Social care
The winners and losers – healthcare is in the news and money is the issue – Jon Chapman considers some issues
I
’m confused! I’ve just finished reading three specialist care magazines and can’t decide whether the long-term care sector is in meltdown or is flourishing. There were lots of stories about fee cuts, profit warnings and home closures but these were in stark contrast to the tales of new development and big-ticket investment.
If the dark clouds are gathering overhead, why would so much money be pouring into the sector? This apparent contradiction is illustrative of the truth about social care in these times of economic austerity – there will be losers, but winners also.
Our job at Pinders is to assess individual businesses in relation to their existing and future markets, so understanding the factors which shape the sector is crucial – and very challenging at the moment! So, let’s start with the easy bits which everyone agrees on. We all know by now that our population is rapidly ageing and the current demands on our care budgets are nothing compared to those we face in the future. Our elderly population will switch from two generations ravaged by war to one inflated by the baby-boom of the fifties and sixties, and medical advances means that a greater proportion of us can expect to live well into our nineties. So, known fact number one is that demand for elderly care will be increasing. Fact number two is that we need to
sort out a huge budget deficit and the coalition government has decided to tackle this head on over the next few years. So, in the short-term, every aspect of public funding will need to be reduced.
28 November/December 2010
The combination of these two
certainties goes a long way to explaining the apparent dichotomy identified above. Long-term investment in the care sector is logical and understandable as additional capacity needs to be created to meet the demographic time-bomb. But, our short-term focus is simply on cost-reduction, even if this involves a backward step on the eventual road. Many observers might conclude, therefore, that care home operators face short-term hardship but long-term
Long-term investment in the care
sector is logical
benefits. And, indeed, the initial actions of many local authorities have tended to support this view. Care home fees have been frozen, at best, and in some cases reduced. To add to the problem, the number of people being referred to care homes has been steadily falling for the last few years, at a time when overall capacity has started to rise. So, income can be expected to fall whilst opportunities for cost savings will be minimal. Tough times ahead then for care homes. Or, perhaps not?
I’d like to suggest that there is just a possibility that privately run care homes may actually benefit from the spending review. This might sound over-optimistic but we are already seeing signs which could lead to it happening. The scale of the spending review is so significant that we might, for once, see a co-ordinated approach to cost-cutting. The chancellor
Business Money
will be looking for absolute savings rather than allowing individual departments to adopt policies which simply shift the burden across to another budget. Perhaps the question will be posed as to what is the most cost-effective way to provide long-term care to our elderly population. It certainly isn’t in a hospital bed or in one of the local authority’s own homes. And, if an individual requires anything more than just basic support in their own home, then domiciliary care ceases to be the panacea often portrayed by the last government. We already know of some care commissioners refusing to sanction home-care when the cost exceeds that of residential care. Whilst Gordon Brown’s policy of providing free care at home for the most needy was a popular soundbite, it simply doesn’t stack up to cost scrutiny.
In many areas, the desire to allow people to remain in their own homes appears to have been swiftly ditched, in favour of a cheaper alternative. That alternative may be 24/7 care in a residential home or a mid-way choice of assisted living accommodation. The latter still offers independence but with the necessary support structure and, very importantly, access to company and activity to stave off loneliness. We have seen an explosion of such provision in recent years, offering both a purchase and rental model, but this is still relatively modest in size and variable in location. In the medium and longer-term, I expect this third way choice to meet a far larger slice of the demand, effectively meeting the needs of the frail elderly who don’t need the level of care provided by residential and nursing homes. In
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