Care home market remains ‘fragile’

Tuesday, 29 July 2014

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A new report from the Institute of Public Care (IPC) shows that significant problems continue for the care home market - three years on from the collapse of Southern Cross.

In the wake of the demise of Southern Cross in 2011, and following the development of the Market Oversight regime in the Care Act, the Care Quality Commission (CQC) has published a major IPC report which reviews the state of the care market in England.

IPC, which is part of Oxford Brookes University, found that recruiting a trained and well paid workforce is likely to be a major issue for the future, and that the older persons’ care market continues to be fragile.

The report notes that “very few of the providers and financial advisors we interviewed ruled out the possibility of another Southern Cross style crisis.”

Debt, and the management of debt, remains a critical issue for a number of the larger care providers. Equally, a rise in property values alongside demands of regulation and lower levels of Local Authority funding may persuade some smaller care home providers to cash in their assets and leave the market.

Finally, the Care Act itself which whilst welcomed by most providers, still creates a level of uncertainty in the market particularly between those who self-fund their care and those in receipt of state funded care.

The report suggest that the most likely characteristics of provider failure is that of a large care home provider which does not own the properties in which they operate, and where they have a concentration of homes in a limited number of authorities in less affluent areas.

Professor Andrew Kerslake, IPC Associate Director and co-author of the report, commented: “We are now three years on from the Southern Cross financial collapse which put at risk over 30,000 older people under its care. Unfortunately our report shows that the Care Market remains fragile and the management of debt remains a very real concern.

“We have made a number of recommendations to the CQC which we hope will ensure that there is an improved market oversight and help to reduce the risk of a further a collapse on the scale of Southern Cross from happening again.”

The IPC recommends that CQC be mindful that:

  • The mere fact of identifying a provider as being at risk may itself weaken their financial position.
  • The data CQC receives from its inspections needs to be fed into its intelligence capability in order to inform its Market Oversight function.
  • The development of the wider market intelligence role is an important precursor to the market oversight regime and as a part of CQC strengthening its role in the care sector.

A full copy of the report is available to read on the CQC website. Further information is available on the IPC website.