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Crisis in care home sector ‘will cost the NHS £3bn’

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Increasing pressures are forcing residential care homes to shut their doors, potentially leaving health service hospitals to care for older people, claims a report from a think-tank.

According to ResPublica, within five years residential care homes could lose 37,000 beds, meaning the NHS would have to care for older patients with nowhere else to go.

It said cutting 37,000 beds was equivalent to 12,829,750 bed days. The cost of nearly 13 million bed days would be £3bn.

Elderly woman in bed

Hospitals are under pressure from rising numbers of emergency admissions, particularly among frail elderly patients

Crisis in care home sector ‘will cost the NHS £3bn’

In its report – titled the Care Collapse: The imminent crisis in residential care and its impact on the NHS – the think-tank said the impending crisis has echoes of the 2011 collapse of the UK’s then largest care homes operator Southern Cross.

Southern Cross Healthcare ran 750 care homes and employed over 40,000 staff, but the company collapsed in 2011 when landlords took over all its homes after it failed to pay the rent.

ResPublica director Phillip Blond, said: “When Southern Cross failed the private sector stepped in and cared for those left homeless.

“Now, however, with the sector losing money for every funded resident there is no provider of last resort,” he said.

“We fear the worst case scenario is the most likely, that these residents will flood our local general hospitals costing £3bn per year by 2020,” he added.

“For the care sector, which is heavily reliant on its labour force, the national living wage could be catastrophic”

Emily Crawford

ResPublica has predicted the government’s national living wage, which will be brought in on 1April 2016, will also cause significant financial harm to the residential care sector.

The report said by 2020-21 the residential care sector would need an extra £1.1bn to meet demand, of which £382m would be for staff pay rises due to the national living wage. Staff costs are estimated to be between 60-80% of the total cost of caring for a patient in a residential home, it noted.

Emily Crawford, report author and research associate, described the national living wage as a “great step forward”, which would help an estimated six million or more low paid workers.

”But for the care sector, which is heavily reliant on its labour force, it could be catastrophic,” she said. “By 2020-21 we predict that a third of the funding gap will be because of the rise in the cost of paying staff the national living wage.”

The report noted a number of other significant factors contributing to the crisis, including an ageing population with complex long-term conditions.

Over 65s currently make up about 18% of the population, but this is set to rise to 25% by 2050. Nearly 10% of the population is currently over 75.

In addition, the report highlighted that 70% of the total health and care spend in England was on long-term conditions, meaning 30% of the population accounted for 70% of the cost.

In contrast, 90% of local authorities now only provide funding for older people with “substantial” or “critical” needs, resulting in the number of over 65s getting public money for social care falling by 27%.

elderly care

elderly care

The cost of care is increasing

The report authors called a fundamental shift in the way residential care is commissioned and paid for.

Justin Bowden, national officer for the GMB union, backed the report’s findings and warned that it was “one minute to midnight for the care sector”.

“This is not some unexpected, overnight phenomenon catching everyone unawares, this has been a slow motion collapse,” he added.

“Local authorities are unable to act as ‘lenders of last resort’ and step in, so the NHS will be forced to try and fill the giant hole created by 37,000 less beds in the care sector for our elderly and vulnerable,” he said. “The effects will be immediate and crippling.”

Dr Chai Patel, executive chair of HC One, the UK’s third largest care provider, said: “Our care staff do an incredible job day-in day-out and deserve the living wage, but it must be properly funded.

”It is one minute to midnight for the care sector”

Justin Bowden

“This report shows that unless the chancellor takes urgent action to address this looming crisis, tens of thousands of older people will lose their homes and be forced into the NHS,” he said.

George McNamara, head of policy at Alzheimer’s Society, said it was “undeniable” that the UK’s social care system was in crisis.

“Wave after wave of financial cuts are diminishing the support available to the most vulnerable people in society,” he said.

“The social care funding gap is growing by £700m each year, so this report only serves to highlight further the devastating impact that these relentless financial cuts are having,” he said.

“We need a new settlement for residential care and one that crucially meets the care needs of an ageing population. This needs reform in the way we fund care, as well as how it is delivered,” said Mr McNamara.

He added: “The forthcoming spending review provides a prime opportunity to address this urgent need.”


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Readers' comments (1)

  • Living wage. Pardon me but nursing and care is not and should not be the second sister to any profession. Investing in a good care team is paramount to quality outcomes and quality care. instead of paying so much on agency staff I would pay staff more than the living wage ,maintain motivation and self worth of the care staff and nurses. i am however living in utopia as operations managers won't let this happen

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