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Cuts To Care Sector Funding Force Care Homes Into Red

CQC-logoA new report published today suggests more and more care homes are struggling to remain profitable, with some 72% stating that funding and cash flow is now the biggest issue facing their business.

The findings, published by regional law firm Rix & Kay, have been drawn from in depth interviews with care homes across the South East. The report highlights the fact that central government funding continues to reduce, leaving care home owners no option but to inject more capital into their business, not just to keep it ‘ticking over’, but to meet the ever increasing CQC (Care Quality Commission) requirements.

According to the report, only 15% of care homes interviewed believe the Care Sector is an attractive business proposition to new entrants. This startling statistic presents serious concerns over the future viability of care home provision in the UK as the aging population and demand for care continues to increase.

The problem is compounded by those individuals considering or needing to enter a care environment not understanding the funding options available to them, coupled by the ‘managed funding criteria’ set by local authorities and CCGs (Clinical Commissioning Groups) which restrict funding to care home users.

Another common theme emerging from the report is that care homes feel that local authorities and CCGs are allowing people to remain at home, or in a less supported care structure, for longer than they should, based around a lack of funds and resources. As a result, people’s health fails faster, so that, when they are admitted to a home, they need a higher level of care than they ordinarily might, which is more expensive.  This, in turn, puts greater pressure on local authorities’ own budgets.

Other key findings in the report entitled The challenges for care homes and their residents include:

  • More than half of care providers (54%) don’t think their residents understand local authority funding
  • Almost two thirds (72%) think their residents are unaware of NHS funded continuing care
  • Care homes are calling for more coordinated information resources for residents seeking information on funding and point only to Age UK as a truly trusted widespread resource

As well as funding and cash flow, the report highlights a range of other issues facing care home owners including:

  • Regulation and the CQC – Care homes’ sentiment towards the CQC is starting to soften following the new regulations with 81% interviewed understanding what needs to be done to comply with the CQC’s model, whilst 59% think the CQC brings a direct benefit to their residents (up from 47% in 2014)
  • Public relations – Negative media reporting on care home provision remains a critical issue for care homes. The report suggests the impact of negative PR is manifesting itself in low morale, a depressing effect on recruitment and creating prejudice from residents and their families at the point of entry into a care setting. Only 38% of care homes said they were comfortable with the CQC’s rating system and less than half (46%) said they knew how to minimise negative PR in the event of a disappointing rating
  • The CQC and lenders are driving better business management by care providers – Both are playing a far more active role in encouraging care homes to maintain and update plans to ensure their business is robust enough to cope with the changing financial landscape.  63% of care homes interviewed actively use a three to five year rolling business plan

Max Wright, Partner and Head of Rix & Kay’s specialist Care Sector Team commented:

“Our report, which is a follow up to the report we produced in 2014, provides great insight into the challenges care home providers face today as well as the issues faced by individuals and their families entering or already in a care environment. We hope it will be a useful strategic planning tool for care providers.

“One very welcome outcome of Rix & Kay’s work in the sector is how a number of care homes interviewed expressed greater confidence in running their business as a result of addressing themes that we explored and in many cases advised on.”








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