Affluent self-funders in the South driving care home operators away from the North

More care home beds are being created in the South, reflecting a North/ South divide that is seeing care home developers open care homes in the affluent areas of the South and fewer new care home beds in the North.

Along with the North, Greater London has experienced the highest drop in the number of care home beds and Health Property Consultants Ltd (HPC) has blamed the desire of operators to benefit from the affluent self-funding market in the South, compared to a higher rate of local authority funded places in the North.

HPC collected data from the Care Quality Commission (CQC) and carried out the annual HCP National Care Home Survey 2014 to find out the views of those in the sector.

The report highlighted that, although the country’s economy is recovering and creating more opportunity for development funding, this has not resulted in greater levels of care home development because developers are now having to bid competitively against alternative land use.

Nigel Newton Taylor, director of HPC, said: “The data clearly identifies new development to be financially driven, rather than reflecting regional demand. CQC analysis during the research period identifies the London region as having the highest level of elderly population per registered care home bed. Despite this level of comparative demand, the capital continues to haemorrhage beds. In contrast, the affluent South East enjoys the second highest proportionate bed provision for the elderly and yet development continues apace.”

There are approximately 200 care homes closing annually and just over half this figure of new care homes replacing them, with larger care homes replacing small care facilities. Research found the average number of beds in new care homes is 58, whereas the average size of a closing care home is 27.

With nearly 90 per cent of survey respondents revealing they think local authority fees to be less than adequate, Mr Newton Taylor believes care home providers are becoming increasingly reliant upon self-funded residents in order to continue to operate.

The report found that, although 6,000 new beds were being opened annually, 5,500 were being closed, showing that although there is growth, a significant number of homes are closing. With local authority baseline fees failing to reach either the national minimum wage or the Consumer Price Index (CPI) for several years, HCP believes margins for small care home operators have been eroded, placing care homes most reliant on funded service users at most risk of closure.

HPC is an independent firm offering specialist advice and services to those operating and investing in the healthcare sector throughout the UK including care homes, independent hospitals and domiciliary care.