Straight Talk
Kerry Dearden • Commercial Director • The Orders of St John Care Trust

Kerry Dearden discusses the funding challenges facing the care home sector.

1948 was a pivotal year for healthcare, witnessing the launch of the NHS and implementation of the National Assistance Act. The principle of the former was to bring free healthcare to all with funding via taxation, and the latter identified 42,000 people as needing ‘care and attention’ delivered through a residential care home. At the time, local authorities could levy means-tested charges for residential and community services but not healthcare.

Since then, funding principles have remained largely unchanged – the NHS provides services that are free at the point of delivery and local authorities fund social care for those who cannot afford to fund it themselves, but people with financial means pay for their own social care. Around 400,000 older people live in a care home today.

The sector has also seen numerous Government papers, consultations and independent commissions. These have made useful recommendations regarding underfunding, caps on care fees and a lack of healthcare integration, but despite this, gross underfunding continues and is at a cliff edge. Social care funding continues to be the poor relation in terms of investment despite it being needed for the most vulnerable in society.

Added to this, life expectancy has increased for both men and women, many of whom now have multiple illnesses and a growing dependency on the healthcare system. Further, lifestyle changes like greater alcohol consumption, smoking, poor diet and lack of exercise place an extra burden on the system. Expectations have also changed; people demand more and have a louder voice, expecting to receive person-centred care.

This demand is set against a backdrop of a growing number of care homes for the elderly becoming insolvent. This means that the question is not if the sector is in a crisis but when it will go over that cliff edge.

Providing an Outstanding quality of care requires a sustainable workforce. However, at any one time there are approximately 80,000 social care vacancies in England and around 27% of employees leave the sector every year, generating a heavy reliance on agency staff.

At The Orders of St John Care Trust, we support the principles of the National Living Wage (NLW) especially for our dedicated workforce in health and social care, but the question remains: how will the sector fund the 17% (£1.25/hour) increase to the NLW expected by 2020? Since 2016/17, the sector has already needed to find an additional £600m. Further pressures seem inevitable given the likely impact of Brexit as carers and nurses decide not to move to the UK.

The emergence of the ‘two-tier’ system of homes is evident within the sector. The new care homes and/or villages are predominantly being built for those fortunate enough to be able to pay for their own care, as only these fee rates provide the necessary return on investment. The Care Act states that people have a choice of residential accommodation but in reality, local authority fee rates do not even cover basic provision of care costs. This means those funded by the local authority have access to a diminishing number of services.

Providers who predominantly operate in the local authority sector are at increasing risk of becoming insolvent if they do not diversify quickly, unless the funding regime changes.

Recently, we’ve seen the impact of using funding from private equity, but for us, the very high interest rates and terms are an unsuitable route to support a sector that cares for the vulnerable. There is a place for high-end homes for those who wish and are able to pay to live there, but for the rest of the sector there is insufficient funding to support a third party’s requirement for investment returns.

It is obvious that the sector has structural funding problems, and one cannot ignore the volume of media coverage on this topic. Such coverage has a negative effect on how the sector is perceived by financial providers, vulnerable people deciding on long-term care solutions, and on the career choices of potential employees.

An answer to this problem is needed quickly and whilst we wait to see what this summer’s Green Paper brings, experience indicates that we shouldn’t be holding our breath for a resolution on the funding crisis. However, I do hope that all political parties finally put the needs of the nation’s most vulnerable citizens first.

Kerry Dearden is Commercial Director at The Orders of St John Care Trust. Email: enquiries@osjct.co.uk Twitter: @DeardenKerry

Do you have a burning issue you’d like to share with our readers? Drop Emma a line at editor@caremanagementmatters.co.uk

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