Sector trends
Modernisation of the care home sector
The past few decades have seen a massive expansion of for-profit care homes for older people. Here, William Laing, executive chairman of LaingBuisson, discusses current trends in the sector and likely future developments
To put modernisation in its context, it is worth reflecting on the short history of the independent care home sector. From being a minor player five decades ago – when the public sector dominated supply – independent sector providers now account for 95 per cent of capacity. The initial trigger for expansion can be traced back to the mid-1970s when the Labour government had to go cap in hand to the International Monetary Fund for a financial bail-out. One of the ‘financial discipline’ conditions extracted by the IMF was a halt to public sector capital funding of – among other things – local authority ‘Part III’ homes, alongside cuts in public spending overall. As a result, faced with rising demand, councils found themselves struggling to make care home placements. They had little spare capacity left in their own care homes and insufficient money to pay for outsourcing. It was voluntary sector organisation which first hit upon a solution, which was to use the benefits system (exempt from cash limits) to pay for care home fees for people without resources of their own. Not-for-profits were rapidly followed by for-profit providers eager to exploit Income Support as a new source of public funding. It set in train a massive expansion of for-profit care homes for older people, as illustrated in Chart 1. The rest is history.
Rapid expansion For independent sector adult specialist care homes, the story is a little different. Demand for these too was given a massive boost by Income Support funding, and it was further reinforced by the closure of the large mental illness ‘bins’ which had already started a decade earlier. The very rapid expansion of care home capacity, largely in the hands of small,
October 2024
www.thecarehomeenvironment.com
Chart 1 – Bed capacity in residential settings for older people (65+), UK 1967-2023
local businesspeople, contained the seeds of the push towards ‘modernisation’ that we see today, because the great majority of new registrations were in small-scale, converted premises. Many of those least well suited to care (such as former seafront hotels) left the sector in the ‘cull’ of care homes following the 1993 community care reforms that gave cash-limited local authorities the primary role in commissioning care services. But most of the care homes set up in the first flush of expansion remain open today. What is not always recognised, though,
The rapid expansion of care home capacity contained the seeds of the push towards ‘modernisation’ that we see today
is that most of this so-called ‘legacy stock’, has in fact been subject to substantial retrofitting. En suite facilities have been plumbed in and most double rooms have been turned into singles to meet the expectations of a more discriminating clientele. The physical environment of most converted nursing homes still falls short of the ‘fully modernised’ tag, but they are still of an adequate standard to remain sustainable for some time to come. Having said that, there is no denying that modern construction and design can take care home environments to a new level of amenity and comfort. At the turn of the century, purpose-built homes started to make up the majority of new registrations, and since 2010 nearly all new homes for older people have been purpose-built. By December 2023, looking at care homes for older people only, 56 per cent of independent sector bed capacity
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