Councils cut bonus payments for high-quality care homes

Councils have cut back on schemes to reward high-quality care homes while fees have continued to lag behind inflation, according to research from Laing & Buisson.

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Councils have cut back on schemes to pay higher-quality care providers more than their lower-performing counterparts, as the squeeze on fees to care homes continues, research has found.

Less than one in five councils said they were making additional payments to care homes that met quality standards or docking money from those that fell short, according to Laing & Buisson’s annual report on council care home fee hikes. This compares with three-quarters who said that they varied fees according to quality two years ago, a fall that Laing & Buisson described as “worrying”.

Council fee rates for older people’s care homes have increased by 1.6% this year – short of the 2.5% that Laing & Buisson has calculated as care homes’ rate of inflation. Though this year’s fee rise was higher than last year’s estimated 0.3% increase, providers will be disappointed that it has still not matched the rate of inflation, given the string of councils who have been forced to review their fees by the courts in the past year.

In a number of judicial review decisions, the courts have ruled that councils must adequately consult with providers in setting fees and show how their rates meet the cost of care.

Laing & Buisson calculated that fees had fallen in real terms by 4.8% since 2010-11, putting further pressure on care homes’ profit margins. “This persistent chipping away at operators’ margins certainly risks damaging the long-term health of the sector,” said the market analysts’ operations director, Justin Merritt.

Laing & Buisson said providers’ scope for mitigating the impact of a sub-inflationary increase in fees were “very limited”, given that many had already taken decisions to review staffing levels and conditions and diversify their provision into new areas, such as domiciliary care or more complex services. While it expected many care providers to seek to expand their base of private-paying clients, it said this option was also limited for many providers because of their geographical location.

More positively for providers, it found that a third of councils expected to place more older people in residential or nursing homes next year and 42% expected no change in their number of placements.

Commenting on the results, English Community Care Association chief executive Martin Green said: “The care system is in crisis because local authorities are refusing to pay the true costs of care, yet still expecting to get high quality services and the government is guilty of shameful complacency in refusing to find a solution to the long-term care funding crisis.”

Mithran Samuel is Community Care’s adults’ editor.

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