What does the future hold for care homes for elderly people in the UK?

Care homes are struggling to come to terms with fewer local authority contracts and politicians' preference for independent living. How can the sector respond, asks Vern Pitt

(pic: UNP)

Care homes are struggling to come to terms with fewer local authority contracts and politicians’ preference for independent living. How can the sector respond, asks Vern Pitt

The country’s biggest residential care provider, Southern Cross Healthcare, last month ran into serious financial trouble raising fears that similar problems could spread through the sector.

While Southern Cross’s difficulties stem partly from its business model of leasing care homes from landlords, it has also been hit by a fall in local authority referrals, thanks to the policy imperative of delivering care in people’s homes. For instance, the government’s adult social care vision, published last autumn, called on councils to reduce the proportion of adult social care budgets spent on residential care.

“Providers do feel that they are unfairly treated in that the attitude people have to domiciliary care is opposite to care homes,” says Des Kelly, executive director of the National Care Forum, which represents not-for-profit providers.

False dichotomy

He says the portrayal of domiciliary care as an alternative to residential care by policy makers is a false dichotomy. “About 70% of older people in residential care are people with dementia. They are a much older and frailer population than they were in the past,” he says. He acknowledges that anyone could be supported for as long as desired at home but at an unaffordable cost.

Politicians often say the reason for the focus on care at home is because polls consistently show this is what the public want. But Martin Green, chief executive of the English Community Care Association, says that, by asking people how they want to be cared for in future, such polls can be misleading.

“They ask the wrong people at the wrong time,” he says. “If someone had asked me 10 years ago if I wanted to be in a cancer unit I would have said no, but when I had cancer I was pretty pleased I was there.”

The real reason for the policy focus on care in the home is resources, argues Green. “People under-assess need and under-resource care,” he says. “So they take people with high-level needs and give them low-level care.”

Care homes’ public image is also suffering. Media coverage of adult social care frequently focuses on poor residential care, most recently through a campaign on the issue by The Independent, sparked by columnist Johann Hari’s account of his grandmother’s experience in a home.

“Having that perception that the quality of care in homes isn’t very good justifies putting all our efforts into keeping people at home,” says Kelly.

Meanwhile, the price of a bed is being driven down by local authorities. In February, Community Care reported that a fifth of providers of residential or domiciliary care predicted they would go out of business next year because of cuts to their fees.


But many in the sector are sure that homes will survive and prosper.

There is a future for care homes,” says Dwayne Johnson, joint chair of the Association of Directors of Adult Social Services older people’s network. “The vast majority of care homes provide an essential, good quality service.e_SDRq

Sheila Scott, chief executive of care home umbrella body the National Care Association, is less certain: “It will be possible for almost all of them to survive, but only if local authorities are talking to the sector,” she says. “If they are not then homes will close.”

There is agreement that there needs to be a shift to a more flexible model of care, incorporating respite and day care (see overleaf). Scott says homes are uniquely positioned to offer respite, especially if they are having difficulty filling places, and can also loan equipment to disabled or older people in the community.

Care homes can also provide short-term care for people at risk of hospital admissions or those who are being discharged from wards, according to Green. “Residential care needs to be acknowledged as the area where people with very complex high-level needs go and therefore [should be] properly resourced. It’s not nearly as expensive as keeping people in hospitals and that’s where the people with high care needs currently are,” he says.

However, he argues that only with access to NHS funds will this type of provision be possible. The NHS in England has been asked to spend about a £1bn on adult social care in each of the next four years but it is questionable how much of this will reach the residential sector.

Green says that care homes’ core work does not need to change but that they do need to increasingly market themselves to health commissioners by showing how they can prevent avoidable hospital admissions.

Staff training will also be necessary to prepare the workforce for delivering a modernised service. But this will prove difficult if fees are reduced, says Ranald Mair, chief executive of Scottish Care, which represent providers in Scotland. He says, in this respect, Scottish homes are in a better position than English counterparts.

Scottish care homes

“We negotiate care home fees nationally, not with each local authority, and this year we have achieved a stand-still position, while up and down England local authorities are facing cuts,” he says.

Negotiating just once also cuts down on transactional costs for providers. In Wales, the government is also trying to help care homes on this front and is due to launch a standard national contract for commissioners in the coming months.

One thing that sets Scotland apart from England is higher levels of state-run homes. With large rural areas where volumes are low and costs are often high, state provision is likely to continue to play a significant role, says Mair, because it is not viable for private providers to enter the market.

