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By Debbie le Quesne

It could soon be a providers’ market (but don’t bank on it)

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During next five years a shift in the dynamics of the care market could favour providers, according to an interesting appendix buried at the end latest white paper by industry analysts LaingBuisson.

The economic forecast (an excerpt from Care of Older People Market Report – 27th edition, published in September 2015) goes like this: “The care home market is subject to a self-righting mechanism like any other market. Investment is curtailed when prices (as now) are insufficient to offer a reasonable return in areas of high public pay. As a result, against a background of rising demand, shortages can be expected to appear.

“Market power will shift towards providers, prices will rise and public authorities will be forced to find extra resources if they are to meet statutory duties.”

The timescale? Likely over the next five years, the analysts say.

As you’d expect with any economic prediction there’s a get out jail clause or two, and here they are: “Market imperfections (including non-transparency of market information together with development time lags) will predispose the market to overshooting equilibrium in both the contraction phase (which the care home market appears to have entered now) and any past or future expansion phase.

“There is also historical evidence of such cyclical patterns in the care home sector in the last two decades . . .”

And there’s more:

The Conservative administration may feel the crisis justifies a pre-emptive injection of substantial new funding – the National Living Wage (£7.20 from April 2016, rising to £9.00 by 2020) would certainly be a driver.

Without an at least partly compensating increase in government grants to allow councils to raise the care home fees they pay, the government can expect – here we go – a “wave of financial failures in the care sector.”

And finally in this post, L&B come up with a stunning nugget of information which may be the real reason for the postponement of the Dilnot elements in the Care Act. At a stroke, the delay (2020 is now the target date) some £2 billion can expect to be saved over the next four years.

Money saved, yes, but at a cost. Those residents who live in the less affluent parts of the West Midlands will certainly not be able to take up the slack, so it stands to reason that those residential and domiciliary businesses will be the first to go.

And the next in line will be those providers who have indeed followed the rules and regulations to the letter and discover too late the cost of doing so does not make for a viable business model. You know, I still can’t help thinking how callous and shortsighted such decisions are. Are we not ultimately penalising the most frail and vulnerable and those who care for them?

 

 

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