Laing and Buisson: Care homes fee rises exceed inflation

Average local authority fee increases for independent older people’s care homes for will exceed inflation this year, Laing and Buisson said today.

In a report, the market experts said UK care homes have received an average fee increase from councils of 2.6% for 2009-10 but calculated that prices would increase on average by between 2% and 2.5% this year, as a result of the economic downturn.

Laing and Buisson also predicted that homes would increase charges for privately-funded residents by more than the increase they received from councils.

Senior analyst Alex Mitchell said: “This means that efficient operators should on average be able to hold and even improve their margins slightly in 2009-10.”

‘Recession dividend’

Mitchell said that care homes were benefiting from a “recession dividend” that had placed downward pressures on prices. For instance, the national minimum wage, a major cost factor for care providers, is due to rise by only 1.2% this October, from £5.73 to £5.80 an hour.

However, Mitchell warned that this must be set against the “chronic shortfalls” in council fees for care homes which he claimed had existed “more or less since councils took over responsibility for paying for care homes in 1993”.

Wide regional variations

And the figures for this year showed wide variations between nations and regions, with Welsh care homes receiving a 4.6% uplift, Scottish providers 3%, Northern Irish homes 2.9% and English providers just 2.2%. Within England, care homes in East Anglia and Greater London received sub-inflationary increases of 1.4% and 1.6% respectively, compared with 2.8% for the North East and North West.

The survey, which is published in the June edition of Laing and Buisson’s Community Care Market News, also found increasing evidence that councils were increasingly using quality criteria to pay higher fees to better providers and lower rates to poorer performers.

Almost half of councils were using quality criteria, compared with about a quarter last year. Many English councils were using the Care Quality Commission’s quality ratings scheme, which rates providers from zero (poor) to three (excellent) stars, though others were using in-house quality frameworks.

Provider concerns over quality-based fees

Laing and Buisson said this would increase concerns among care providers that the stringency of some quality criteria may lead to a significant number of care homes receiving low fee increases.

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