Johnson acknowledges that local authorities in England will struggle to maintain their own provision. “I think that will happen because of budget constraints but also competition and quality,” he says.

Care homes will certainly have to diversify and specialise to handle the impact of public funding cuts. However, as market expert William Laing argues (see column, p23), demand for the sector’s services will remain high: there is a growing market of self-funders; and the number of older people with high-dependency conditions such as dementia is growing.

Until the state can find a more cost-effective way for this group to be cared for at home, it appears there will still be life in the residential care model.

Case study: Wood Grange: responding to clients’ needs

“I really believe we have got a jump on the competition. There’s always a waiting list for the home,” says Sally Davidson, manager of Wood Grange care home in Bourne, Lincolnshire.

In a market where referrals from local authorities, the largest purchaser of care, are increasingly hard to come by, Davidson is struggling to meet demand.

Wood Grange, owned by Barchester Healthcare, is a prime example of a care home diversifying. The home offers day services and respite care to those in the community as well as residential care to 20 people. It regularly hosts other community groups for coffee mornings and meetings and is starting an exercise group.

After consulting clients two years ago, Helen O’Leary, regional operations manager, realised there needed to be more attention paid to the demands of service users who wanted a broader range of care options not the “structured old model” Wood Grange then offered.

She says she’s convinced this old model would not be able to survive in today’s market “It’s right that people should be able to live in the community and therefore when they do come in [to residential care] they are at a later stage and more complex. Also, fewer people are coming into residential care and therefore the service needed to change to meet that,” says O’Leary.

That flexibility does create some staffing challenges. Davidson says she now has over 60 staff at the home working anywhere between eight and 50 hours a week, while previously she employed 48. She says she needs this many to be able to respond to the shift in working patterns.

The staff training was the toughest part of the transition to a community-based model, says Davidson. “Some of the workers had been here for many years and they were set in their ways,” she says. “You had get them to adapt to work hours to meet the needs of the residents rather than themselves.”

The increase in staff is dwarfed by the numbers of extra clients they now work for – more than an additional 50 clients a month.

Davidson says that establishing relationships with people in the community makes transition into residential care easier when this becomes necessary. “Service users and their families have built up a bond with us and families need that trust.”

This is exemplified by the case of Julie Smith, an older woman with dementia who now lives at Wood Grange. Before moving in she came to the home to give her husband David respite from caring for her.

“She went there to give me a break,” he recalls. “She got to meet other people in those days, she could talk reasonably well, now she can’t. It was a break for her and I could go and have a pint.”

He says it was only a small pleasure but one he rarely got to enjoy while looking after her.

David says the decision for her to go to Wood Grange after her condition started to deteriorate was difficult for him but was made easier by the fact he had built up a relationship with the home. He describes the other residents and staff as being more like an extended family.

“I want her to be at home with me, like it used to be, but this is the best I can get,” he says.

The sector analysts’ view: ‘Sector is no longer in decline’

A little more than 50% of the UK’s care home residents are funded by councils, so it’s not surprising that the sector faces challenging times as public expenditure cuts bite, writes William Laing.

But despite the strong policy preference for care at home, I confidently expect there to be more older people receiving care in residential settings in five years time, and yet more in 10, 20 and 30 years time. It may be surprising, but the decline in residential care stopped five years ago.

Though many policy makers will disagree, councils’ ability to divert care to non-residential settings is running out of steam. Councils are still reducing care home placements, but by only 2% last year, and only because the NHS has taken some of the pressure by picking up the bill for increasing numbers of continuing care residents. Overall, including the NHS, publicly funded care home placements fell by only 0.5% last year.

Meanwhile, demand from private payers remains robust. Private payers now account for 40% of residents and we expect this to grow.

The fundamental economics of care homes are unchallengeable. Beyond a certain level of dependency, care is less expensive to deliver in clustered accommodation, whether in extra care, supported living or care homes. The challenge for the care home sector will be to continue to make their settings more attractive and offering genuinely personal care and good affordable standards of “hotel” service.

Providers focusing on the private payer are already doing this. New care homes are being “future proofed” with larger room sizes and more communal facilities.

For the present, however, operators exposed to public sector funding are unlikely to gain much relief as councils continue to pay unrealistically low care home fees. The vast majority of providers will survive through private payer subsidies and by making economies where possible, but the “two-tier” disparities between public and private will grow.

William Laing is director of Laing & Buisson

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