Care home meltdown will continue unabated

Paul Burstow MP, Liberal Democrat Spokesman on Older People, commenting on the scrapping of National Minimum Standards for residential and nursing care homes for older and disabled people said:-

Paul Burstow MP said:-

"The Government sees the scrapping of minimum room sizes as the utopian way of stopping homes from closing, but the meltdown in the care home sector continues unabated.

"Ministers are too intent on getting care on the cheap rather than being prepared to put the investment that is needed to stop closures. Despite their own research, they have failed to accept that low fee levels are the main cause of the care home collapse.

"The U-turn on minimum room standards that have been championed by Ministers for several years, shows how poorly thought out the Department of Health strategy is towards the vulnerable elderly."

ENDS

The government today scrapped its plans to force owners of care homes to improve conditions for older people by making them upgrade facilities and increase minimum room sizes.

In an attempt to stop proprietors quitting the business, Alan Milburn, the health secretary, published fresh proposals allowing established homes to stay as they are indefinitely. The higher environmental standards and space requirements will apply only to new homes.

In the report 'Meltdown', Paul Burstow MP outlined the main pressures on care home owners.

There are a number of pressures on the care home sector:

1. Inadequate fee income and cost pressures;

2. Staff shortages;

3. Property prices;

4. National minimum standards that came into effect from April 2002;

5. Retiring care homeowners.

6. The commissioning and regulatory environment

Care Home Fees

Fees have risen on average by 2% for state funded placements and 5% for self-funders. Fee increases have been depressed for the last five or six years and reflect pressures on social services budgets. It means that self-funders and care homeowners are subsidising state funded residents. In the latest report by the Government think tank the PSSRU, care home owners cited an average 22% increase in fees would prevent their home being closed

There is also a wide range of fees paid across the country. For example in Islington it is £856 pr week. However in other areas, such as Kent, they receive only £333 per week. Kent has lost ¼ of its residential care beds in the last year alone and is consequently exploring the possibility of sending older people to care homes in France or Belgium, where it is cheaper and there is excess supply.

The difference in fee levels between neighbouring local authorities has also resulted in the poaching of care home places. So, again in Kent, London social services departments who pay considerably more, are purchasing a large number of care home beds in the north of the county. This problem may get worse with the payment of a special grant to social services to tackle bed blocking as those social services department who receive the grant use the money to increase their fee rates.

Liberal Democrats have called for an independent review of care home capacity and the development of a national strategy and local action plans to secure an adequate supply of beds. The review needs to look at fee levels, local labour market constraints and the costs associated with complying with the national minimum standards.

Problems faced by homes include: -

Staff Shortages

There are serious shortages of care home staff across the country. The squeeze on fees has put pressure on pay levels and owners find themselves in competition with the local supermarket.

Some nursing homes now have to use agency nurses to meet existing regulations. Again this put pressure on an already difficult bottom line. Liberal Democrats have argued that better pay is necessary to aid recruitment and retention, but this should be in exchange for higher standards in terms of the ratio of trained staff to residents.

Liberal Democrats highlighted this issue at our Conference in Bournemouth in September 2001. "The looming care crisis". The review outlined above would also address the labour market issues.

Property Prices

In the south of England, land and property values have risen dramatically and are continuing to do so. For care homeowners struggling to balance the books it is becoming increasingly attractive to opt to close the home and sell the property for redevelopment. Again capacity is lost.

National minimum standards

The Care Standards Act 2000 introduced a new inspection and registration regime bringing nursing and residential care homes within a single system. The National Care Standards Commission (NCSC) started work in April 2002. Liberal Democrats (and the Tories) have supported this. Interestingly, despite what the Tories are currently saying about the minimum standards (that they are too strict and it's the Governments fault etc) it was they who set up the original committee, who in 1996, produced the Burgner Report that led to the introduction of these National Minimum Standards.

As part of the new regime the Department of Health produce national minimum standards for each type of care setting regulated by the NCSC. The national minimum standards care homes have caused great concern across the sector.

Although the staffing standard will not apply until 2005 and the room size standard will not come into effect until 2006 they have been the final straw for many owners who feel that the cost of compliance will not be recovered due to inadequate fee levels. For example, care homes will have to have lifts installed and will have to have minimum room sizes. Some very good care homes are set in Grade II listed buildings and will have to either move properties or undergo vast structural changes to the property in order for it to comply with standards.

There are three problems. The first is that the Government is not putting any money to one side to help meet the compliance costs of the standards. The second is that in order to raise the capital to pay for the remodelling of the home the owner has to be able to make a rate of return, but the remodelling will result in less rooms and as a result a reduced income from fees. Bank managers are unlikely to finance such investment. The third is that to get planning permission to make the alterations in some of these properties are nigh on impossible.

Retiring care homeowners

During the mid 1980s there was a massive expansion of the number of private care homes as the Conservative Government deregulated, and in effect, privatised the industry. As a result the supply of long-term care beds has been unplanned leading to an excess of supply in some areas and a growing deficit in others. However this is set to change over the next few years, as many of those Care Home owners are set to retire. They can either sell on their business against the backdrop described above or sell up realise the development value of their property and landholding.

The commissioning and regulatory environment

Local Authority arrangements for negotiating and passing on care home fees have been cited by care home mangers as a final reason for closure of homes. Problems that have been reported include delays in passing on payment of fees, delays from assessment to admission and delays taken to assess clients. If Local Authorities are not passing money on quickly and effectively then small operators experience severe cash flow problems. If there is no end in sight, then it is easier to sell up.