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10th August 2017

Care Homes Market Study – Competition & Market Authority

In July 2017, this study was published.

It invites views on their findings so far, our future focus and possible recommendations. I was asked by Care Forum Wales to do so on behalf of providers in Wales. Most of their conclusions accorded with my experience. Although my responses have a slant from the Welsh perspective most issues will be relevant UK wide.

The report highlights that for the market to work well, prospective care home residents and their families need to be able to make informed choices. The initial results from the Competition and Markets Authority’s (CMA) consumer research suggest that many people find it challenging to make decisions about care under the stressful and time pressured circumstances which generally apply. Even when good information is available people rarely seek it or engage with it. Many people do not seek more information and in many cases, they are confused by the social care system and funding arrangements, and do not know how to find and choose between homes.

It goes on to say that where a resident is dissatisfied with their care home, it is generally not realistic to expect them to move to another one. Once settled, the upheaval of moving from a familiar environment can be extremely disturbing, and can adversely impact on the health of the resident. It is therefore essential that effective mechanisms are in place for residents to express their views and, where necessary, have them acted upon. Their findings, however, indicate that complaints and redress systems often do not work well, as residents often find it very challenging to make complaints.

The CMA found that while many care homes offer a good service, they have identified concerns that some might not be treating residents fairly and that certain business practices and contract terms might break consumer law. Many of these consumer protection concerns relate to how some care homes treat self-funded residents, including for example issues around the lack of indicative pricing information on websites, the charging of large upfront fees and deposits, care homes having a wide discretion to ask residents to leave, and requirements to pay fees for an extended period after a resident’s death.

It is also recognised that there is evidence of competition between care homes to provide care home placements to local authorities. However, some providers have told us of instances where they have found local authority and NHS procurement processes are complex, inflexible, and insufficiently person-centred. Some providers have also argued there is inadequate provision to encourage and reward quality.

Whilst the possibility for families and friends to make top-up payments can give residents greater choice of accommodation, some providers have told us that top-ups are not always encouraged or facilitated. In addition, it appears that in some areas, making a top-up payment may be the only way a prospective local authority-funded resident will have a choice of care homes to go to.

The CMA have referred to demographic changes and recognised that demand for care home services is expected to increase very substantially in the coming years. The number of people aged 85 and over is projected to more than double by mid-2039, and the level of care needed for people moving into a home is increasing over time because, having spent longer in their own homes, people are more frail when they do move into a care home.

The building of care home capacity takes time, and investment, therefore, needs to take place in good time for places to be available when they are needed.

In contrast, short-term funding pressures, in the forms of current fee rates, the number of placements local authorities make in care homes (rather than meeting needs through other means such as domiciliary care ) and uncertainty over future funding, mean that there are at present weak signals and incentives for the sector to undertake future investment necessary to grow capacity primarily intended to serve state-funded residents. Their initial results suggest homes primarily serving local authority-funded residents have lower margins than those with higher proportions of self-funded residents. It seems likely that the incentives to attract investors to build new capacity will be lowest where it is aimed at primarily serving state-funded residents.

*All information is correct at the time of publishing

Mike Kemp

Welsh Regulation Specialist

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