the short-term, however, the continued stagnation of the housing market and patchy provision across the UK, will make its impact less noticeable.
Local authorities have displayed little love for the private care home sector, believing that profit has no place in social care. They now have to realise that losses are equally abhorrent and their own homes can no longer haemorrhage tax-payers’ money. Faced with high fixed costs, and the need to spend significantly on upgrading unsuitable premises, it is not surprising to see those authorities who hadn’t already done so outsourcing as quickly as they can.
Of course, the transferring from hospital geriatric ward to private care home requires the funding to move from the ring-fenced health budget across to the already pressured social care pot. But, with a potential cost saving of hundreds, if not thousands, it is not surprising to see senior government ministers rapidly uprooting the fence posts!
In terms of occupancy, therefore, I think there are good reasons to expect an increase, rather than decrease, in demand for private care home beds. Another factor in this equation will be the potential loss of some capacity from the sector through home-closures. Why will homes need to close if demand is set to increase, I hear you ask? Well, not all homes are suitably equipped to meet the demand and some will, quite rightly, fail. This may sound harsh, but these are homes which have failed to adapt and improve over the years and, frankly, are no longer fit to accommodate our vulnerable elderly residents. We also have some better-quality spare capacity at the moment, due to the rapid new-build programme of the last decade. It is unfortunate that we haven’t been able to co-ordinate this development to ensure the right types of facility in the right place, and not all have been successful in filling their rooms. I suspect the operators of some of these homes may be teetering on the brink of collapse as they struggle to cover their highly geared borrowings, and will be delighted to take up any additional demand – possibly at cut-prices.
And, I’m afraid that’s the bad news for home owners. Whilst you might expect higher occupancy, don’t assume any fee increases for the next few years. In fact, in some areas we may see fee reductions as desperate providers scrap to keep their ailing businesses alive. The experience will vary from home to home, depending on the availability of privately funded residents and the mix of local competition, and it is to be hoped that homes offering better quality accommodation and care will fare best. Unfortunately, there are some signs that the trend of recent years towards quality-linked fees has given way to lowest cost as the determining factor in local authority placements, offering a potential lifeline to the poorer homes.
Thought needs to be given to the care sector we will need to provide in the future
Ultimately, the long-term future for a top-quality care home looks positive, but even the best homes may need to focus on operating efficiency to maintain profit margins in the short-term. With most costs fixed, consistent high occupancy is the key to sound profits, so even if fees come under pressure, taking up the demand from other parts of the sector should help to see good homes through this difficult period. Whilst attention will naturally be on immediate challenges, thought needs to be given to the care sector we will need to provide in the future, as we need to be building it now. Whilst the changes I have predicted above will be implemented through necessity rather than desire, there is good reason to suggest that they will end up shaping care provision for the longer-term. The other inescapable fact is that we cannot meet the escalating costs of that demographic shift without something changing. The cost of choice will not become any less, even assuming the budget deficit is one day bridged, so structures we put in place today will probably remain in place. Whilst it may be our desire to live in our family home whatever happens, society may just not be able to afford you that
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luxury. With the population forecast to increase further, particularly in the south of England, it may not even be physically possible to provide domiciliary care in a grid-locked country. The pressure for family housing may also drive the need for the elderly to down-size into some form of retirement housing/assisted living accommodation and I expect the range of this to increase to suit every budget.
At the other end of the spectrum, we can expect care homes to focus less on the frail elderly and more on those with higher care needs. These needs will fall into two broad, sometimes overlapping, groups; physical care and dementia care. Thus far, medical science has made greater advances in keeping the body intact longer than the mind and forecasts suggest a significant increase in the prevalence of dementia ailments. With people potentially living for longer with dementia, we will need to focus more on providing stimulation and activity than just accommodation. We will need to separate and distinguish between caring for the living and caring for the dying, both in terms of accommodation design and the use/training of staff resources. Ultimately, we face the same huge challenge of an ageing population and care choices will be limited by our individual and collective wealth. As far as publically funded care is concerned, the process of ensuring value for money has begun and the winners in that process will be the providers of good quality and efficient care.
Jon Chapman, director, Pinders, tel: +44 (0) 1908 350500, e-mail:
info@pinders.co.uk
November/December 2010 29
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