Care homes concern over budget black hole
EXPERTS have discovered a £20billion black hole in the budget to pay for care homes for the elderly in the future.Public spending for care homes already tops £11.3billion a year – more than the current cost of the London 2012 Olympics.But a report warns taxpayers will have to shell out £33.1billion annually by 2032 to cope with the soaring population of OAPs.
And there are fears the public will also have to meet the costs of failures in the private sector.
The news comes after it emerged Southern Cross Healthcare, the UK’s largest private care home operator, is on the brink of financial collapse.
The company is being hit by a rising yearly rent bill for its homes of almost £250million – which it can no longer afford.
More than 31,000 elderly residents living in its 750 care homes, including 25 in Northern Ireland, have been left facing serious uncertainties about their future. And taxpayers may be forced to pick up the multi-million pound tab.
DEMAND
But the situation looks set to become much worse.
Worried analysts predict the number of people aged over 75 will double in England alone by 2032 – from 4.8 million currently to 8.7 million.
By that time there will be more than half a million being looked after in care homes.
The report, compiled by the Personal Social Services Research Unit on behalf of private healthcare provider Bupa, warns that public spending must increase to meet demand.
It also says private spending – for privately owned care homes – must also go up from £7.3billion to £22.4billion.
In total, to sustain the demand on our already strained care home services, public and private spending combined must increase by 199% by 2032 from £18.6billion to £53.5billion to meet reasonable expectations of care.
Robin Darton, one of the authors of the Projections of Demand for Residential Care for Older People in England report, says the stark predictions make tough reading for the Government.
He said: “This is not a new problem. Southern Cross has highlighted it, but it’s something that has been going on for a long time. Care homes in this country are going to cost more and more because we have an ageing population and more people to look after.
“The report is tough reading because there are some deep rooted issues and that is a tough pill to swallow for the Government.
“If the extra money is not provided for, care is going to suffer and so will the elderly. The money has to come from somewhere.”
The report, read by officials at the Department of Health, says that by 2032, the number of people in care homes funded through public spending will increase by 68% from 227,700 to 383,500 – while private places will go up 126% from 106,300 to 239,800. The average cost of one year in a care home is around £26,000.
Academic Deidre Wild, a former nurse who has carried out research into care homes, said: “In the future, younger people will have to start making provisions earlier in life so they are provided for in later life.
“That may be through some sort of insurance contribution or pension provision. But more of the onus could be on the individual.
“It is a huge shame what has happened with Southern Cross, but the independent sector has a very important contribution to make, and many homes up and down the country which are privately run have fantastic levels of care.”
Before the last election, Labour proposed a National Care Service on the lines of the NHS to deal with the mounting problems of how to finance our care system.
It would have been paid through a compulsory 10% levy on inheritance estates. However, the Conservatives dubbed the idea a “death tax” and have so far failed to put together another plan.
Shadow Health Secretary John Healey told the Mirror yesterday: “The number of old people needing care is rising each year and sorting out our care system is a must do for Britain’s Government.
“Labour had big plans for a National Care Service and we worked with all parties on these until the political temptation for David Cameron to pull out the Tories from the talks before the election got too great.
“One year on, we’re still waiting for any sign of action from the Tories and elderly care services are getting worse not better.
“The Government promises to increase care funding but nine out of 10 councils are in fact cutting access to care services.
“At the same time, the Tories are piling more pressure on the NHS by holding back two billion promised for patient care to cover the wasted costs of their internal reorganisation.”
The Coalition may turn to the private sector to bail them out.
CRISIS
However, after Southern Cross announced its financial crisis, there is a sense of unease surrounding companies backed by private equity firms, which invest millions but only to eventually extract as much profit as possible.
Southern Cross Healthcare has been left in dire straits through the actions of City venture capitalists.
The US private equity firm Blackstone, led by Stephen Schwarzman, bought Southern Cross in 2004 for £162million and sold it three years later.
It is believed to have quadrupled its investment – but it sold off the Southern Cross’s homes, forcing the firm to lease the properties back from another company.
Among other care home groups with links to private equity firms, Barchester care homes are owned by Grove, Care UK belongs to Bridgepoint Capital and Voyage homes are under the ownership of HG Capital.
Also, Avery Healthcare has Graphite Capital behind it and Priory is owned by Advent International – which paid just under £1bn earlier this year for the company.
Care homes are a lifeline for our family
By DAVID COLLINS
PENSIONER Joyce Canniss, 83, was put in private care after she was diagnosed with stomach cancer at Christmas.
Her stay at the Bupa centre – which would normally cost around £900 a week – is paid for by the NHS.
Her daughter, Sharon, 51, a PA to a financial advisor, says the home in Sidcup, South East London, has been a lifeline for the whole family.
She adds: “It’s essential because me and my sister both work full-time.
“Mum used to stay with me but she needs care during the day and I cannot do that all the time. She has stomach cancer and was very ill around Christmas time.
“Mum is terminally ill now and we are not sure how long she has left.
“But the staff at her care home are absolutely fantastic. If she is in pain and asks to see the doctor, they arrange it and the doctor comes to the home. They will also always ring me up immediately to tell me what is going on.
“Mum was treated at Queen Mary’s Hospital, in Sidcup, and they recommended the place to us.
“Her care is paid for by the NHS, because she has cancer. She has her own room, wardrobe, chest of drawers, TV and bathroom.
“She gets all her meals made for her during the day and snacks, if she wants them, are provided.
“There is a lovely lounge and a garden where she can sit and chat with friends. It is really nice.
“Mum is really settled. She has friends here now, and I would hate to move her. She’d hate it. She doesn’t like change at her age.
“I can’t imagine what relatives of people in Southern Cross homes must be going through. It is just awful.”
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