Care Homes – A Funding Dilemma

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Care homes

The 2017 autumn budget was greeted by cheers from some areas of society: first-time house buyers can now avoid the stamp duty tax, the young train railcard has been extended from 16-25 to 16-30, and universal credit claimants can expect to have the support they need within five days. Other areas, however, were left waiting for their moment in the spotlight. Notably, calls for funding of child and adult social care appear to have been ignored; healthcare career site Community Care commented “Chancellor Philip Hammond [mads] no reference to pressures in the system.”

The healthcare funding approach from the UK government appears to be leaning heavily towards the reactive, as Chancellor Hammond dedicated £2 billion to social care in the March budget (2017), half of which was given to local councils for immediate use. The remaining £1bn is to be added to the social care budget for the next two years, reported Community Care. But is it enough?

Care Homes – A Funding Dilemma

Part of the creaking landscape of British social care is residential care homes. These are sometimes council-funded, sometimes privately run homes for seniors who no longer can or no longer want to live without some form of social assistance nearby. Care home operating costs are around £353 per week per resident for purely residential use. That cost rises to £459 if the resident requires additional nursing care.

When investigating the funding of care homes, it’s clear to see where problems arise. Councils take on responsibility for arranging care for those deemed in need by social services; the costs of such care can become very steep, very quickly due to our ageing population; this comes at a time when councils find themselves with shrinking budgets (“budgets have been slashed by around a quarter since the start of the decade,” reports the Telegraph), which happens to coincide with an increase in the living wage, resulting in increased operating costs.

To avoid caving into the various pressures, some care homes now charge self-paying residents (non-council-funded) extra to cover costs of council-funded residents. Councils can demand lower prices for residents funded through social services which results in a hit on care homes’ profits. This loss is then being passed over to self-funded residents.

Addressing these particular issues, Age UK’s 2016 report titled “The Health and Care of Older People in England” stated that many local authorities are dealing with care home closures or with care homes handing back council contracts; unfortunately, this makes finding local residential care homes more challenging and often results in elderly people being moved far from their prior place of residence. The handing back of contracts appears to be an attempt by care homes to circumnavigate the draining costs of council-funded residents by making the home available only to those able to directly pay for the service.

Is Private Investment the Answer?

Healthcare workers will almost certainly be aware of the recent funding issue with the Four Seasons Health Care group. It’s the UK’s largest care home provider, and it’s creeping ever-closer to administration. The original takeover was facilitated by taking out a large percentage of the cost of the purchase of Four Seasons Health Care in loans. Interest payments began to escalate, and the company found itself “struggling to meet a £26m debt interest payment due on Friday [15th December 2017],” reported the Guardian. Adding to the woes of a financially suffocated sector appears to be a lack of foresight and regulation regarding purchases of this importance. As financial journalist Nils Pratley said in the Guardian: “It’s a shocking way to fund provision of care homes for the elderly.”

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