Care home insolvencies almost doubled in 2017/18, according to accountancy firm Moore Stephens.
Almost 150 services (148) went out of business in the year, compared with 81 in 2016/17.
Lee Causer, Partner, said: “Care homes should be benefiting from the demographics of the UK – an ageing population. But they are not. Care homes are not receiving enough local Government funding to sustain the profit margins necessary to run a successful business.
“Many companies are finding it difficult to cope with the rising costs associated with the care industry. Without additional income, care homes will not be able to offer the levels of care required whilst remaining solvent.”
Moore Stephens attributed the rise in insolvencies to the cuts in local authority budgets and rising costs, including the National Living Wage, as well as a dependency on agency staff.
The accountancy firm said staff costs accounted for more than half of average care home turnover.
Mike Padgham, chair of the Independent Care Group, said: “These figures come as no surprise, we have been warning for years that the £6bn cut from social care would eventually see more and more care homes closing – and here we have the evidence.
“However, the statistics only tell half the story. For every home closure there are older and vulnerable people either forced to find somewhere else to live or unable to have a place because the number of homes is on the decline.
“Some 1.2m people in this country are now going without the care they need – this is our mothers, our fathers, aunts and uncles – and unless action is taken this will very soon be us.
“We now face a further £2.3bn funding shortfall and that is going to mean more and more people not getting the care they need.
“The Government has to act on the crisis in social care – even if it means we have to better fund care through taxation. Otherwise, we are going to see more and more statistics like those issued today.
“It is shortsighted not to support social care. A hospital bed costs far more than a care bed – so investment in social care saves the NHS money.”