Cash-strapped councils and the NHS have put pressure on providers to bring down costs leading to the loss of beds, particularly in less affluent-areas, a LaingBuisson report out today claimed.
Although the value of the care home market as a whole has gone up 3% over the last five years to £15.7bn – about 1% of GDP – in 2016, this is mainly driven by privately paid for services.
“The private-paid side of this market (177,000 residents in independent sector homes) is robust and profitable”, LaingBuisson concluded, “particularly in the affluent south”.
“In contrast, the state-paid side (220,000 residents in independent sector homes) continues to struggle under a cloud of uncertainty and risk, as cash-strapped councils and the NHS continue to put pressure on providers’ prices and margins and capacity slowly drops out of the market.”
William Laing, author of the report Care of Older People, said: “A generalised bed shortage has been averted in the state-pay side of the market to date because local authorities have succeeded in containing placement numbers.
“If they cannot continue to do this in the future, the natural conclusion is a capacity crisis driven by inadequate investment incentives at a time when underlying demographic demand is rising.”
He said although a crisis “would be painful” it might be the only way to drive up state-paid prices to sustainable levels.
The report also noted nursing homes in England had benefited from a 40% increase in NHS Funded Nursing Care (NHS FNC) contribution in 2016/17 – from £112 per week to £156.25.
“The NHS FNC hike, which continues into 2017/18, will be much more important in sustaining the state-paid market than the uplift in funding for social care announced in the March 2017 Budget,” Laing said.
Chancellor Philip Hammond announced £2bn would be ploughed into adult social service in England over the next three years in his Budget in March.
