Posted by Rachel Bashford

Care Home Costs: What Pressures Are There?

Some care homes are coming under increasing strain due to the current financial climate.

How might this impact costs for residents?

Elderly Couple

This article will update you on:

  • The current situation for the care home industry.
  • Reasons for potential cost increases.
  • Influences on future cost decisions.

What Is The Current Situation For The Care Home Sector?

It will come as no surprise to many that the increase in UK prices during 2022, combined with a squeeze on income, is impacting nearly every sector, not least the care home industry.


According to The Health Foundation, the Chancellor’s Spring Statement of 2022 brought no extra funding for the health and social care sectors. Plus, it is expected that inflation will hit around 8% by 2023, which will create further demands on most care home finances, in regards to staff pay, utility bills and other essential outgoings.

Inflation forecast
Source: House of Commons Library

Addressing the issue in more detail, The Guardian newspaper explores how compression on the UK economy is beginning to influence people’s everyday spending decisions.


Highlighting these issues illustrates how individuals and businesses are facing difficult choices about a wide spectrum of financial matters.


With a great majority of care homes and retirement living communities still trying to get back on their feet after the coronavirus pandemic, these costing pressures are already having an effect. If you’re a care home resident, or a family member, then you may have had a few conversations this year about fees.

This BBC video summarises the cost-of-living crisis and how it’s affecting large sections of the UK population.

Unless you have been directly involved in a care home, either being in one yourself, working in one or being a loved one of a resident, it’s likely that you aren’t completely aware of what care home fees cover.


It’s probably fair to say that many people don’t realise that the resident fees cover everything a person needs to live well. In general, care home charges cover the care at a level that residents need, assessed on an individual basis.

Also included should be food, energy and utility bill costs so that people can live without the worry of having to deal with sorting out bills or unexpected payments.


It’s tricky to compare the difference financially when living in a care home to living independently at home, but it’s not always recognised that care home charges do cover a wide range of essential living expenses.

As a result, there are possible tensions in terms of managing costs in care homes because of the multidirectional demands being faced on a daily basis.


Of course, these are changing the nature of household budgets up and down the country; however, care homes do have those extra costs and financial pressures related to areas such as staffing, cleanliness and medication that mean they are constantly factoring in rises and trying to balance these as best as they can.

Why Might Care Home Costs Be Rising?



There are a range of increasing pressures that many care homes are now having to deal with. Some facilities may be more affected than others, but most will be feeling the bite of constricted finances in one way or another.


Here are some of the reasons why care homes may feel they have to increase residents’ fees to pay for their growing costs.


The Coronavirus Pandemic


Undoubtedly, care homes in the UK were some of the most impacted locations during the pandemic. With substantial amounts being spent on PPE, testing, cleaning and all the other issues related to Covid, many care homes have struggled to keep going in the face of such a devastating period.


While many of us may believe that life is now quite a lot closer to pre-pandemic normality, care homes are still grappling with the after effects and continue to pay for protection so that their vulnerable residents are safe.


This ongoing situation is still affecting the way care homes are run and operate on a daily basis, without a real end point to work towards and with a concertina-like impact on budgets.


The withdrawal of the infection and testing control fund occurred last month, in April 2022. This has huge implications for care homes, according to the Local Government Chronicle.


Independent Care Group chair Mike Padgham said the “pandemic, sluggish occupancy and the growing cost of living crisis have left the sector on its knees. Now the fund set up to help us to staff the Covid-19 pandemic is ending and nothing is being put in its place.”

Care home managers are becoming increasingly concerned about this open area of their budgets and how it may affect the ways in which they can spend money in the future.


Staffing

There are a variety of reasons why staffing may be having an effect on care homes and their finances. Firstly, Brexit resulted in a number of staff who work in care homes either not being able to work in the UK anymore as a result of work visa implications or because some workers decided to return to their home country.


In order to best deal with a lack of available staff, some care homes turned to agencies to supply staff, which means they are charged higher rates that in turn impact negatively on their budgets.


In a recent article, The Financial Times reported that increases in national insurance and the national living wage will also restrict care facility finances even further.


The government has made the Workforce Recruitment and Retention fund available for adult social care environments, in the hope that this will help to ease the problems surrounding staffing in care facilities.

To illustrate the purpose of the fund, the government says it offers support with,

“ A range of tried and tested initiatives which other local authorities and care providers have successfully implemented to increase adult social care workforce capacity.”


Energy Bills

For many care home providers, energy is the largest non-staff cost. With energy bills soaring above previous years’ prices by around 54% now and predicted to potentially rise again in the Autumn, these costs will potentially add extra financial stress in regards to care home budgets.


Highlighted in an article by Citizens’ Advice, there are real concerns that individuals, older people and care home providers are already feeling the pinch of skyrocketing energy prices and that this situation will only become more urgent over the winter.


It’s important to note that the rise in energy bills is affecting large portions of the UK population, not just care homes. But, where there are communities of older people living together, the use of energy to heat and keep vulnerable people warm and well cared for contributes to significant increases in energy bills.

This video from ITV quickly summarises the current cost of living crisis, including rising energy costs.

As with all parts of UK society, it’s possible care homes will face a challenging time during the rest of 2022, and potentially into 2023, in terms of budgetary decisions.


It has been predicted that there will be further energy bill increases towards the end of this year, which will have a restrictive effect on care homes as there will be an increased need for energy through the winter months to maintain warmth for residents.


In addition, the National Audit Office has reported that there will be a long-term incline in the amount of people needing adult social care over the next two decades, adding to the pressures on care homes to make space available for a growing number of residents.

Projected increases in demand
Source: National Audit Office

What Is The Best Way To Research Information About Care And Support In Retirement?

Growing numbers of people are turning to Autumna for support and information when they want to find out more about their care home options.

Starting an internet search without really knowing what to look for can be tricky but, as users quickly discover, the simple search tools on Autumna help people to rapidly find what they are looking for.

Let Autumna help you. Why not complete this short form to let us know exactly what type of care is important to you? We’ll then use our database of over 26,000 care providers to filter your search and send you a shortlist of those that can help.


Alternatively email us here: info@autumna.co.uk or call our Advice Line on 01892 335 330. Our phone line is open seven days a week. (8:30am - 5:30pm Mon-Fri, 10am - 5pm Sat, 10am - 4pm Sun).

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