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Following the introduction of the new National Living Wage on 1st April, this years care home fee review brings mixed feelings for the sector. While the increase is welcome, it is felt that it is not enough.

Sheffield City Council have recommended that fees in 2017/18 will rise by 3.2% for residential care homes and for nursing homes.

The tables below show the increased Sheffield City Council fee bandings:

 

 

Residential Care Max Contribution from SCC (2017/18) Mac Contribution for higher Environmental standard (2017/18)
Standard £389.00 £391.00
High Dependency £426.00 £430.00
EMI £434.00 £438.00

*Source: Report Supporting The Recommendations for Care Home Fee Uplifts Sheffield City Council 2017/18

 

Nursing Care Max Contribution from SCC (2017/18) Max contribution for Higher Environmental standard (2017/18)
Standard £590.00 £596.00
Enhanced £603.00 £609.00

*Source: Report Supporting The Recommendations for Care Home Fee Uplifts Sheffield City Council 2017/18

Last year in our  2016/17 care home fee review and analysis, we saw the fees increase by 4.32% and now we look at the latest figures  to review each of the core key performance areas for care homes, to look at the stability and sustainability of the care home market and analyse the recommendations for 2017/18 Sheffield care homes fees.

This year’s care home fees review and market analysis follows (and provides a more in-depth look at the care home market) our article: How is your care home performing? Which found that although there were positive signs moving forward, many care home operators still face an uncertain and challenging future.

Sheffield care home fee review and market analysis 2017/18

This years care home review comes with some interesting stats, detailed below:

  • Fees for 2017/18 are to rise by 3.2% for both residential care homes and nursing homes
  • There has been a total net reduction of 200 beds since 2013
  • With the increase to the National Minimum Wage, the National Living Wage and associated pension costs, care homes are facing ever increasing financial pressures

In detail – Sheffield and the national picture

Supply and demand:

In 2016 there was a total of 3,768 bed places in the city – this is a net loss of 200 beds since 2013 and 2016/17 saw the largest number of net bed losses.

In the latter part of 2016, there were two unexpected care home closures, and while this didn’t have a significant effect on the market in terms of availability, there was a significant reduction in beds that were available. According to the Sheffield City Council, it is not necessarily the number of beds available that is an issue, but more so the amount of beds that are available at a standard price.

The data suggests that while the market can cope in the short to medium term, it can’t be suggested that the market is ‘stable’ and if there are any more unexpected closures, or any closures of any kind, it could potentially create significant instability.

According to a report by Adult Social Care Outcomes Framework (ASCOF), the number of admissions of older adults into care homes has increased by 257.5 per 100,000 population between 2015 and 2016 and if this continues to increase, it is entirely possible that demand could exceed supply in the medium term.

It is recognised that further work is needed to ensure that older people only go into a care home unless it is absolutely necessary and that further support is needed to care for people at their home after a short hospital stay. This could potentially reduce the amount of people living in a care home for the longer term.

The tables below show the supply in care homes if demand continues at the current rate – the shaded boxes show the demand exceeding supply:

*Source: Report Supporting The Recommendations for Care Home Fee Uplifts Sheffield City Council 2017/18

*Source: Report Supporting The Recommendations for Care Home Fee Uplifts Sheffield City Council 2017/18

Costs

Year upon year, payroll costs continue to rise. The increases to the National Minimum Wage and the National Living Wage (from 1 April 2017) will undoubtedly bring more financial challenges for care homes up and down the country. The care sector is going to be one of the hardest hit sectors by the yearly increases to the National Living Wage, particularly as salary structures in care homes are often set relative to the National Minimum Wage i.e. those paid above the National Living Wage may also expect to be given an hourly pay rise when the new rates come into force.

Staff retention and agency costs also continue to be an issue for providers, difficulties in finding qualified nursing staff and skilled care employees is leading to an increased reliance on recruitment agencies, which in turn is increasing the cost of recruiting new members of staff. Reducing staff turnover and retaining well-trained, qualified and competent staff is becoming ever more important.

2017/18 Sheffield care home fees rise

Scott Sanderson, Healthcare Partner at Hawsons, had his say on the fee increases: “The fee increases are of course welcome news. However, with the continued financial pressures facing care homes, one can’t help but feel a little disappointed that the recommendations were not of a higher value. It is 1.12% less than last year and while we appreciate the uncertainty currently surrounding our economy, care homes are finding it ever more difficult to cope with the mounting financial burdens that are being placed upon them.”

“While the increases for Sheffield care homes will be a relief to many operators and provide much needed financial support, it is no secret that costs are rising, staff retention is down and demand could soon exceed supply. That, in conjunction with an ageing population and the care home bed shortage, means that the care sector is still on an uncertain course.”

More from our care sector experts

You can also find all of our latest care sector news and newsletters here.

If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.

Alternatively, we offer all new clients a free initial meeting to have a discussion about their own personal circumstances – find out more or book your free initial meeting here. We have offices in Sheffield, Doncaster and Northampton.

Scott Sanderson began his career with Hawsons and trained as a Chartered Accountant, becoming a partner in 2015, specialising in the healthcare sector and small businesses. For more details and advice, please contact Scott on [email protected] or 0114 266 7141.

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