Councils ease pressure on care homes with near-inflationary fee rise

Councils have relieved the pressure on care home providers with a near-inflationary rise in fees this year, market analysis firm Laing & Buisson has said. Fees for older people’s care homes across the UK have risen by 1.8% for 2013-14, just below the 2% Laing & Buisson estimate is necessary to keep up with care home cost inflation.

The figures from its annual survey of local authority baseline fee rates suggests an easing of the pressure councils have exerted on care home fees in recent years in response to tightening budgets. Last year, fees rose by 1.6% on average, against an inflation rate of 2.5%; in 2011-12, fees rose by just 0.3% while inflation was 2.8%; there was also a real-terms cut of 1.4% in 2010-11.

Based on a sample of 133 of the 207 relevant authorities, Laing & Buisson found that 31 councils were freezing fees, 31 others were giving sub-inflationary increases, 56 were providing rises of 2-2.9% and 15 were raising fees by 3% or more. It also found that the volume of care home placements was likely to remain stable through 2013-14.

No sigh of relief from care homes

While Laing & Buisson said the figures were relatively positive for the care home sector, it warned: “There will be no collective sigh of relief from care home providers, since none of the ground lost in the previous three years has yet been regained and there remains no sign of any inflation busting increases in the years to come, with councils’ budgets expected to remain under severe pressure.”

It predicted that, at best, fees would remain static in real-terms in 2014-15.

The easing of the pressure on fees follows a number of judicial reviews that care home providers have brought against councils for failing to consult on fee changes or take into account the actual costs of care when setting fees. The Association of Directors of Adult Social Services has also warned that councils’ ability to extract efficiency savings from care fees without hurting quality has reduced considerably.

Councils reduce commissioning of home care

In a separate report published this week, Laing & Buisson found councils had reduced the volume of home care they commission for the second year running. Prior to the previous year’s reduction, commissioning volumes had increased for 15 successive years.

Councils funded 3.62m contact hours of home care a week in 2011-12, down from 3.85m a week the previous year, found Laing & Buisson’s domiciliary care market report 2013. It said most of the reduction could be attributed to the increase in the number of people using direct payments; any purchases of home care by this group would not show up in the figures for council-purchased hours.

The independent sector’s share of the council-funded market has risen to 89% – up five percentage points on Laing & Buisson’s previous figure – with council in-house teams taking an 11% share, with their work primarily focused on reablement. The report also noted a shift from block-contracting of home care towards spot purchasing against framework agreements, a trend that is leading to downward pressure on the price of services.

Most home care agencies surveyed for the report (83%) expected an increase in the size of the market in private payers, due to the ageing population and squeezes on eligibility and the size of personal budgets from councils that were requiring people to fund care privately.

Laing & Buisson also found a significant increase NHS-funded home care, focused on avoiding hospital admission and supporting hospital discharge.

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