Beds crisis warning as self-funders pay more

Care homes will run out of beds for elderly people within two to three years as the sector heads for a ‘widespread capacity crisis’, according to market analysts LaingBuisson.

And average self-pay fees for nursing care have risen to £1000 a week, with some areas charging as much as £1200.

Bed shortages would hit poorer older people hardest because the squeeze on local authority budgets would affect those with fewer assets and those in the least affluent parts of the country.

Although local authorities were given an extra £2 billion for the next three years in the budget, LaingBuisson say the government may take comfort from a false assumption that a crisis has been averted.

About 2,000 beds are being lost each year, especially in poorer areas, as dozens of care homes close because councils, and in some cases the NHS, cut fees they are willing or able to pay for care.

Previous reports have suggested that many more ‘zombie’ care homes, providing beds to council-funded residents, are close to bankruptcy as councils insist on lowering rates.

LaingBuisson says that the market for state-funded care beds, which supports 220,000 residents at care homes in the independent sector, faces a ‘cloud of uncertainty and risk’ as prices and profit margins are driven lower and capacity shrinks, despite growing demand. Higher payroll costs from the national living wage will put extra pressure on care home providers.

LaingBuisson also say that nursing care has broken the £1,000 barrier and has reached £1,200 in some places. 

Weekly fees for self-funders in residential care homes without nursing care have reached £700 on average, compared to £486 for state-funded residents. 

Earlier this year a report by parliament’s Communities and Local Government Committee found that self-payers paid an average of 43% more than state-funded residents for the same room and care.

William Laing

William Laing

William Laing, author of the report, said: “There is a danger that Treasury officials may conclude ‘job done, profitability restored’. Such a conclusion would be mistaken, however, because financially stretched local authorities are likely to continue to offer only sub-inflation fee uplifts to care homes.

“A generalised bed shortage has been averted to date because local authorities have succeeded in containing placement numbers. If they cannot continue to do this, the natural conclusion is a capacity crisis.

“A severe and widespread capacity crisis would be painful, not least for people seeking care, but it could be the only way of re-establishing investment incentives, by driving state-paid prices up to sustainable levels.”

The market for privately funded places, which comprises 177,000 care home residents, is robust, profitable and growing at a rate of six per cent a year.

The report also notes the potential risk from the study by the Competition and Markets Authority into instances of excessive charges, long notice periods and difficulties when a resident moves.

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