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Care home insolvencies hit record level

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A record number of residential care home businesses went insolvent in 2016, according to new research.

The analysis by business advisory firm FRP Advisory reveals that 75 residential care home providers went out of business in 2016 up from 74 in 2014.

Chris Stevens, partner at FRP Advisory, said: “The fall in sterling against the euro will exacerbate pre-existing pressure on staffing costs in a sector reliant on overseas workers to fill frontline staff vacancies, and where margins have come under increasing pressure from the rise in the minimum wage, pension costs and cuts in local authority funding.

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“The care home sector is beleaguered due to all local authorities facing overall double-digit budget cuts for this current financial year under way and beyond.”

FRP said annual care home insolvencies totalled 32 in 2010 and have been steadily rising every year since.

The advisory firm said care was the only industry to have seen rising insolvency numbers over the past seven years.

Chris said operators providing purely for local authority residents where financial stress was most acute were the most vulnerable.

“The care home sector is beleaguered due to all local authorities facing overall double digit budget cuts for this current financial year underway and beyond, comprising often cuts of over 20% to their social care provisions meaning operators have limited abilities to increase their fees which currently for many are running below the true cost to the businesses of delivering appropriate care – all placing rising financial pressure on care sector operators,” Chris said.

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The author Lee Peart

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