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Funding crisis could close 25 care homes in Devon

By Western Morning News  |  Posted: November 09, 2012

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Care home owners have warned that Devon County Council must raise fees at the end of its recently-launched review or a list of 25 private providers the council identified as being at risk will close.

The authority suffered a defeat in the High Court this week and is now conducting a "fuller equalities assessment" which could lead to a rise in the fees it pays businesses to look after residents.

It currently pays maximum weekly fees of £558 a week for nursing care and £415 for residential care, following a 6.6% increase this year.

The Devon Quality Care Forum says a general rise of between 15% and 20% is required or the 25 homes will shut, forcing hundreds of vulnerable people to be moved.

The authority says the homes are at "greater risk of closure" because of low occupancy levels.

It argues that closures are an inevitable part of the market and claims the 25 have too few private payers, who homes say they are forced to charge £150 per week more, to subsidise council-funded residents.

Alan Beale, managing director of South West Care Homes and the DQCF spokesman, said: "We know a lot of care homes are under serious financial pressure.

"They are hanging on, gradually cutting corners and reducing costs while the banks circle, imposing more and more stringent conditions.

A High Court judge ruled on Tuesday that the council had failed to meet its public sector quality duty in setting the banded fee rates for residential and nursing homes in 2012/13.

The council was told it acted unlawfully and was ordered to pay a third of the complainants' costs, said to amount to around £220,000.

But the judge rejected two out of the three allegations by owners – that the council had not consulted lawfully over the setting of fees, and that the initial model to calculate the fee levels was not rational or accurate.

The authority said its detailed equalities assessment would be completed by the end of the month.

"A decision will then be made as to whether this work makes a difference to the current fee levels – this may or may not result in a change to fee rates," a council spokesman added.

"Care home businesses can and do fail for many reasons including quality, a failure to attract private customers and failure to meet changing demand

"Where private homes do close, the council does already step in to support residents and their families in finding suitable alternative accommodation, even when they have had no previous involvement with the home."

Graham Greenaway the owner of three care homes, and a former member of the DQCF during the first judicial review, predicted there would be "a heck of a lot" more closures than the 25 on the list.

"This will have a massive and dramatic effect on the owners, the staff and a vulnerable client group," he added.

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  • emma_springs  |  November 12 2012, 4:31PM

    @blackpot ...From my experience of care homes, the owners at present would have no such thing as a 'fat salary', as they are desperately trying to keep the homes afloat and at a good standard of care; very often meaning they take a pay cut because of this. And considering the amount of time and effort they put in to their businesses to keep them afloat in the current climate, I think they deserve to be paid more than minimum wage; don't you? Maybe you should look in to what the average work load is for a Care Home owner before you make such uninformed comments. (P.S. I am not an owner, but have nearly 15 years first-hand experience within this sector).

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  • 2ladybugs  |  November 09 2012, 9:56PM

    @blackpot ......the rough estimate I gave for this particular care home included the wages taken by the owners. It is like any other business, when times get tough you tend to take a pay cut. BTW, I am not the owner .

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  • blackpot  |  November 09 2012, 9:39PM

    2ladybugs..you have missed something,the fat salaries the owners take.I know the owners of a care home,they are not rich,but far from poor.

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  • 2ladybugs  |  November 09 2012, 6:08PM

    @Stork. A very rough estimate for you taken from a care home catering for 14 people. Staff wages comes to £5000+NI contributions. minimum. per week. Food, laundry, cleaning sundries. etc.incontinence pads and other disposables, entertainment, heating and lights, wear and tear to bedding, etc. When one client moves out, room redecoration, new carpet. Accountant, office supplies. Staff training. Staff uniforms. (I am sure I have missed something). The £600 x 14 (£8400) doesn't seem quite so much.

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  • Stork  |  November 09 2012, 5:07PM

    I've often wondered how care homes cost their charges. I had a relative in a care home, it was very nice, but cost over £600 per week. It was warm, but there didn't seem to have that many staff around when I went there. I suppose there must be a patient/staff ratio ? If you compare a care home cost with say, a hotel room at a Premier Inn or other at £29 a night. That's just over £200 per week for an en-suite room. Obviously there's food, laundry, and care costs on top, but with just 10 patients, there's £4000 a week to pay for that. It would be interesting to hear from someone who knows how care home costs are arrived at.

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  • fiest1406  |  November 09 2012, 9:51AM

    This issue clearly needs to be addressed. Over the last 2 years looking at care homes for a family member; care home owners clearly said there was 2 tariffs and private paying individuals had to pay a premium to cover the deficit caused by local council funded residents. This i was appalled to hear, why should those funding privately have to pay an extra tax to reside because the Council would not pay the going rate? Care homes should have one fee that is equal for all...The Councils cannot have there cake and eat it....going back to the 80's the Plymouth Council ran its own care homes of which there were many...sad to say over the years the Council have sold off 90% of them pocketed the savings and land profits...this is the real travesty of Council failure to consider long-term costs against a rising elderly population. The mantra of home care was never going to work for those with Dementia who are at risk 24/7.

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