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Adult social care fragility

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Adult social care is a sector that was under pressure even before the pandemic. COVID-19 has increased this even further, threatening the financial viability of some providers and services.

Care home providers and their representatives have told us about the operational challenges they continue to face as a result of decreased occupancy, reduced admissions, increased costs and difficulty recruiting and retaining staff.

There is evidence that the pandemic may have impacted patterns of accessing adult social care. Representative bodies of adult social care providers told us that feelings of uncertainty, anxiety and fear over safety as well as restrictions on visiting, may have led to families choosing not to send relatives into care homes or take up home-care services.

We know that in the pandemic people have relied more on family and friends for informal support. For example, Carers UK reported that, by October 2020, 81% of unpaid carers reported that they were providing more care since the start of the pandemic. In discussions, both our staff and stakeholders have stressed that if these changes to patterns of care continue, it may have long-term implications for the sector and its recovery.

Analysis of providers in our Market Oversight scheme (covering providers that have a large local or regional presence which, if they were to fail, they could disrupt continuity of care in a local authority area) indicates that the impact of the pandemic has been most pronounced for non-specialist care homes (principally those that care for older people). This significant group of providers saw a fall in occupancy throughout 2020/21, as seen through average financial occupancy figures for each quarter (figure 5).

This shows a continuing reduction in occupancy compared with the 2019 average. This, coupled with the increased costs of PPE requirements and additional staffing and fluctuations in the level of government support available, has had an impact on profitability (as calculated using ‘EBITDARM’, which is a high-level measure of profit that excludes key expenses such as rent, depreciation and interest charges; this is a relative measure only and should not be equated with overall profitability). Profit margins declined through October 2020 to March 2021 to the lowest level since the Market Oversight scheme began in 2015, including earlier in the pandemic.

Similarly, profitability per registered bed also declined to a three-year low in March 2021 for providers in the scheme. Reduced profit means that providers have less cash to pay debts, build and refurbish homes and invest in quality improvement.

Market Oversight data also signals a change in the funding mix as a result of the pandemic, with non-specialist care homes seeing a decrease in the proportion of privately funded beds relative to those funded by local authorities or the NHS (from 46% in the quarter ending March 2020 to 41% in the quarter ending March 2021). This is the reverse of the trend seen before COVID-19 and could have a long-term impact on the sustainability of those providers dependent on the higher level of private fees. Care home providers with a low proportion of self-funders saw occupancy fall nine percentage points from the quarter ending March 2020 to the quarter ending March 2021, whereas providers with a high proportion of self-funders saw occupancy fall 11 percentage points over the same period.

These reductions in occupancy should be seen against a backdrop of a relatively unchanged position in the number of registered care homes beds. Our registration data shows that, between April 2020 and March 2021, there was an increase of just one nursing bed per 1,000 people aged 65 and over in England, while for residential beds this figure remained unchanged.

There are signs from Market Oversight analysis that home-care providers had greater flexibility to respond to fluctuations in demand throughout the pandemic. This is seen through staff costs (as a proportion of turnover) reducing and generally being lower than previous years (figure 6). Home-care providers in the Market Oversight scheme have seen stable or improved profit margins over the course of 2020/21.

Home-care providers in the Market Oversight scheme have seen sustained improvement in their profit margins over the course of 2020/21.

Until very recently, the indications were that adult social care services had managed to avoid both widespread home closures and home-care contract handbacks. It is likely that the market has been protected by short to medium term funding, including the ring-fenced funding for infection prevention and control of almost £1.5 billion, discharge to assess funding, and support for testing of almost £400 million in care settings.

But, while extra funding from the new health and social care levy announced by the government in September 2021 will be welcome, substantial questions remain about the sustainability of adult social care providers. In the 2021 Spring survey by the Association Directors of Adult Social Service, 82% of directors reported that they were concerned about the sustainability of some of their home care providers, and 77% about some of their care home providers. One of the report’s key messages was that “COVID-19 short-term funding has helped to prevent failure but there is profound uncertainty about the future”.

Urgent action is needed to tackle staffing pressures and the stresses caused by staff shortages, and the long-term impact of emotional exhaustion of staff. Monthly data from information submitted to CQC by providers of residential care shows their staff vacancy rate rising steadily from 6.0% in April 2021 to 10.2% in September 2021.

Workforce data from Skills for Care also shows that vacancy rates are increasing. As at August 2021, the vacancy rate in adult social care, for employers updating ASC-WDS data since March 2021, was 8.2%. This is a 2.1 percentage point increase since March 2021 and 0.2 percentage point increase on pre-pandemic levels (as at March 2020). Vacancy rates were highest for home-care services at 11.3% (a 0.9 percentage point increase since March 2020) and for registered nurses at 13.4% (a 5.0 percentage point increase since March 2020.

There are regional differences. London has the highest vacancy rate at 11.0% (an increase of 2.2 percentage points since March 2020). The North West has the lowest vacancy rate at 6.5% (an increase of 1.9 percentage points since March 2020).

Skills for Care has also estimated that turnover rates across adult social care remained high in 2020/21, at 28.5% overall. For registered nurses, the rate was higher at 38.2%; this compared with 8.8% for equivalent roles in the NHS.

Furthermore, the Skills for Care monthly data also shows that, pre-pandemic, sickness rates for adult social care staff were 2.6%. They almost doubled to 5% between March 2020 and June 2021. Care homes with nursing saw the biggest change with a 2.7 percentage point increase in sickness compared with pre-pandemic levels, followed by care homes without nursing at a 2.5 percentage point increase and home-care agencies at a 2.4 percentage point increase.

We have heard examples of care homes having to cancel their registration to provide nursing care because their attempts at recruitment have failed, leaving residents needing to be found new homes in local areas that given staffing challenges are already at, or close to, capacity.

We are concerned that vacancies may increase further as hospitality and travel industries speed up recruitment and offer incentives to new staff. These industries can offer higher salaries than the care sector. Staff from adult social care may also take up vacant posts in hospitals – especially registered nurses. These influences, combined with the effects of the requirement for all care home workers to be vaccinated against COVID-19, may lead to more care staff leaving, unless a new deal for the care workforce is developed. This should consider recruitment and retention, training, pay and rewards, the professionalisation of the workforce, and workforce resilience.


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Last updated:
20 October 2021