More than 100 care home operators collapsed in 2018 – taking the total over five years to more than 400 – and has sparked warnings that patients in homes that close down could be left with nowhere to go but hospitals.
UK care home firms are buckling under the pressure of funding cuts, crippling debt and rising costs, according to research by the accountancy firm BDO.
It found that in the period between 2014 and 2016 there were an average of 69 care home company insolvencies per year. The number rose sharply to 123 in 2017 and another 101 collapsed last year.
Professor Martin Green, chief executive of the social care trade body Care England, called for urgent action to avoid a shortage of beds in a sector that provides care and accommodation for more than 410,000 residents.
“The situation is serious and getting more serious,” Green said. “The cost of care is ever rising and yet the amount of money local authorities pay for care is at very best rising much more slowly or not at all.
“The implications are that a lot of people in those care homes will have to find somewhere else and that is extremely traumatic.”
He warned that the speed at which care homes are closing in some areas could leave residents with nowhere to go.
“If there is less provision and less potential for people who leave care to find a place, their only resort will be to go to hospital,” he said.
“That will increase waiting times and mean cancelled operations, which is the opposite of what the government claims it’s trying to achieve.”
Prof Green called for the government to put more money into social care so that local authorities can afford to pay care home operators to look after patients.
The future of funding for the sector is due to be laid out later this year in a delayed government green paper intended to address a £3.5bn funding shortfall expected by 2025.
Major operators to suffer financial difficulty include Four Seasons Healthcare, which has been put up for sale after rescue talks failed, seven years on from the high-profile collapse of Southern Cross.
BDO’s research said care homes, already struggling with debts racked up before the credit crunch, had “suffered as a result of the reduced spending by central government”.
It warned further pain lay ahead, highlighting research from the Association of Directors of Adult Social Services showing that councils had £700m of social care cuts planned in 2018-19, despite growing demand.
BDO also highlighted the the rise in the national minimum wage from £7.50 to £7.83 in April 2018, adding that “Brexit uncertainty” was making matters worse because of concern about the freedom of movement for staff and the availability of drugs.
Labour’s shadow social care minister, Barbara Keeley, said the care home sector had been “driven to the edge of collapse by the Tories’ relentless pursuit of austerity.”
She said: “£7bn of cuts to council budgets putting older and disabled people at risk by pushing care homes to the brink of closure and heaping pressure on carers and an overstretched NHS.
“Labour would halt the slide to collapse in social care by investing an additional £8bn in social care before moving to develop a sustainable social care system for the long term.”
A spokesperson for the Department of Health and Social Care said: “We are committed to ensuring everyone has access to the care and support they need. Although the number of care providers does fluctuate, the overall number of social care beds has remained broadly constant and there are over 3,600 more care home agencies since 2010 – helping people live in their homes for longer.
“We have provided local authorities with access to up to £3.6bn more dedicated funding for adult social care this year and up to £3.9bn for next year. We will shortly set out our plans to reform the social care system for adults of all ages to ensure it is sustainable for the future.”