Stalled recovery

William Laing, LaingBuisson executive chair

LaingBuisson has launched the latest edition of Care Homes for Older People. Deven Pamben provides coverage from the launch event and takes a closer look at the report

The number of occupied beds in older people’s care homes may not return to pre-Covid-19 levels until 2023, due to the second wave of infections dampening the sector’s recovery.

LaingBuisson estimates there were 395,000 older people in care homes in the UK in March and this fell to 363,000 by September. Founder and chair William Laing told a webinar at the launch of the latest edition of Care Homes for Older People that while some homes had few infections full recovery for the sector would not be for another two years.

HC-One chief executive James Tugendhat, who was sitting on a panel during the event, said admissions would normalise this summer and then catch up and return to pre-Covid levels in 2023/24.

James Tugendhat

He told attendees there were ‘wide variations’ in occupancy and admissions across its portfolio of 340-plus properties. ‘In homes where we have had no outbreaks and managed to stay safe all the way through, in geographies where they have been least impacted by tiering or lockdown, you have seen enquiries, in some cases, grow…and you have seen admissions hardly impacted and therefore occupancy has stayed very constant,’ Tugendhat said.

‘On the other hand, in areas most impacted…where you have more than one outbreak and it has been hard to contain and longstanding, admissions have come down well over the average – 40-50% or even more…’ he said.

Figures released by the Office for National Statistics show in the week to 15 January, there were 1,260 Covid-related deaths in care homes. Including statistics from Scotland and Northern Ireland there had been more than 25,000 coronavirus-related deaths in care homes since the beginning of the pandemic.

LaingBuisson foresees additional demand for older people’s care homes at between 17,000 and 93,000 occupied beds by 2031, due to two different approaches in modelling, which is explained later.

During his presentation, Laing said the private pay segment of the market would continue to grow and be profitable. ‘Those groups that are primarily focused on public pay have seen their profitability…on a downward trend,’ he said. ‘Those that are primarily private pay focused, there has not been the same downward trend and absolute profitability is higher and that represents the strength of the private pay market.’

He said despite ‘static’ demand, prices were growing due to costs, which were being driven by the rising National Living Wage.

Fellow panellist, National Care Forum executive director Vic Rayner said some of the ‘spiralling costs’ care providers have had to cope with would not be recognised until next year, with occupancy continuing to be ‘under pressure’.

On the workforce, she said: ‘They have been under relentless pressure and strain for the last ten months unlike their colleagues in the health system, who I am not suggesting haven’t been under pressure but there has been some easement…The pressure for care home staff has continued throughout this and it is something we ignore at our peril.’

Covid-19

Analysis of first wave data shows the 30,000 Covid-19 or other ‘excess’ deaths among English older care home residents represented over half the excess mortality across the whole population, the report said.

From the beginning of October, which was around the start of the second wave, to the end of 2020 there were fewer deaths. ‘Within the general population this may be attributed to improved treatments,’ the document said. ‘The lower mortality toll in the older care home population can also be attributed, in part, to the infection control measures that care home operators have taken, including very strict visiting rules.’

Figure One shows care home resident deaths from the virus peaked very early at over 50% of all Covid-19 deaths in England, as the transfer of older hospital patients to support settings happened.

The proportion then fell to between 23% and 28% during the weeks of the second wave, due to the care home infection control measures effective in suppressing Covid-19 deaths in settings.

Laing said a feature of the mortality statistics, for both the older care home and the general populations of England, is that total deaths during the second wave up until mid-December had been running below the level of expected and Covid-19 deaths. ‘This may reflect the removal of some of the most vulnerable people from the populations during the first wave,’ the report said.

Substitute

The demand for care homes has been ‘relatively static’ over the past 15 years, according to the report, despite the ageing population. It points to a few factors for this, including restrictive eligibility criteria applied by public sector agencies, and the availability of substitutes for care homes, including housing with care and live-in support.

The document said when trends in the two sectors – care homes and housing with care – are set out side by side, the ‘striking feature’ is that combined demand closely tracks the UK’s raw index of population ageing, as illustrated in Figure Two. ‘On this evidence, it is tempting to single out the expansion of housing with care as the principal factor responsible for recently subdued care home demand,’ it said.

