David Heath MP, Liberal Democrat Member of Parliament for Somerton and Frome
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Constituency office: 14 Catherine Hill, Frome, Somerset, BA11 1BZ. Tel: 01373 473618
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Care home survey

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1.Self-funders subsidising state funders
2. Number of beds available to social services may drop
3. State fees and national standards double whammy
4. National Minimum standards costs

Thirty-five Care Home Owners responded to the MPs Somerset Care Home survey. This is a fair portion of care homes in the county and is indicative of the situation facing most care homes in the area, if not the country.

The 35 care home managers who replied to the survey were responsible for 663 beds, 346 of which were used by state funded residents. So, the average home had 19 beds, 11 of which would be used by state-funded residents.

The pie chart below shows that over three quarter of homes currently accepts state-funded placements. This indicates a healthy relationship between social services and local care homes.

state-funded placement pie chart
However, the substantial differences between the scale and size of various care homes should not be underemphasized. The survey found that many of the smallest homes were finding it most difficult to survive and were increasingly reliant on self funders, while larger concerns who could benefit from economies of scale did not find the level of fees paid by the local authority a significant problem. Larger companies which manage a number of care homes were also in a better position to arrange large scale contracts with local authorities, so guaranteeing a steady income stream.

1.Self-funders subsidising state funders

The most basic and overriding question is how much are costs rising and how do state fee levels reflect this. The table below shows what care homes cost increases, state fee increases and self-funder increases have been over the last 3 years.

  1999-00 2000-01 2001-02 Respondents
Social Service Fees increase 1.8% 2.1% 4% 17
Selffunder Fees increase 5.6% 5.0% 9.6% 18
Costs increase 9.2% 12.0% 17.8% 16

One can see then the state fee increases cannot keep up with the cost increases which the sector has been facing. It is also clear that the fees charged to residents who fund themselves are often double of the fees paid by the local social services authority. Self-funders are bearing the brunt of the care home cost increases and are, effectively being used to subsidise those whose fees are paid by the state.

One care home manager spelt it out:

"We reduced the number of beds in the home to be cost effective but this is only possible on the fee levels paid by self funders."

An increase in costs to meet the National Minimum standard and new staff standards will lead to either a (probably unsustainable) increase in fees for self funders, the closure of more care homes, the increasing refusal of care homes to accept sate funded residents or all three.

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2. Number of beds available to social services may drop

The number of care home owners who had seriously considered refusing state funded placements or closing their home in the last 12 months gives serious cause for concern.

As one can see from the graph below, 27 out of 32 care homes, almost four-fifths, stated that they had considered refusing state funded placements in the last 12 months because of inadequate fee levels. If this actually occurred it would mean the loss of around 270 beds to local social services in our area. Although this is unlikely, it does suggest that the level of beds available to local authorities is likely to dry up as more homes decide that they can no longer remain commercially viable if they continue to care for state-funded residents. This would exacerbate bed-blocking and which would then impact on the number of cancelled operations and waiting times.

refusing state-funded placements pie chart
The survey shows that the trend of diminishing care home places shows no sign of diminishing as half of the care home respondents (16 out of 33) stated that they had seriously considered closing in the last in the last 12 months. This is a shocking proportion and demands urgent attention.

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3. State fees and national standards double whammy

These are both very disturbing findings, but what are the key reasons for pessimism? We asked care home mangers which of the factors weigh most heavily with you in deciding whether to continue trading?. Care home owners prioritised various problems by giving 5 points to the most pressing problem and 1 to the least.

This analysis shows that the most pressing problems are, respectively, the low level of fees paid for state funded residents and the impact of the national minimum standards. The stress and low profit margins that are caused by these two factors seem to have made retirement or a lucrative redevelopment of a care home into private housing more attractive.

The welter of bureaucracy and rate of legislative change was also cited as having a severely demoralising effect. One respondent wrote:

"With the blinding snowstorm of new legislation in all fields which effect this type of work I feel that no employer can truly know they are complying with the law at any one time, and if they did, would be out of work tomorrow."

It is clear then that the low level of fees paid by social services and the costs of the National Minimum standards are the two key issues which need to be tackled to re-invigorate the care home sector.

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4. National Minimum standards costs

As has been said, before care home costs are undoubtedly set to rise with the introduction of the National Minimum standards. The requirement necessary to comply with these standards range from major structural changes to fixing radiator guards. More investment in staff will also be necessary as the level of care assistant who need to be trained to NVW level 2 is to increase to 75%.

Although the standards (which many care homes wish to meet) represent an increase in costs for care homes they have not been given the financial support necessary to implement them. However, no one really knows how much the introduction of the National Minimum Standards will cost. This survey is therefore an early attempt to quantify these costs. Knowledge of the costs can then act as a solid foundation on which to claim increased funding from the Government.

However, few care home owners were able to estimate the increased capital costs and running costs which implementing the care home standards would cause. This is primarily because the first inspections will take place this April and it is not yet known how strict the inspections will be. However, the table below shows care home managers estimates of meeting each of the standards.

  Range Average Respondents
Running Costs £2,000 £75,000 £14,000 12
Capital Costs £5,000 - £250,000 £40,000 17

Our survey shows that care home owners expect that compliance with the new National Minimum standards will result in an average capital cost of £40,000 and increased running costs of £14,000. However, it is to soon to say exactly how much these new standards will cost.

One Care Home Owner summarised the impact of meeting these standards:

"Installation of a lift - £50,000. Loss of income from de-registration - £60,00 per annum. Staff training. Until we have our first inspection the full extent will not be known so we are all unsure of the implications."

So, this new legislation will certainly result in a substantial on-off payment for most homes. Not only this, but the new rules may require some rooms to be lost so that all room meet the minimum space requirement. Not many bank managers would give a home a loan to reduce its care provision. However, neither these costs nor the increased running costs (however small or large they may be) have been factored into the social services standard spending assessment.

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