Local authorities are underfunding care homes for the elderly to the tune of £1 billion a year according to a detailed market study by the Competition and Markets Authority.
The authority has identified that self-payers in care homes are being charged 40% more for their care than local authority funded residents.
The CMA is also planning enforcement action against some care home providers that have been unfairly charging upfront fees and charging for periods after the death of a resident.
After a year-long study into the care home industry, the CMA says the average weekly charge for self-funders is £846 – 40% more than local authority rates. It meant private individuals were effectively paying a £1bn subsidy every year to keep the ailing sector afloat.
The authority identified two broad areas where they found problems in the market:
- Those requiring care need greater support in choosing a care home and greater protections when they are residents.
- The current model of service provision cannot be sustained without additional public funding; the parts of the industry that supply primarily local authority-funded residents are unlikely to be sustainable at the current rates that councils pay. Significant reforms are needed to enable the sector to grow to meet the expected substantial increase in care needs.
The CMA wants governments to work with the NHS, councils, care home providers and the third sector to deliver a sustained and coordinated programme to help people make good decisions about their care needs. It should focus on:
- Providing people with good quality, relevant and timely support when they are making life-changing decisions about care.
- Helping people quickly and easily identify the relevant, local care options that are available to them.
- Encouraging and helping people to prepare and plan for future care needs.
The CMA says the funding model for care homes is not sustainable especially as the need for care homes will grow in line with the increase in an elderly population.
While the CMA is only planning to take action against a few operators over upfront fees and post death charges, it has warned other operators to take note as the practices could be in breach of consumer protection law. The CMA said it was prepared to take legal action if care homes failed to respond.
CMA chief executive, Andrea Coscelli, said: “Care homes provide a vital service to some of the most vulnerable people in our society. However, the simple truth is that the system cannot continue to provide the essential care people need with the current levels of funding.
“Without substantial reform to the way that councils plan and commission care, and greater confidence that the costs of providing care will be covered, the UK also won’t be able to meet the growing needs of its ageing population.
It is essential that residents and their families can make informed choices, understand how these services will be paid for, and be confident they will be fairly treated and able to complain effectively if they have concerns. We are now calling on care homes, councils and government bodies to help people navigate what can be a confusing system.”
And on action against care homes, he added: “Of all people, it is especially important that care homes residents are treated fairly and have the full protections of consumer law. We will be taking steps to assist care homes in understanding their obligations, but we are also taking enforcement action now on some issues where we believe the law is being broken.”