Demand For Care Home Beds Rises In Run Up To Social Care Funding Revamp
As the country awaits word from the government on how it intends to revamp the way in which adult social care is funded, latest research from healthcare intelligence provider Laing & Buisson finds that despite public policy which favours non-residential solutions to support needs of the country’s ageing population, efforts to divert demand away from care homes appear to be running out of steam.
After a year which saw much heated debate on how to shape the future of elderly care, as well as the high profile collapse of Southern Cross, the 2011/12 edition of Care of Elderly People UK Market Survey reports that the number of elderly or physically disabled people living in care homes in the UK rose to 421,000 in the year ending April 2011 – growth of 6,500 beds since 2010.
This is partnered with a reported reduction in the number of homecare hours provided in 2009/10 (the latest available figures) when the number of hours dropped by 8% from 200m a year to 183m per year. While some of this drop may be accounted for in the use of Direct Payments and the ways in which homecare hours are now recorded, it is not clear how to fully interpret this parallel trend at present.
Reflecting the gradual decline in the number of people who qualify for state support – via council reviews of eligibility criteria - the funding profile of England’s care home population continues to move towards private payers in 2011, with some 41% of residents (159,000) now fully responsible for their own fees.
Although state supported residents retain a majority share at 50.5%, the report shows that if quasi-private payers are taken into account – those who pay ‘top up’ fees over and above those met by their local authority – in combination with outright private payers this group makes up the national majority of care home residents at 55%. NHS funded residents also increased their share to 8.5% of residents across all home types and to 20% of those more specialist nursing homes.
With this in mind a key theme of this year’s report is polarisation with very different market conditions being experience by those care groups catering primarily for private pay and those catering for primarily state-paid residents.
Those with high exposure to state-pay – especially in the North and the Midlands – are experiencing a double blow from council fee freezes and reductions in the volume of local authority demand, while conditions in the private pay market in affluent areas remain relatively benign despite the downturn in the economy and the weakness of the housing market outside of London.
Commenting on the evolution of the funding profile, report author William Laing said:
‘Within the state paid sector, most councils froze their baseline fee rates in the face of swingeing cuts in central government funding. In contrast, the private pay market continues to bear significant fee increases. As a result Laing & Buisson has found that care home fees have risen at a surprisingly high compound annual growth rate of 3.5% for nursing care and 4% for residential care over the last four years, with no sign of a break in the trend in 2011/12.
Nonetheless, care home operators with a high level of exposure to local authority funding will have experienced significant pressures on margins in 2011/12, with further pressure expected in 2012/13.’
An unexpected rise in new capacity over the past three years, however, has led to a fall in home occupancy rates with new registration capacity running at about double the loss of capacity from closures.
Once the pipeline of pre-credit crunch projects completed it had been roundly expected that the care home sector would experience a lull in construction. In fact according to the report the reverse has happened and there is, as yet, no sign of any falling off of this drive. At April 2011 capacity stood at 481,100 places in residential settings for long stay care of elderly and physically disabled people, compared to 474,600 in 2010 and up almost 3% over the 2006 figure of 467,600.
Commenting on this growth, Mr Laing said:
‘The unexpected surge in net capacity over the last three years is the most significant trend to emerge from recent Laing & Buisson market monitoring, since it impacts on occupancy rates and profitability at a time when the sector is also being challenged by local authority constraints.
This is the third year in succession in which capacity has edged upwards. Prior to that, capacity had fallen for twelve successive years. If, as this report projects, capacity continues to increase in the future, the end of the first decade of this century will have marked a significant turning point in the history of UK care homes from a declining sector to (once more) a growing sector.’
With the White Paper on adult social care funding expected in the spring, Laing & Buisson’s report warns that in addition to the government reaction to the Dilnot report Fairer Care Funding and a response to the recent Oversight of the Social Care Market discussion paper - which asked whether more should be done to effectively ensure service continuity in the event of financial failures being experienced by large national care providers a la Southern Cross – focus should be directed towards the impact of Direct Payments and personal budgets.
Looking ahead Mr Laing concluded:
‘Widespread take-up of these new funding mechanisms could radically change the nature of homecare and home help services in Britain, though it would probably require a parallel expansion in advice and brokerage services to enable people with care needs to use their purchasing power effectively.
While the potential exists for fundamental change in the social care market, the elephant in the room is that transformation and personalisation has to take place at a time of intense pressure on council budgets. Truly personalised care services are likely to be more expensive rather than less expensive.’
2012-01-13 13:47:09
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