Care home operators are pressing the UK government for higher prices to take in NHS patients as they seek to tackle a staff shortage before the pressures become even more acute.
Companies such as market leaders HC-One, Barchester Healthcare, Four Seasons and Care UK could receive up to £200mn under the new NHS crisis plan to clear patients from hospital beds by moving them to care homes.
The sector has about 70,000 free beds, according to data from property consultancy Knight Frank, far more than the 13,000 patients waiting for discharge.
But the private care home operators are pushing for prices of two to three times what some local authorities have been paying per bed per week, according to the industry association Care England, arguing they have been historically underfunded and hit by inflation.
Providers said the extra money would help them pay staff more, so they did not lose workers to more lucrative and less stressful jobs.
However, some critics have questioned whether the NHS should be funding care home operators, some of which have been criticised for paying out millions of pounds to private equity owners and not paying tax in the UK.
Jake Rollin, director of commissioned care and commercial support at HC-One, said the government would be much more likely to secure the extra capacity if it created a “national tariff” for a care home bed of about £1,500 a week.
Local authorities, which pay for most publicly funded social care beds, are often paying about £600 to £700 a week, with some offering as little as £490 a week.
Rollin said this may seem “expensive” but there were extra costs involved in responding rapidly. “I think the price of £1,500, when compared to the average cost of a stay in hospital, actually starts to look quite good value for money,” he said.
He added the company would be prepared to discuss restricting its margins to a “reasonable rate of return”, perhaps between 6 and 10 per cent. With 1,300 beds available, Rollins said the provider could create capacity in some areas where it has staff by the end of January.
Former Goldman Sachs bankers Jay Dodhia and his wife Palvi Dodhia run a smaller chain called Serene Care and are buying a care home that is more than half empty. Jay Dodhia said he could offer those beds, if the NHS would pay enough to cover the staff wage bill, which has risen 6 to 10 per cent, and utility bills that have increased four to sixfold.
“If the NHS were able to say, here is the rate we are going to pay every care home, no matter where it is, it would clear the way for us to be able to block book these beds,” he said.
Nick Hood, social care specialist at financial consultancy Opus Restructuring, said there were 165,000 job vacancies in social care. “If the NHS is going to pay at a premium rate, it would provide the care home operators with the ability to go out and recruit at a level of pay that means they stand some chance of actually getting people,” he added.
Occupancy in care homes has still not recovered to pre-pandemic levels after Covid-19 outbreaks in the facilities put some people off applying for places.
William Laing, co-founder and director of consultancy Laing Buisson, said the £200mn was a “significant sum of money” and could be “good for business provided the price being paid is a reasonable price”.
However, Christine Corlet Walker, a political economist at the University of Surrey specialising in social care privatisation, said it was a “very tricky situation”. Her research found private equity owners were more likely to cut corners on the quality of care.
“I understand the logic behind wanting to use the money to secure those beds, but it is concerning in terms of both the potential quality of care being delivered and the public money ending up in the pockets of shareholders, rather than going towards decent delivery of care,” she said.
The Department of Health and Social Care did not say if it was prepared to pay the higher rates. It said several care home providers had spare capacity, including necessary staffing, and local NHS teams would work with them and local government to “determine the most appropriate and cost-effective placements for patients”.
Julian Evans, head of healthcare at Knight Frank, said there was “significant cynicism” in the sector because successive health ministers had never truly grasped the problem. He did not think the NHS would pay £1,500 a week, so believed most operators would focus on their most profitable market: self-pay customers in relatively affluent “middle England”.
“It’s absolutely ludicrous that when we’ve got 70,000 beds potentially available to shore up the NHS, there’s a lack of communication on sensible tariffs,” he said.