Cuts to funding ‘pushing care homes into the red’, law firm says

Max Wright, partner and head of Rix & Kay's specialist care sector team
Max Wright, partner and head of Rix & Kay's specialist care sector team

A new report published by a Sussex law firm suggests care homes are struggling to remain profitable, with 72 per cent stating that funding and cash flow is now the biggest issue facing their business.

The findings, published by Rix & Kay, have been drawn from research into care homes across Sussex, Surrey and Kent.

The report highlights the fact that central government funding continues to reduce, leaving care home owners no option but to inject more capital into their business, not just to keep it ‘ticking over’, but to meet CQC (Care Quality Commission) requirements.

According to the report, only 15 per cent of care home owners interviewed believe the sector is an attractive business proposition to new entrants. The firm said this comes as the demand for care continues to increase as a result of an aging population.

The problem is compounded, Rix & Kay said, by clients not understanding the funding options available to them, coupled by the ‘managed funding criteria’ set by local authorities and CCGs (Clinical Commissioning Groups) which restrict funding to care home users.

Another common theme emerging from the report is that care homes feel that local authorities and CCGs are allowing people to remain at home, or in a less supported care structure, for longer than they should, based around a lack of funds and resources. As a result, the law firm said people’s health fails faster, so that, when they are admitted to a home, they need a higher level of care than they ordinarily might, which is more expensive. This, in turn, puts greater pressure on local authorities’ own budgets.

Max Wright, partner and head of Rix & Kay’s specialist care sector team said: “Our report, which is a follow up to the report we produced in 2014, provides great insight into the challenges care home providers face today as well as the issues faced by individuals and their families entering or already in a care environment. We hope it will be a useful strategic planning tool for care providers.

“One very welcome outcome of Rix & Kay’s work in the sector is how a number of care homes interviewed expressed greater confidence in running their business as a result of addressing themes that we explored and in many cases advised on.”