Scottish care home industry faces collapse ‘in three months'

Increasing wage bills due to the national insurance hike, immigration controls which limit the ability to hire staff, as well as growing demand from an ageing population, and reduced government spending are leaving care homes facing closure. 

The system also makes it more difficult for care homes to take in elderly residents who are paid for by the state, rather than wealthier residents who pay using their own assets. 

The state is the biggest purchaser of care within the industry. However, care homes earn more money from private self-funded residents, compared to residents paid for by local authorities. 

Care home costs often can’t be met through state-funded residents alone. Around 70% of care residents, though, are state-funded. Most care homes are also heavily indebted to banks, increasing the sector’s fragility.

Care costs are rising (Image: PA) Macaskill said that one major charitable care home a decade ago had 70% of residents “paid for by the local authority” and 30% private residents. Today, that figure has “flipped in order for them to stay open”.

“Some perceive that the fallout will be in six months, nine months, a year’s time. But If you can’t pay wages or raise money from the bank, the bottom will fall out of the sector in three months,” Macaskill said.

He added: “This isn’t a one-off. This is life until somebody comes over the hill riding a white horse, carrying a bag of money, which is not going to happen. These are continual costs, which will only make matters worse.”

Macaskill went on: “You’ll start to see closures. I know of at least four [care homes] in the last week who say they can’t continue.”

Relying on state-funded residents alone would be commercially unviable, so most homes “go for the self-funded private market because that’s closer to the truer cost of care. The national contract isn’t at an appropriate level so fewer care homes are placing people paid for by the state”.

READ MORE:

• Over 6,500 Scots 'in limbo' due to waits for social care assessment
• More than half of private care homes have complaints upheld

This causes NHS “bed-blocking”, as elderly patients who shouldn’t be in hospital remain there because “they cannot get social care … Research last year showed about 1900 people died waiting for care home places”. 

The state is also buying “less and less” social care due to “huge debt” accrued by health and social care partnerships (HSCPs) of around £450million, Macaskill claimed.

“Even before the national insurance rise kicks in, the system is exceptionally fragile.” That means, Macaskill says, HSCPs “slow down assessments, buy less care home beds, and commission less care-at-home packages in order to try to balance the books”.

He added: “Ninety percent of our members have seen significant reductions in care packages bought by local authorities, and 48% say they don’t believe they’ll be in business this time next year. That’s not hyperbole, or scare-mongering."

Due to the low rate of return - at 4% - Macaskill says: “You get more money from an ISA than delivering public paid care in Scotland.”

There are fears some homes may close (Image: NQ) Providers are “exiting” when it comes to taking on state-funded clients. Scotland’s care sector is dominated by small providers. 

Macaskill says: “I think the next few weeks and months might bring a decline in that number.” He fears "smaller providers going to the wall because they don’t have the economy of scale. If I had a buck, I wouldn’t invest in the care sector due to its fragility … I fear we’ll lose many smaller charitable, individual providers.”

That could see elderly people forced into care homes hundreds of miles from where they live, and unable to receive visits from relatives. Already, 20% of care home residents receive no visits, often due to geography.

Asked what ‘the bottom falling out of the sector’ meant in practice, he said: “There is a very real fear of what coming weeks may mean without Scottish government and UK government mitigation. The impact for all will be noticeable but if you are able to build your private market it will be less acute.

“But Scotland is not economically wealthy to accommodate much growth. This will further exacerbate a two-tier system.” There will also be “a very geographical impact especially on smaller, rural and remote care-at-home and care home providers”.

He added: “The greatest impact will be on those who are seeking care in their own home as around 90% of costs in home care relate to staffing which is the area with increasing costs.”

Referring to the SNP scrapping plans for a National Care Service, Macaskill added: “It feels like we’re on the Titanic, getting into the life rafts, and we’re being asked ‘where would you like to go on your next holiday?’. There’s so little appetite for radical structural reform.”

Macaskill referred to “red austerity” by the Labour Party and said: “It’s like the UK government decided to make social care provision as hard as possible. National insurance is a nightmare, immigration changes are awful, disability changes will increase demand.”

Macaskill wants Scotland to have its own visa immigration system to recruit overseas care staff. “We can’t afford to deliver quality, dignified care today,” he added.