Care homes are under increasing pressure as council fee rates fail to keep pace with inflation, market analysis firm LaingBuisson has said. The fees for older people’s care homes have risen by just 1.7% this year, falling well below the firm’s 2.4% estimate necessary to keep up with care home cost inflation.
Last year there was a near-inflationary rise of 1.8%, following three years in which local authority fees had not kept up with inflation, which slightly relieved the pressure on providers, LaingBuisson found. However, the figures from this year’s annual survey of the usual costs UK local authorities pay for care suggest the gap is widening again due to the continuing impact of council budget cuts, with 73 of 143 councils sampled giving a rise of below 2%.
LaingBuisson found that 21 were freezing fees, 31 had provided a rise between 2 and 2.9% and just 17 had increased fees by 5% or above. Of the remaining 65 UK councils, 23 said they had not yet set new fees and the others did not respond.
The results also showed that a number of authorities in the West Midlands had increased fee rates by 5% or more and Solihull stood out as giving a comparatively “enormous” rise.
But the firm warned that the new findings signal the continuation of a “dangerous trend”, which has seen fee rates fall significantly since 2010-11. It said that this would add to the financial concerns already facing providers, including the recent decision to introduce special measures for failing care services. LaingBuisson predicted that, at best, fees will remain static in real terms in 2015-16.
David Pearson, president of the Association of Directors of Adult Social Services, said in response to the survey: “Laing and Buisson acknowledged a small uplift last year, demonstrating a willingness to increase fees to providers where possible. However, as the National Audit Office report published in March 2014, said, ‘need for care is rising as public spending is falling, and there is unmet need’.
“Councillors and providers alike are experiencing the challenge of reduced funding whilst need increases. We advise local authorities and social care providers to work together and plan for services in their area taking account of the costs of local care.”
A Local Government Association spokesperson said: “Local authorities work alongside providers to agree fee levels that reflect the stark financial pressures both are facing. Cost models are also being developed to enable greater understanding or the demands facing councils and providers.”
The survey also looked at the number of councils using quality criteria to pay higher fees to well-performing care homes and lower fees to poorly performing ones. It found that 12% of council respondents made additional quality-related payments, with the 32 Scottish councils making up the majority of these.
This data compares with three-quarters of local authorities that claimed to offer quality payments in 2010. LaingBuisson said this change was due to the fact that many of the historic quality payments were based on the Care Quality Commissions now defunct ‘star ratings’ system.
LaingBuisson concluded that there might be a market shift in favour of providers before the end of the decade, but in the meantime any care homes heavily reliant on council funding would have to mitigate the impact by making savings, including to staffing.