Sat. Jan 22nd, 2022

Britain’s largest care home chains are planning to increase fees by as much as 10 per cent this year as they pass on higher staff, food and energy costs to their frail and elderly residents.

Overall costs for care homes are expected to rise about 30 per cent this year, according to a survey of operators, representing 98,000 beds in the UK, by real estate consultant Knight Frank.

The sector is in the grip of an acute staffing crisis with some agencies charging £ 60 an hour for nurses, leaving operators “with no option but to pass on the costs, otherwise they will not be able to take in the residents”, says Julian Evans, chief. of health care at Knight Frank.

Last week, some operators closed for new entrants as the spread of the Omicron coronavirus variant exacerbated deficiencies.

The cost of living crisis in the UK, as well as higher insurance costs in the aftermath of the pandemic and staff shortages exacerbated by Brexit, are encouraging operators to raise fees by between 7 and 10 per cent, Knight Frank said.

The fee increases come as some larger operators came under the microscope about the financial aid they received during the government pandemic, while also handing out generous rewards to investors and executives.

Barchester Healthcare, which manages about 200 homes, said it plans to increase fees by 7.5 percent this year, although a letter to residents seen by the Financial Times in November warned of an increase of about 200 percent. 9 percent ‘. The company cited rising food, energy and personnel costs as well as the increase in national living wages and additional national insurance taxes as reasons.

His accounts show that CEO Pete Calveley received a £ 250,000 increase last year, which took his salary package, including a long-term retention plan, to £ 2.27 million in 2020. The care home operator also received £ 12.6 million in government grants. during the Covid-19 crisis.

David Haggie, a software business manager, said his wheelchair-bound mother was already paying £ 1,525.21 a week, or £ 79,000 a year, for her room in a Barchester home near Edinburgh, following successive fee increases of 19 per cent since January 2019.

“The combination of a resident who can’t move realistically, maximum fee increases for three years, a large government Covid award combined with high and rising CEO pay is pretty toxic,” Haggie said.

Barchester, part of a Jersey-based investment firm, said it had informed residents that it was facing “extraordinary circumstances”, adding that it was “a top national wage-earning employer that is constantly investing in our homes”.

Four Seasons, which is owned by US hedge fund H / 2 Capital, said its fees would rise but declined to give details, while Care UK, which is owned by private equity firm Bridgepoint Capital, said it was ” impossible to give a general figure on fee changes. ” .

HC-One, UK’s largest chain, said its costs rose 3.5 percent last year and that given the “significant increase in cost pressures” it “expects it to be higher this year”.

Bar graph of £ showing average UK weekly care and nursing home fees

Fees have been rising for several years with more than the inflation rate, partly due to an increase in the minimum wage for staff, which accounts for 80 per cent of the cost.

Local government or NHS-funded residents have some protection as the state must provide an alternative. But people who pay for their own care, which includes anyone with assets over £ 23,500, have little security or protection against eviction if they can not pay the fees and only 28 days notice must be given.

Helen Wildbore, director of the Family and Residents’ Association, warned that the relocation of care homes could have “catastrophic consequences” for older people with deteriorating health. “With so little legal security, many residents also find themselves in a too vulnerable position to feel that they can challenge such increases, especially because they can be evicted so easily,” she added.

Knight Frank said about 100,000 beds are at risk as nursing homes are closed due to rising costs, enabling surviving operators to take advantage of higher occupancy rates and push up prices.

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