The UK care home market’s increasing reliance on the private pay market has been revealed by LaingBuisson.
In its UK Care Homes for Older People Market report, LaingBuisson shows private payers now account for 51% of the care home market by value and by 45% in volume terms.
The thriving private pay market is also driving growth in the sector, rising by 6.1% (CAGR) in cash terms between 2009 and 2019, compared with 3% for the market as a whole.
LaingBuisson forecasts healthy growth to continue for the sector as the ‘owner occupier peak’ moves into the over 85 age group where people are most likely to enter a care home.
In contrast, the state pay market remains under pressure with local authority fees barely covering providers’ average costs.
LaingBuisson said the current situation was being sustained by cross subsidies with private payers forking out on average over 40% more for their care than local authorities.
The report reveals that a number of local authorities are considering re-entering the residential care market to ensure they can access care at a price they can afford while also benefiting from additional income from private payers.
The analysis also reveals that one in eight care homes have been forced to close in the last decade due to market pressures.
In total, the number of care homes has dropped from 12,592 to 10,980 over the decade.