Older people (65 plus) Care Home market

• There are 145 homes in Somerset that are CQC registered for 65+ services. Of these, 1 is dormant and another is in the process of closing. This leaves 143 homes with 5,459 beds that are registered for 65+, although not all these beds are currently available and not all homes specialise in 65+.
• 53 homes (3,034 beds) are registered for Nursing and 36 (2,344 beds) of those are registered for dementia.
• There are 90 residential (without nursing) homes (2,425 beds) and 46 (1,711 beds) of these are registered for dementia.

In 2021/22 Somerset made 446 placements in residential homes and 487 in nursing homes. These figures were similar to 2020/21 however the table below shows an overall decreasing trend in the number of new placements each year since 2017/18.

At the end of the 2021/22 there were 859 people in a residential placement and 823 in a nursing placement.

The care home market in Somerset is feeling the impact of inflation on gas, electricity and food prices. This has been a particular concern during the winter with higher usage periods. Although the headline inflation rate has started to fall, food inflation remains at record high levels with 16.9% recorded in December 2022. Alongside this we have received reports from providers with expiring fixed term contracts that they are seeing energy price increases of 500%-600%. These increases are now being passed on to the local authority through fee rates and new placements are not able to be made at our published fee rate for 2022/23 and most fee rate requests are at a higher rate than our proposed fee for 2023/24.

Where providers have current placements at our fee rate, we are getting regular requests for fee uplifts to enable them to remain in business. The impending 9.7% increase to National Living Wage will put further pressures on the running costs of care homes and these costs will continue to be passed on to both local authorities and self-funders through increased fee rates. Somerset’s published fee vs actual fees paid by the Council are shown below. This illustrates the difficulty we have placing at the published rates.

Workforce for the care home sector is a challenge with most struggling with recruitment and in extreme cases this has led to homes having to close whole wings of their property. This reduces the amount of capacity available in Somerset to support hospital discharge flow and people who need to move into a permanent placement.

Skills for Care data shows that vacancy rates have increased in both Residential and Nursing homes for the period where data is available.

It is estimated that there were 8,400 posts filled in care homes at April 2022, but with vacancy rates over 5% this would equate to roughly 500 vacant posts[1].

Providers are losing long term employees to acute hospitals due to the NHS ability to give higher salary uplifts and better terms and conditions. This has been a particular issue with nurses since the agenda for change uplifts announced in the summer. This is a good example of where actions taken in the NHS can affect the ability of social care to react to pressures in the hospitals and provides a good argument for more joined up funding for the whole system.

The delays to charging reform will mean providers can continue charging a premium rate to self-funders. This does mean that providers are likely to prioritise self-funders to remain sustainable businesses in the face of huge cost pressures driven by inflation. This will leave less beds available for those who are eligible for council funding and make market management more difficult but is likely to keep care homes in the market that otherwise may have failed.

The number of care homes that are registered for and able to accept people with dementia is a priority area for commissioners to develop over the next few years. In 2017 it was estimated that around 9,300 people in Somerset have dementia and this is projected to almost double to 18,000 by 2035. The number of new dementia cases each year is predicted to rise by 86% to over 4,800 by 2035. Rates of dementia in Somerset are significantly higher than the national average and there are indications that even this may significantly under-estimate the true picture. In 2016/17, 1.0% (5,479 people) of all those on GP practice registers in Somerset were registered with dementia, compared with 0.8% for England.

We are already starting to see the impact of these increases through more assessments for people with severe dementia, both with nursing needs and without.

Somerset Council purchase approximately 35% of the total beds registered and commissioners have been working with the care home market to gain a better understanding of where vacant beds exists. This has been through a combination of the National Capacity Tracker and local sourcing arrangements. As a result, we have a much better understanding of the care home market than we did when submitting the provisional Market Sustainability Plan in October 2022, which is allowing us to identify placements for people quicker.

Assessment of the impact of future market changes between now & Oct 2025   

Funding reforms will have a longer-term impact on the care home market so the delay will give us more time to prepare the market for the change in the equity between council funded and self-funders.

The immediate concern is the pressure that providers are facing due to inflation, with energy costs, food and staffing costs increasing at levels not seen in recent history. This is driving up fee levels which are then being passed on to the council and self-funders. Should inflation continue at the current levels for a long period of time it is likely that fees will continue to increase beyond the cost of care and this will put further pressure on council budgets. If we are not able to keep pace with these cost increases, it is a real concern we will see further home closures. This could leave Somerset without enough care home beds to discharge our statutory duties under the care act (2014) or to support hospital discharge.

Plans to address sustainability issues

Somerset made a substantial financial investment into the care home market for 2022/23 and plans to increase fees by between 26% and 58% for 2023/24. It is planned that fees will continue to increase in 2024/25 and 2025/26, at which point it is anticipated we will be paying the cost of care identified by providers during that exercise.[2]

There are big financial pressures in this sector due to high inflation which has led to a market where care homes are having to charge fees above our published rates leading to increased costs for the council. These are being considered on a case by case basis which can cause delays however the care home market is in a strong negotiating position due to the vast majority of homes now charging above the set fee rates.

There have been 10 home closures since the start of 2022 (for a variety of reasons, including safeguarding/quality concerns) and we are attempting to safeguard against further closures; however costs pressures could see home owners looking to exit the market. Further loss of bed capacity would seriously impact social care’s ability to react to NHS pressures or to find permanent care home beds for those who need them.

We will be working with care homes to ensure that there are sufficient beds available to meet future demand, particularly for people living with dementia. There are almost twice as many homes registered for residential only as there are for nursing and this is something that it is our intention to address over the next 3 years. We also aim to remove the burden of collecting assessed contributions from people in receipt of services, which providers are currently contractually obliged to do.

[1] Local area information (skillsforcare.org.uk)

[2] Decision – Adult Social Care Fees and Charges 2023-24 – Modern Council (somerset.gov.uk)