Rising compliance costs risk dragging down the care home industry

Care home costs are becoming bloated by compliance costs, according to data released by business support organisation The Forum of Private Business (Forum).

When compared with other small and medium-sized enterprises (SMEs), care businesses are spending over £7,000 a year more, averaging at £21,250 as opposed to the £14,200 that other SMEs are spending.

The ‘Kennedy report’ calculates care home compliance costs as at £521m overall, with £181m being spent on external consultants and The Forum warning that this expenditure will continue to rise due to increases in ‘punitive’ budget measures and employment, while care homes have also seen a greater increase in general payroll costs than other sectors.

Managing director of the Forum, Ian Cass, comments, “While everyone wants a high quality care system in this country to take care of an ageing population, the Kennedy report has shown that there is tension between compliance needs and care needs.

“We have become really worried that punishments for care home managers in particular will lead to a new slew of paperwork that cannot help with the care of their charges. Caring for the most vulnerable in the community should be one of the most rewarding jobs that a person could have but the industry is beset by low pay/margins and an increasingly bureaucratic workload.”

According to the Forum, the care home sector is different to other industries in being bogged down by industry specific compliance, which includes costs incurred from regulation, with the Care Quality Commission accounting for £5,880 per firm.

Other examples of costs per firm include £4,760 for health and safety, £5,500 for employment law and £5,800 for industry specific legislation and environmental compliance.

Moving forwards, The Forum advises that ‘radical deregulation’ is needed in order to allow for care home owners to focus on care above compliance, especially with the increase to the National Living Wage being announced in last week’s Summer Budget. While the support organisation has also made a new Management Liability Policy available to its members, as a means of allowing care homes to prioritise care by reducing the distraction of compliance issues.