Unfortunately, there is no research that shows some older people living in housing with care developments would have entered a care home if the alternative had not existed. ‘Nevertheless, some degree of substitutability is plausible, and will presumably apply in the future as publicly and privately funded housing with care continues to expand from its relatively small base,’ the report said.

As mentioned previously, projections of future demand offer two different approaches.
A variant of the Brookings Institute model argues that admission into a care home for older people is an event near to death. It therefore projects the volume of demand for care homes pro rata with official projections of numbers of deaths. This leads to a projected 93,000 increase in the volume of demand from 395,100 last year to 488,100 by 2031, as illustrated in Figure Three.

A separate approach – adjusted population ageing index – assumes counter-drivers of growth, such as housing with care, will continue to apply. The population ageing index is therefore ‘adjusted downwards by a factor sufficient to bring past projections of demand in line with recently observed demand’.

The resulting index is then applied to future population projections to give a ‘much more conservative’ projected rise of 17,000 to 412,100 by 2031, also seen in Figure Three.

Market

The value of UK services for older people in residential settings was estimated at £17.3bn at the end of March last year, dropping to £16.6bn by September.

As illustrated in Figure Four, the sector has experienced ‘significant’ deconsolidation at the upper end over the last 15 years. At the end of 2010, the top ten providers held 20.3% of total sector capacity, which is 6.9 percentage points down on the peak of 27.2% reached in 2006.

‘The fall is mainly due to the demise of Southern Cross Healthcare Group in 2011 and dispersal of its portfolio across a number of operators, followed more recently by disposals by former market leaders Four Seasons Health Care and Bupa Care Homes,’ it said.
Deconsolidation, the report warned, would continue as Four Seasons disposes of its remaining portfolio.

Administrators to Four Seasons restarted the sale process of the operator’s Northern Irish business in October. In March, the group agreed to transfer two portfolios of properties, comprising 58 operating care homes and specialist units, while in December 2019, it agreed to hand over 57 leasehold homes to four operators as part of its restructuring process.

The document pointed out HC-One had emerged as market leader by acquisition, but no company had yet taken the place of Southern Cross Healthcare as a strong driver of market consolidation.

With a capacity of 379,000 beds, the for-profit segment dominates the UK supply of care homes, which represents 87% of independent sector supply, with not-for-profit providers supplying the remaining 59,000 beds (13%).

Staffing

According to Skills for Care, the percentage of days lost to sickness was around 2.7% pre-Covid-19. This more than doubled to 7.5% between March and August 2020, during the pandemic.

By September, care homes in England were reporting through NHS England’s capacity tracker, average absence rates of 5% for nurses, 4% for non-nurse care staff and 1% for non-care staff.

Vic Rayner

As mentioned by Vic Rayner during the webinar, pressure on the care workforce has been unrelenting and a snap survey at the beginning of this year of National Care Forum members showed staffing absences were on the increase.

Additional pressure during the pandemic has led to workforce fatigue and ‘burnout’, impacting on the mental and physical wellbeing of NHS and care staff, a report by MPs in October concluded.

The health and social care committee’s Delivering core NHS and care services during the pandemic and beyond said it was concerned NHS and care staff were suffering exhaustion and that the wellbeing of workers was at significant risk.

Last month, the government provided local authorities with an additional £120m to support staffing in social care settings.

LaingBuisson estimates there were about 425,000 full time equivalent staff, including agency staff, working in independent sector care homes for older people and dementia across the UK last year, not counting regional and head office staff, which may add a further 5%.

Sources told Care Homes for Older People staffing numbers had not changed much, despite the reduction in resident numbers because of Covid-19.

‘With the prospect of coronavirus vaccination being rolled out in early 2020/21, it can reasonably be predicted that the sickness absence rates for hourly paid care home staff overall will return to its baseline level of about 3% in financial year 2021/22, the report said.

‘Staff costs at home level, including agency, were estimated at £10bn, based on financial year 2020/21 pay rates. The report said agency staff costs to care homes were estimated at £650m last year for all client groups, with settings for older people and dementia accounting for the ‘lion’s share at £510m’.