A view from the top
Mark Aitchison

Mark Aitchison is Chief Executive Officer and Group Finance Director at Colten Care.

Reflections on the last decade

When you look at all the challenges confronting the sector, you can’t help but conclude that we’ve created all the conditions for a perfect storm.

There’s no question that the Care Quality Commission (CQC) and its inspection regime has raised the bar for elderly care, making a much clearer and easier-to-understand rating system. Providers’ care standards are highly-visible and the pressure to maintain and improve has had significant cost implications for many operators.

An increasing number of care homes are no longer providing nursing care. It is considered too difficult; be that recruitment, payroll cost, training etc. We have this paradox whereby there is an increasing demand for nursing care, but operators are withdrawing from its provision and passing the problem back to the NHS. Many providers are struggling with additional costs, such as the National Living Wage, apprentice levy and pension obligations. In recent years, a conservative estimate of the increase in an operator’s annual payroll cost would be more than six percent.

Many local authority-run care homes have closed due to a combination of financial reasons and that they no longer provided suitable accommodation and overall facilities. Local authorities effectively outsourced the provision of elderly care to the private sector.

Consequently, there are a lot of operators now who are heavily reliant on local authority-funded residents. At the same time, the fees paid to these operators have declined in real-terms, making it very difficult for many operators to meet and maintain CQC’s standards.
As evidenced by the recent cross-party report by the Communities and Local Government Committee, care providers have been advised to subsidise fees for local authority placements by charging higher rates for private clients receiving essentially the same accommodation and services. LaingBuisson recently estimated privately-funded residents are subsidising others at an average around £8,000 p/a. This is neither acceptable nor sustainable.

More people are living to an old age and with that comes increasing complexity of age-related illnesses. We have seen, and will continue to see, an increasing need for care homes to be registered for nursing. The majority are not, and we cannot look long-term to the nursing element being provided by the NHS by means of district nursing services. These services are already stretched to meet the needs of those living in their own homes.

Rising expectations, increasing regulatory demands and costs and reducing numbers of registered nurses, combined with unrealistic local authority rates and reducing numbers of nursing homes, brings into question the long-term viability of many providers. While we all saw the consequences of the Southern Cross collapse, I am not convinced the lessons have been learnt.

Projections for the next decade

Elderly care is a political hot potato, but one political parties must address. We have an ageing population, with complex needs and this issue is not going to go away, indeed it is likely to get worse.

70% to 75% of providers are rated Good. As a sector, we should pat ourselves on the back as this is a significant achievement given the challenges. However, with ongoing financial and resourcing issues, sustainability of these standards will be a major problem for many.

We must address the lack of nurses. There is a stigma about working in the care home sector, with some regarding it as a backwater. We need to engage with nurses at all levels, newly-qualified through to experienced, and proudly highlight the opportunities and career satisfaction that come from working in elderly care.

The sector faces increasing costs. One of the most obvious is the National Living Wage. For employees over 25 years old, it is projected to rise to at least £9 per hour by April 2020. This is a 20% increase over the next three years.

The current situation isn’t sustainable and doesn’t enable operators to plan for the long term. Local authorities must pay a fair price for care. After all, many moved out of providing care because they could not do it cost effectively. Expecting privately-funded residents to subsidise is morally reprehensible.

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