UK: Crisis in care homes could cost the NHS £3 billion

(25 January 2016) According to a report published last month by the independent think-tank ResPublica*, around 37.000 places in care homes for the elderly could be lost over the next five years, unless the government tackles a predicted £1.1 billion shortfall in funding from local authorities.

ResPublica reports that if nothing is done to plug the funding gap, then many care homes will face closure, with the risk that the National Health Service will be forced to take up the slack at a much higher cost, estimated at £3 billion a year. The £1.1 billion shortfall is a combination of increased demand, current underfunding and higher labour costs arising from planned increases to national minimum wage rates (including the Conservative government’s proposed “National Living Wage”(NLW) for workers aged 25 and over **).

Several Four Seasons care homes to close

The conclusions of the ResPublica report seem to be confirmed by events: The Four Seasons Group has just been notified that the sale of the Garvagh Care Home, a privately-owned residential care home in County Londonderry (Northern Ireland), has fallen through and the home will close in May 2016. The sale of three other homes - in Antrim, Ballynahinch and Armagh - is going ahead. Trade Union (TU) UNISON is currently in negotiations with the company and will enter into negotiations with the Northern Health Trust and the Health and Social Care Board in an attempt to the keep this care home from closing. At the same time, TU GMB is seeking urgent meeting with Northern Ireland Health Minister along with senior management.

It is one minute to midnight for the care sector

Back in 2011, the Southern Cross Healthcare home operator collapsed as it could not afford the rent of its care homes (see EPSU’s articles As a result, 750 care homes closed down affecting 40.000 employees and 31.000 older people. At the time, the private sector stepped in and patients were then taken care of. Today, the private sector is losing money and there is no private operator capable of absorbing the coming loss of 37.000 beds – as it is the case today for the Four Seasons care homes. Backing the report Justin Bowden, National Officer for GMB said: “It is one minute to midnight for the care sector. Just as GMB warnings that Southern Cross would collapse were ignored again and again by government, history looks set to repeat itself unless George Osborne (Chancellor of the Exchequer) acts now. This time however we are not just talking about the largest care home provider collapsing, but the entire publicly funded care home and domiciliary care sectors.” GMB on its side, had for some time now been pressing the Northern Ireland Executive and the 5 health trusts to be aware of the financial problems within the UK largest private care home provider.

There is ample evidence that liberalisation and marketisation, privatisation of the health and social services sector as well as public-private partnership as a rule, will undermine the quality of services and they often also fail to deliver on both efficiency and cost, too. EPSU is making a clear case for more resources and (public) investment in the sector. Supporting quality, affordable and accessible social services is an essential investment that brings both economic and social benefits. EPSU has been warning on numerous occasions in the past against the negative impacts of commercialisation, marketisation or of de-regulation on the pay and working conditions, on the quality of the services, on their accessibility, affordability, continuity, etc. Last May, EPSU and ETUC organised a workshop.

EPSU believes top priority should go to developing action plan(s) on “more and better” care services for older people in the context of the EU quality framework on social services.
In 2011, EPSU also issued a report Care Services for Older People in Europe - Challenges for Labour. Elderly care will most probably be one of the key topics for EPSU’s work in social services in 2016.

*the full ResPublica report is to be published in January 2016. It will outline solutions to the crisis facing residential care.

**the NLW rate for workers aged 25 and over starts at £7.20 an hour, an improvement on the current £6.70 but well below the £8.25 calculated by the Living Wage Foundation


An Ageing Population
-* The number of old and frail people will double between 2010-35
-* Over 65s make up about 18% of the population; to rise to 25% by 2050. Nearly 10% of the population is over 75 years old.
-* The population aged 65+ has grown by 47% since mid-1974 = 18% of the total population in 2014
-* Between 2010 and 2035, the number of people aged over 85 will more than double – from 1.4 million to 3.5million

Long-Term Care (LTC)
-* 58% of people aged 60+ have long-term conditions (such as diabetes, dementia) = 70% of total healthcare in England meaning 30% of the population accounts for 70% of spending
-* in the next 30 years: people with dementia will double
-* by 2040: ¼ of people aged over 65 will be cancer survivors
-* Residential care homes look after 1/6 of people aged 65+ = 425.000 people
-* cost of residential care homes: in 2015: £225/day/bed; in 2020-21: £235/day/bed

-* Spending cuts: 90% of local authorities now only provide funding for older people with ‘substantial’ or ‘critical’ needs. The number of over 65s getting public money for social care has fallen by 27%.
-* By 2020-21, there will be a funding gap of £1.1 billion
-* By 2020-21, there will be a 23% shortfall between funding and demand pressures for that year
-* A 15% rise in demand for residential care for older people between 2015-16 and 2020-21
-* A 29% increase in the cost of providing that care from 2015-16 to 2020-21
-* 2011: collapse of Southern Cross Healthcare (SCH) home operator. SHC could no longer afford the rents of its care homes. As a result, 750 care homes closed down, that represented 40.000 employees and affected 31.000 older people
-* The staff cost represents 60% to 80% of the total cost of caring for patient in a residential care home.

* Source: “The care collapse: the imminent crisis in residential care and its impact on the NHS”, ResPublica, Nov. 2015

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