News Councils rely on ‘hidden tax’ on older care home residents


The funding profi le of older residents of independent sector care homes is continuing to shift slowly towards private pay,


according to the latest research from healthcare intelligence provider Laing and Buisson. The latest edition of the Care of


Elderly People UK Market Survey 2012- 13 shows that 175,000 older residents (43.4 per cent) paid the full costs of their long term care fees in 2012. A further 56,000 (14 per cent), while being supported by councils, also relied on ‘top-ups’ from family or friends. This means that a total of 231,000 older residents were paying in full or in part from their own or their families’ resources – a record high of 57 per cent of all older residents of independent sector care homes in the UK.


The remaining 43 per cent of residents either had their fees paid in full by councils or by the NHS under the continuing healthcare programme. Laing and Buisson chief executive,


William Laing, predicted a further shift to private pay in the future. He said: “The private payers’ share is projected to continue growing in the future as the rate of owner occupation continues to expand among the very old population at risk of entering care homes. Meanwhile, the quasi-private, top-up market will be reinforced by the minimal or zero local authority fee uplifts which look likely to continue in the medium term.” The report fi nds wide regional variations with a much higher proportion of ‘pure’ private payers in affl uent areas of the country. With the per week fees being paid by councils either frozen or subject to very minor increases, the gap between what councils pay and what private payers are being asked to pay is opening up to an alarming extent.


6 Care Home Management | March//A


On average, English councils are paying just £480 per week for residential care in 2012/13, approximately £50 - £140 less than the ‘fair market price’ range of £528 – £623 calculated by Laing and Buisson. Mr Laing commented: “The reality is that independent care home providers have to rely more and more on cross subsidies from private payers. Without these subsidies, large numbers of care homes would be literally bust. It is understandable that cash-strapped councils are seeking to pay care homes as little as they can, since this is now the biggest single cost that councils have to bear, but it needs to be recognised that this amounts to a ‘hidden tax’ on private payers, who are in effect bearing the brunt of austerity measures.”


Addressing the long term funding debate, the report says that implementation of the Dilnot proposals would reduce the burden on private payers and their families, but it will by no means remove it, because the proposal is that only ‘care’ costs will be paid by the state once a cap is reached, leaving the individual to pay for ‘hotel’ and other costs which are included in care home fees. For the fi rst time, the report has split care home costs into their component parts for a care home meeting all the latest physical and other standards. On these fi gures, residents and their families would under the Dilnot proposals still have to pay £399 - £418 per week in care home fees on average, even after the state picks up the full cost of ‘care’. In affl uent parts of the country the costs to the individual will much higher. It would still be necessary post-Dilnot, for most private payers entering care homes to sell any house they own to pay for fees - either at the outset, or at death for those benefi ting from deferred payment arrangements.


There are also hidden dangers from Dilnot for care home operators,


April 20 2013


according to the report. In particular, moving the upper limit of the asset threshold from £23,250 to £100,000 would mean that large numbers of care home residents who are presently private payers would be drawn within the ambit of local authority payment, meaning that a signifi cant proportion of the premium fee rates which are presently needed to cross subsidise inadequate local authority fee rates may gravitate towards the low fee regime of councils.


Elsewhere the report once again shows that, despite public policy which seeks to divert elderly care away from residential settings, the overall number of people being supported in their older age in care homes is rising. In 2012 there were 432,000 people in all residential settings compared to 422,000 in the previous year, a growth of 2.2 per cent.


This fuelled an occupancy rate growth in the year taking it to an average 89.9 per cent in 2012, compared to 88.5 per cent in 2011. Mr Laing concluded: “A two decade declining trend in the volume of demand appears to have been transformed into a rising trend. Independent sector capacity from new registrations continues to run at about double the loss of capacity from closures, making this unexpected surge one of the most signifi cant trends to emerge from recent marketing monitoring. “Without rising demand the additional capacity would impact negatively on occupancy rates and profi tability at a time when the sector is also being challenged by council fi nding. However, this had not happened and new capacity has been coming onto the market at a faster rate over the last four years and there is no sign of this falling off so far in 2013.”


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40