Crisis looming as care home closures far outstrip openings

The social care sector is “on the cusp of a national crisis” after more than double the number of care homes closed last year than opened.

Around 280 homes closed down, amounting to approximately 7,000 beds, while just 106 new facilities opened, according to Knight Frank research.

Smaller care homes, ie. those with fewer than 25 beds, were closing at an especially rapid rate because they lacked the economies of scale to be profitable, Knight Frank said.

“More than 6,000 care homes around the country are sub-25-bed care homes, which are no longer economically viable,” Julian Evans, head of healthcare at Knight Frank, told Property Week.

“The economies of scale don’t work for them and thus they are closing down. The national living wage and shortage of nurses are also crippling the nursing homes in this category.”

Less severe in larger homes

The challenges were less severe for larger homes, of up to 60 to 79 beds, but the whole care home sector faced an acute supply/demand imbalance, the research found. While demand for spaces had risen, supply was severely constrained, it noted, mainly by the high cost of construction.

“The cost of raw materials is fettering many development sites - hence the lower number of care facilities being constructed. UK social care is on the cusp of a national crisis and demand outstrips bed supply,” said Evans.

‘Completely unacceptable’

The startling figures come in the same week that health secretary Jeremy Hunt described some NHS care as “completely unacceptable”.

His comments followed the case highlighted in the press of 89-year-old Iris Sibley, who was stuck on a hospital ward at Bristol Royal Infirmary for more than six months because a nursing home place could not be found for her.

A hospital bed costs taxpayers around £400 a night, far higher than the cost of a care home.

Knight Frank’s Care Homes Trading Performance Review also found that occupancy rates grew for the fifth year in a row, to 88.4%, with average fees increasing, too. This helped offset rising staff costs.

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