According to a recent article by Moore Stephens, care home insolvencies have risen by 83% in the year to 31 March 2018. In 2017/18 148 homes became insolvent, compared with 81 in 2016/17.
Lee Causer, a partner at Moore Stephens, is quoted as saying “Care homes should be benefiting from the demographics of the UK – an aging population. But they are not. Care homes are not receiving enough local Government funding to sustain the profit margins necessary to run successful business”.
At HSKS Greenhalgh, as specialist business advisors and accountants to the nursing and care homes sector ourselves, we are only too aware of the significant impact that the National Living Wage, National Minimum Wage and ‘sleep-in’ payments have had on operators, as well as the increase in the use of agency staff due to a shortage of nurses.
It is common knowledge that Local Authorities in England and Wales are planning to make huge savings from their social care budgets in 2017-2018 and there has been much publicity recently in the national press about the issues this has caused, and Jeremy Hunt has been urged to take this matter seriously.
I occasionally get involved with clients’ discussions with Local Authorities and I’m always alarmed by the amount of people in the public sector who believe that private care homes are a ‘cash cow’ and who appear completely oblivious to the pressures that many homes are under. Perhaps the surge in the number of insolvencies may make people sit up and take notice of the real issue in the sector. The Daily Express is currently running a campaign regarding the poor care in the sector and in my opinion have been fair in their appraisal that the money going into the sector is not sufficient to maintain the standards that everybody wants for the elderly population.
There is no doubt that the Government do need to address immediate pressures and ensure that The Green Paper on older people will deliver the reforms needed to futureproof long-term sustainability of adult social care.