New data indicates there may not be a care home supply crisis
In the 29th edition of Care Homes for Older People UK market report, released in late July, market analysts
LaingBuisson say new data has led to a reappraisal of whether there is likely to be a care home supply crisis.
The UK market for care homes for older people is estimated to be worth £16.9bn in the year to March 2018, which represents nominal growth of about 3% with respect to the previous year.
LaingBuisson has collated and analysed data taken from CQC reports on individual care homes which shows that overall occupancy of care homes is lower than previously thought. It shows that the aggregate numbers of residents as a percentage of registered beds is 85%, whereas the widely accepted occupancy benchmark had been around 90%.
The research also points to there being a good deal of ‘latent provision’ in care homes, which suggests commissioners should look at ways of bringing this provision back into use.
The report also identifies a reversal in the recent trend of net closures during the yearly cycle. It also reappraises predictions for care home demand based on a model originally developed by the Brookings Institute in the USA.
The balance between state-pay and self-pay clients continues to be a key determiner in the market. In the state-pay sector, there continues to be significant pressure on providers’ prices and margins and this is bringing into question the sustainability of this model.
There remains strong evidence of a ‘self-pay’ subsidy, with ‘pure’ self-payers accounting for 52% of the market by value but only 45% by volume, making the market much more stable in areas of the country where there is a greater reliance on self-pay.
“At the premium end of the market, the top decile of care homes for older people charge in excess of £1,200 per week (nursing care) and over about £900 or more per week (residential care),” said the report’s author William Laing.
“It is believed that the premium market is under-supplied in many affluent areas, and that there remains an unfulfilled demand for more high quality homes aimed primarily at a self-pay clientele and run to the sort of standards that an increasingly discriminating public has come to expect in other sectors of the economy.
“The relative buoyancy of the private pay market in general, and in particular the market for homes charging premium fee rates in affluent areas, is reflected in the focus of most current care home development on the self-pay market. The private care home market also overlaps with the privately paid extracare market, with several operators’ offerings spanning both.”
- For further information and to order this report, contact LaingBuisson on +44 (0)20 7841 0045 or at firstname.lastname@example.org.
Key findings of this year’s report include:
- Aggregate number of residents as a percentage of registered beds are much lower than the widely accepted occupancy benchmark of c.90%.
- Care homes in the UK have significant ‘mothballed’ capacity.
- There has been a net increase in the number of available beds.
- A reversal of the trend of recent years.
- The market continues to grow at around 3% per annum nominal and was worth £16.9bn in the year to March 2018.
- Self-payers represent 52% of the market by value but only 45% by volume.