Care homes jeopardised by cost squeeze, councils warn

7 Jul 15

Many parts of England could face a shortage of care home beds in future years due to closures triggered by council funding cuts, according to an analysis for upper-tier local authorities.

An examination of the care home market for the County Council Network, carried out by analysts LaingBuisson, found clear evidence that people who met the costs of their own residential and nursing care paid a premium compared to local authorities, after town halls had squeezed costs in response to budget cuts.

So-called “self-funders” pay around 40% extra on a like-for-like basis, across the 12 county authorities participating in the report.

This pricing disparity effectively acts as a subsidy for those being cared for under cheaper deals negotiated by local authorities, but the report concluded that this model will not remain sustainable in the long-term

The number of self-funders is set to fall from next year as more people become part of the local authority system, so care spending can count towards the government’s new £72,000 lifetime cost cap as part of the Care Act. Removal of this cross-subsidy therefore represents an “unsustainable” trend for providers, which could lead to a shortage of beds, the CCN stated.

According to the 12 councils surveyed for the report, in 2014 they paid £236m less than the benchmark cost level – a calculation based on sustainable services with costs allocated on an even basis.

If this is extrapolated to the 37 authorities that are members of the CCN, the gap is forecast to be £630m in 2014, and could grow to £756m by 2019/20 as more people move to within the local authority system.

CCN health and social care spokesman Paul Carter said care homes that are dependent on council-funded residents are already reporting lower profits, and authorities will not be able to meet this £756m gap.

“Counties strongly support the vision behind the Care Act, but further reductions to our budgets and unforeseen consequences from the Care Act may limit our capacity to provide care services to meet the needs of our growing numbers of elderly residents,” he said.

“This research shows that care providers are facing enormous financial pressures and many are looking to leave the marketplace. A sustainable funding settlement for social care is needed, but counties are keen to work with government to find a practical solution.”

The CCN has held talks with the Department of Health about the problem, he said, and will undertake further discussions ahead of the forthcoming Comprehensive Spending Review.

“Sustainable social care funding is integral to delivering the significant benefits through much greater health and social care integration,” Carter added. “Timely discharge from hospitals is dependent upon effective social services in the local community reducing unnecessary additional costs to the NHS.”

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