Dementia


with more complex care requirements. The long-standing gap between private and local authority funded residents is well documented, and many providers rely on fees from self-funders to meaningfully improve the overall economics. While councils may acknowledge the


extra care needs linked to dementia, the premiums available to reflect these needs are often modest and insufficient. Once wages, overheads and margins are factored in, the uplift attached to a dementia diagnosis may only allow for a small amount of additional care time. When the actual time needed to support


people with advanced dementia is taken into account, including both direct personal care and ongoing supervision, the gap between funding and need becomes clearer. Residents with significant behavioural and psychological symptoms may need sustained observation and responsive staffing throughout the day. In this context, providers’ decisions follow


the financial realities they face. Homes may be more likely to accept residents whose care needs fit more easily within existing fee structures. Self-funders and people with milder cognitive impairment can be more financially sustainable than publicly funded residents with more complex behavioural symptoms. This does not reflect an unwillingness of providers to care, but the harsh financial reality and structural incentives within the system.


Consequences of funding gaps Residents with dementia often have higher care requirements than those without cognitive impairment. Evidence suggests that councils have not consistently funded these additional needs, leaving care homes to manage the gap. There have been numerous reports


indicating persistent underfunding from local authorities alongside increasing costs for self-funders. For instance, the UK government’s decision to abandon the planned lifetime care cost cap has left the system heavily means-tested, creating a substantial gap between the true cost of care and the funding councils provide. Providers naturally choose to focus on


customer segments with lower needs and better economics, prioritising self-funders or residents with milder dementia. Those with more advanced behavioural or cognitive symptoms are increasingly turned away. These individuals often have the fewest options because their behavioural symptoms


make home care unsafe, yet their conditions are not severe enough to qualify for hospital or specialist mental health placements. This creates a clear mismatch between


demand and available provision, highlighting the ongoing challenge for the sector in delivering adequate care within existing capacity and funding structures.


Strategic choices for providers In this context, care home providers face important decisions about how to respond to rising demand for dementia care. The supply of dementia-appropriate rooms is already lower than the number of residents with dementia, and funding from local authorities often falls short of meeting the additional care needs. As a result, providers naturally focus on residents whose care needs are more economically sustainable, such as self-funders or those with milder dementia. Providers may choose to invest in


training, staffing, and facility adaptations to support residents with more complex needs, but these efforts depend on clear and sustainable funding streams. In a constrained funding environment, demonstrating outcomes such as continuity of placements, reduced behavioural incidents, and effective management of dementia care is critical when engaging with local authorities. Providers that track and analyse the care


requirements of their residents are better positioned to make evidence-based decisions about future capacity and service offerings.


A national conversation, a local response Dementia is not just a care home issue. It is a national health and social care challenge that needs a coordinated approach. Political attention can shift, and social care funding reform is still unresolved. In the absence of a national solution,


providers continue to make incremental improvements. Staff training is strengthened. Environments are adapted. Partnerships with health services are being developed. These actions make a difference, but they cannot overcome the wider structural gaps in funding and capacity. If the system does not align with the


complexity of care needs, the market will respond in financially rational ways that may leave the most vulnerable without adequate support. Those most affected are people with advanced dementia and behavioural symptoms. They cannot be safely cared for at home, yet their needs do not fit neatly


34 www.thecarehomeenvironment.com April 2026 Eilert Hinrichs


Eilert Hinrichs is a Partner in L.E.K. Consulting’s London office. He has over 25 years of consulting experience and is a senior member of L.E.K.’s European Healthcare Services Practice and European Financial Services Practice. In both sectors he has worked closely with senior management teams in addressing key strategic issues, developing market entry strategies, improving commercial effectiveness, and providing transaction support.


within existing funding or care frameworks. Within these constraints, providers focus


on what they can control. By improving care environments, staffing approaches, and support practices, care homes can continue to offer safety, stability, and meaningful quality of life for residents, even as broader system reforms remain unresolved.


Rising to the challenge Dementia has moved to the centre of the UK’s care debate, with care homes supporting some of the most vulnerable people and providing stability for families during difficult times. However, whether providers can meet the growing challenge of rising demand for dementia care depends not just on their dedication, but also on whether the wider system keeps pace with the needs of residents. Homes must have environments that


support daily life, staffing levels that can respond to behavioural and psychological symptoms, and funding that reflects the intensity of care required for advanced dementia. With these in place, care homes can continue to offer safety, supervision, dignity, and a meaningful quality of life, even as broader reforms remain unresolved. Dementia is not a distant issue, but is a part of everyday life in care homes, and the focus now is on shaping a system that can meet it. n


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