Published : 5 years ago, on 10/09/2019

With a rapidly ageing population, this new government has to stimulate new solutions that can deliver the capacity we need.

By Pete Dowds, CEO of Elder

It is no secret that Britain’s care home industry is on a knife-edge. The Competition and Markets Authority (CMA) noted in its 2018 report the care home sector has an annual funding gap of £1bn. Over 450 providers have failed since 2010, and more will surely follow.

Time is of the essence to find a resolution that delivers and this new government can’t just focus on bailing out a broken system. An ageing population will only ratchet the current pressures. A 2017 study found there’s a need for 71,000 care home places by 2025.

Department of Health data shows care homes can’t respond to the demand in beds. With the best will in the world, the lead time of financing, building and staffing a care home renders the likelihood of meeting such demand unlikely at best.

Many providers are highly leveraged as a result of private equity groups coming into the sector hot in the early 2000s. Aggressive ‘leaseback’ agreements, by which companies opened, sold and leased back homes were often predicated on infeasible returns of 12% or higher.

The result of poor long-term financial planning has already spelt serious trouble for some of the sector’s biggest players, such as Southern Cross and Four Seasons. In macro terms, this has strained supply and impacted investment. In human terms, it has placed great stress on families as they struggle with not knowing whether the home their loved one is in will close.

This parlous financial state has a huge impact on the workforce  — often underpaid and under-appreciated. The National Audit Office has recently found staff turnover in the sector of 28% annually, with a vacancy rate up to three times other sectors. It’s no wonder. Half of care workers earn an average of just £14,625 per year. Luckily, they now have viable a way of staying in the vocation many simply love to be in.

Live-in care is where a carer moves into a recipient’s home, providing one-on-one care. Carers can earn between £550-750 per week. But the benefits don’t stop there. The NHS gains from a range of improved health outcomes, such as 33% reduction in the chances of having a fall, and those receiving care get to stay where they’re happiest; their own home.

This is while passing on a price to the family as little as £695 per week, significantly below the £846 per week the CMA identified as the average self-funder care home fee.

And, importantly for NHS and local authority budgets, live-in care is deliverable now. There’s no large capital investment or shovels in the ground. It’s scalable, sustainable social care that can rise to the historic challenges we’re now facing.

Boris Johnson has echoed the previous Prime Minister by hinting at reform of the social care system. Namely on funding. But any move has to consider the pressures on care homes, and incentivise take-up of alternative options. This can be done by igniting consideration of care options earlier.

A mandatory insurance scheme feels like it’s gaining momentum among policymakers, industry leaders and health care professionals. If this is to be the option, it needs to be implemented in a way that stimulates new solutions.

People should get to choose the type of care they want when they begin paying their premiums — whether in their home, a care home or another form of assisted living. This would make people aware of care home alternatives and ensure they’re more actively engaged in what is a crucial decision.

To include this option would be to revolutionise the sector. We grew by 500% last year, being named the UK’s third fastest-growing company, as more learn they’re able to avoid residential care.

The future of care is a story of personal choice. One of a diversified sector that is able to respond to the huge demand. One of sound finances and fair earnings. One where we look increasingly at community-based solutions. We now need this government to back this vision.