A change in the market of elderly care
The Board of Southern Cross care home group have reported that they are coming under increasing pressure from local authorities to reduce fees, further reporting that some local authorities are looking for reductions of up to 20%. All these reductions and freezes are not only for new residents of the care homes, but for existing ones as well. This next coming year is therefore looking to be a difficult one for providers of care to the elderly.
Local authorities continue to pay a good premium to fund nursing care for specialist requirements (EMI/Dementia/YPD). Indications are that this will continue as the cost of care for such clients is cheaper in a specialist home than either in hospital or in their own home.
Unfortunately if the proposed cuts come in to force we could see a number of care home operators struggle, especially those who are highly leveraged with debt, as they will still have to sustain increases to the minimum wage, food and the general utilities. Despite the commitment from the Government for £2Billion extra cash for social care within their spending review, elderly care is fast approaching crisis point.
Nationally the average occupancy rate for all types of care home including residential, nursing, respite, dementia and EMI care homes is around 90%. Approximately 12,000 people per month move into care homes, and around 40% are self funding, yet only around 7% of people get any financial advice. A wise care home operator would ensure that their residents are referred to specialist financial advisors to ensure that their residents can afford the care of their choice for the rest of their lives, and continue to pay the much higher rate charged to people who are self funding.
There are many care home operators who only accept residents who are self funding and the rest of the care homes should look to these companies to see what they can learn from them. Whether the care homes choose to, or are forced to, it may well be time to change their approaches to the elderly care market.
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