Public policy think tank Respublica has said that a funding crisis in the elderly care market will cause the loss of 37,000 care home beds by 2020/21 in the authority-funded sector.
Private providers are not expected to create enough beds to make up the shortfall in many parts of the country because there is not enough profit to be made.
This, Respublica says, will lead to tens of thousands of frail and elderly people using hospitals as a last resort for accommodation, at an enormous cost to the tax payer.
“We project that if all these care home lost beds were to flow through to hospitals in this way, the annual cost to the NHS would total £3 billion,” Respublica predicts.
Director of ResPublica, Phillip Blond, said: “When Southern Cross failed the private sector stepped in and cared for those left homeless. Now, however, with the sector losing money for every funded resident there is no provider of last resort. We fear the worst case scenario is the most likely, that these residents will flood our local general hospitals costing £3 billion per year by 2020.”
The report, titled The Care Collapse, was commissioned by care home groups Four Seasons Health Care and HC-One, and by the GMB trade union.
Respublica published a report in 2014 that set out a five year plan for far greater integration between health and social services. In its latest update, the think tank says that questions over the financial viability of the residential care sector threaten the extent to which such integration can be achieved.
Its analysis points to several factors that threaten the entire care system including the ageing population, with the percentage of over 65s rising from 18% today to 25% by 2050. Nearly 10% of the population is already over 75 years of age.
This elderly population is most prone to acute health problems. Already 70% of health and care spending in England is on long term conditions; this money is being spent on 30% of the population in England.
And local authorities are squeezing funding for elderly care. 90% of local authorities now only provide funding for older people with ‘substantial’ or ‘critical’ needs. The result of this has been that the number of over 65s getting public money for social care has fallen by 27%.
The imposition of the National Living Wage will create additional pressure, the report concludes. “The National Living Wage is a great step forward. It is estimated it could help more than 6 million low paid workers. But for the care sector, which is heavily reliant on its labour force, it could be catastrophic. By 2020/21 we predict that a third of the funding gap will be because of the rise in the cost of paying staff the National Living Wage,” said the report’s author Emily Crawford.
Dr Chai Patel, executive chairman of HC One, the UK’s third largest care provider, said:“Our care staff do an incredible job day in day-out and deserve the Living Wage, but it must be properly funded. This report shows that unless the Chancellor takes urgent action to address this looming crisis, tens of thousands of older people will lose their homes and be forced into the NHS.”