care of those who get help from the state.

LaingBuisson studied data provided by NHS Digital and found the average fee paid by councils was 486 100 less than the minimum needed to run services.

The analysts said this means the market is being short-changed to the tune of 1.3 billion a year, with the inevitable result that the cost is being borne by self-funders.

486

per week paid by councils

...

As care homes struggle to make ends meet, research shows those who pay for their own care may also be topping up fees for state-funded residents

Care_Crisis
People self-funding care home places fear they are subsidising other residents. Picture: iStock

Four in ten care home residents in England pay the full cost of their care. But new research from analysts LaingBuisson suggests they may also be paying for the care of those who get help from the state.

LaingBuisson studied data provided by NHS Digital and found the average fee paid by councils was £486 – £100 less than the minimum needed to run services.

The analysts said this means the market is being short-changed to the tune of £1.3 billion a year, with the inevitable result that the cost is being borne by self-funders.

£486 

per week paid by councils for care places

LaingBuisson founder William Laing says: ‘The entire sector is being kept afloat through cross-subsidies from residents who pay privately.

‘The £1.3 billion can be viewed as a hidden care tax that government and councils are content to see private payers contribute to because it keeps mixed-funding homes in business. The figure equates to about £8,000 a year on average per resident. And we have conservatively estimated the shortfall.’

Tipping point

The findings raise questions about the sustainability of the market. Last autumn the Care Quality Commission (CQC) warned that the care system had reached a ‘tipping point’.

It is easy to understand why. The number of care homes has fallen by almost 1,500 to 16,600 over the past six years as providers have struggled to stay afloat.

The CQC has also warned about problems in recruiting nurses to care homes with nursing. Vacancy rates are running at about 10%.

£590

per week – the minimum needed by care homes to generate a ‘reasonable return’

This situation is not helped by a high turnover of staff. About one third of the 50,000 nurses in the sector have changed jobs in the past 12 months.

With the effect of Brexit on non-British European Union workers remaining unknown, there are fears that the situation could get even worse.

Jane Buswell, an independent nurse consultant and member of the British Geriatrics Society nurses and allied health professionals group, says: ‘It’s a difficult situation. The NHS is always able to attract staff and so turnover is high. This is not good for the sector. It is really gloomy.'

Incentives

Ms Buswell adds: ‘You hear of nurses willing to move for just a little financial incentive – an extra 50p an hour for example. Larger homes are resorting to making incentives, such as childcare vouchers, but smaller homes don’t have the financial resources to do this.

‘High staff turnover destabilises the sector. Care homes with nursing are closing or de-registering. This means community nursing teams are left to support care homes and they are already stretched.’ 

Royal College of Nursing professional lead for older people Dawne Garrett agrees, highlighting the huge fall in district nurse numbers over the past few years – a 28% fall since 2009. ‘Those teams are really stretched.’

But she also says the fall in nurse numbers is putting those nurses left caring for residents in an awkward situation.

‘It’s having an impact on relationships. Self-funders and their families hear about it and start to think they’re subsidising those who get help from their councils.

‘They could start to feel they should be getting more from those who work in homes, which would put nurses in difficult positions.’

Two-tier system

Martin Green, chief executive of Care England, which represents care homes, fears that the shortfall in fees will create a ‘two-tier’ system, with providers in poorer areas eventually walking away because of their greater reliance on council-funded places.

This would affect hospitals, he says, because they would have fewer options for discharging older, frail patients.

£1.3bn

funding gap for care home sector from under-investment

Professor Green does not blame councils, however. He says: ‘Local government has been under-funded for years. The government points to the things it is doing with council tax and transferring NHS money, but these are not enough. Councils do not have enough money and have been left with little option.’

Unsurprisingly, local governments are making a pitch for more funding. In a pre-Budget submission to the Treasury, the Local Government Association (LGA) says the continual underfunding of social care makes it ‘impossible’ for local authorities to fulfil their legal duties under the Care Act.

The LGA estimates that, because of wider cuts to funding, the overall funding gap in social care will be £2.6 billion by 2020, even with the extra money brought in through the council tax precept and Better Care Fund. Councils are spending £16 billion a year.

LGA community wellbeing board chair Councillor Izzi Seccombe says the government must address the situation and ‘fully fund social care if we are to ensure people can live independent and fulfilling lives’.

While the LaingBuisson report highlights the situation in England, the problem is repeated in Northern Ireland, Scotland and Wales. There are big regional variations in self-funding of care varying from under one in five in the north east of England to more than half in the South East.

One in three self-fund in Scotland, one in four in Wales and one in six in Northern Ireland.

What the government is doing about care
  • Better Care Fund: the aim of this £3.8 billion fund is to encourage collaboration between councils and the NHS. Introduced in 2015 and funded mainly from the NHS budget, it is due to increase to £1.5 billion by 2020.
  • Council tax precept: local authorities were told they could increase council tax by 2% a year during this parliament. In the first year, 95% of councils did so, raising just over £380 million. Before Christmas, in an attempt to get money in more quickly, ministers said the precept could be increased to 3% over the next two years.
  • Cap on care costs: a cap of £72,000 for care over the age of 65 was proposed by the previous coalition government. The policy was due to be introduced in 2016, but it has now been delayed until 2020. There is some scepticism about whether it will ever be introduced given the pressures facing the sector.
  • Local government funding: during the last parliament, central government funding for councils fell by over one third in real terms. Councils prioritised social care by making big cuts in other budgets, but spending still fell by more than 6% between 2009-10 and 2015-16 once inflation was taken into account.

 

Better care fund ‘fails to stem hospital workload’

Plans to get councils and the NHS working together more closely have failed to have the effect on hospital workloads that had been envisaged, according to the National Audit Office (NAO).

During its first year, the Better Care Fund was expected to have cut the number of hospital admissions by 106,000, but instead it went up by 87,000.

The number of delayed discharges was meant to drop by 293,000 days, but actually rose by 185,000.

The NAO report, Health and Social Care Integration, states that there have been some good projects on a local level, involving care homes, community nursing teams and home care, but that it remains to be seen whether these will have the desired effects nationally.

NAO head Sir Amyas Morse says: ‘Integrating the health and care sectors is a significant challenge in normal times, let alone at times when both are under severe pressure.’

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