‘Significant reforms’ needed for care homes to survive, government report warns

Competition and Markets Authority study points to £1bn funding gap and calls on sector to do more to support and protect residents

care home
Photo: Image broker/Rex

The UK care home sector is being propped up by self-funding residents and needs “significant reforms” to survive and grow, a study by a government watchdog has warned.

The report, published yesterday by the Competition and Markets Authority (CMA), pointed to a national funding gap of at least £1bn by 2025 and said many homes faced closure in the medium term.

Fees paid by councils to care providers are already on average 10% below costs, the CMA said. To plug the resulting £2-300m shortfall, self-funders were typically being charged on average weekly fees of £846 in 2016, compared to the average £621 per week paid by  local authorities.

Earlier this year, industry body Care England warned of an emerging ‘two tier’ system in which only those who can afford to pay will be able to access good care. Meanwhile reports by the Care Quality Commission have described the sector as being at a “tipping point” as capacity reduces and need goes unmet.

The CMA’s report also called for greater support and protections for people accessing the care market, whom it said face “many inherent barriers” to making well-informed decisions during what are often stressful circumstances.

Experts welcomed the research findings but called it “deeply unfortunate” that they had been published in the wake of November’s autumn budget, which made no mention of the adult social care crisis.

Last month the government announced it would publish a green paper on the future of older people’s social care by summer 2018, pledging to “build consensus around reforms which can succeed”.

‘Just about covering costs’

The CMA’s report said that, looked at as a whole, the care home sector was “just able to cover its operating costs”. But many providers, it said, were unable to deliver any additional investment meaning they would eventually face the choice of closing homes or leaving the local authority-funded market.

“Our analysis suggests that about a quarter of care homes have more than 75% of their residents LA-funded, and that these are the ones most at risk of failure or exit because of a funding shortfall,” the report said.

While many mixed homes would be able to continue for the time being by charging self-funders more, the CMA added, “there will be a need for additional funding to support further care homes that would not be sustainable without the benefits of this price differential”.

The study made three recommendations towards remedying the situation:

  • Enhanced planning on the part of local authorities to make “accurate and meaningful forecasts” of future need
  • Greater oversight of local authority commissioning arrangements and transparency around pricing
  • “Robust funding principles” for the sector to ensure investors of its future viability, underpinned by a formalised process to provide evidence around care costs to the government.

It suggested an independent body be established in order to support and monitor local authorities and to provide advice to central government.

‘Extremely difficult decisions’

As well as the structural issues facing the sector, the CMA found prospective care home residents and their families were often poorly informed as to the options available to them. This was driven, it said, both by poor information on behalf of providers and by people not wishing to contemplate themselves or their relatives having to go into a home.

“Frequently, decisions on care are faced for the first time following a sudden illness, injury or loss of a carer, meaning they are often made with urgency under extremely distressing circumstances,” the report said. “Once in care, it is very difficult for residents to correct a poor choice. The process of moving can severely impact on a residents’ health.”

The situation was exacerbated, the CMA said, by confusing and poorly signposted complaints systems and by people’s fears of reprisals if they did raise issues. As a result residents were vulnerable to unfair practices, such as being hit with unexpected fees. Where consumer law was being broken, the CMA was now taking enforcement action, its chief executive Andrea Coscelli said.

The CMA’s report made a series of recommendations around improving the system, including requiring councils and the government to provide information to help people navigate it. It said regulators should assess complaints procedures during inspections, and suggested a requirement for care homes to signpost complaints to the Local Government and Social Care Ombudsman – something the ombudsman’s recent annual review said independent providers were becoming better at.

Michael King, the local government and social care ombudsman, welcomed the report’s recommendation for statutory signposting to the ombudsman, saying this would “place the onus firmly on care providers to make this right known to their service users”.

“Our casework shows there is a need for better information to be made available to service users and their families, particularly around care charges, to allow them to make informed choices about care. We are pleased to see the report call for this, and an important review of advocacy support.”

He added: “Above all, we want to see a culture shift in the approach to complaints. We know the best councils and care providers empower their workforce to deal with complaints and to view them as free feedback and an opportunity to learn from their mistakes  – and those of others – to drive service improvements.”

‘United around challenges’

Margaret Willcox, president of the Association of Directors of Adult Social Services (ADASS), said the CMA’s “telling” report underlined the need for social care to be deemed a national priority.

“We recognise the importance of providing information and advice to help people make informed choices about care homes that meet their needs, that making comments and complaints after the upheaval of moving can be difficult and that the capacity to plan for the future and growing need is difficult in the current climate,” she said.

“Balancing the funds available, the price that can be paid to providers, the level of quality and the number of people that can be supported is an unenviable task,” Willcox added.

Izzi Seccombe, chair of the Local Government Association’s community wellbeing board, said the study served as “another powerful warning” around the crisis facing the social care sector. It was “hugely disappointing” this had not been addressed in the autumn budget, she said.

“Councils and providers are united around the severity of the challenges the system faces around care home availability and viability,” Seccombe added. But she said councils could “only do so much” in the face of chronic underfunding.

Martin Green, Care England’s chief executive, said the CMA’s report highlighted that “choice is imperative” yet not always possible because of poor commissioning.

“The CMA recommends an independent body to oversee fees; this body needs to have teeth and the authority to compel Local Authorities to pay,” Green said. “If the market continues without a considerable funding injection or better commissioning practice, the closure of care home providers will limit choice and competition.”

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