Financial viability and stability in the adult social care sector

Impact on financial viability during the pandemic

Previous issues of this report have highlighted the financial vulnerability of the adult social care system before the pandemic, and the further impact that COVID-19 has had on a sector that cares for primarily older people, often with underlying conditions.

The government has provided £3.7 billion of extra funding to local authorities to help them address the pressures they are facing across the range of public services including social care, and an additional £600 million through a new adult social care infection control fund.

In our first issue, in May, we said that some providers may face a reduction in people using their services due to the tragic increase in deaths, coupled with fewer admissions. We also said that some providers were struggling with the costs of ensuring they had enough personal protective equipment. These have continued to be themes in some of the discussions our inspectors have been having with providers through our emergency support framework.

These concerns have been echoed by the Association of Directors of Adult Social Services in their Coronavirus Survey, published last month. This said that a quarter of directors now have concerns about the financial sustainability of most of their residential and nursing providers since the pandemic. Also, 15% of directors now had concerns about the financial sustainability of most of their homecare and community care providers, whereas this figure was only 3% before the onset of COVID-19.

Market Oversight

We have previously signalled, through our Market Oversight scheme, that COVID-19 is having a significant impact on the financial viability of adult social care services. We think this impact continues and will continue to monitor the market carefully.

Recent analysis of providers in our Market Oversight scheme shows an overall reduction in admissions to care homes during the pandemic, but the rates vary significantly. Although admissions funded by local authorities have now risen to an average of 72% of the number received in the same period in 2019, admissions for the week ending 7 June 2020 ranged from 43% to 113% of the 2019 amount. Self-funded admissions, by comparison, ranged from 25% to 51% of 2019 levels, with an average of 35%. This could put added financial pressure on homes that are more reliant on people who fund their own care.

Again looking at Market Oversight figures, homecare services also appear to be experiencing lower levels of activity, but to a smaller degree. Homecare hours are at 94% of pre-pandemic levels, but have stabilised, and are now forecast to increase going forward. Homecare providers that are commissioned by local authorities have typically continued to be paid on planned hours, which should have insulated these providers from the reduction in hours.

Care home and community services capacity

Financial difficulties in adult social care do not yet appear to be translating into significant amounts of reduced capacity or service closures, according to our registration data. Comparing the change in overall numbers of care homes in March to June in 2019 and 2020 shows that the number of services has remained relatively stable; indeed, the change in residential homes is less in 2020 than it was in 2019.

Looking at changes in the numbers of care home beds gives a similar picture so far. Considering the size of the care home market (approximately 450,000 beds), these numbers seem relatively small. However, these figures could be showing a delayed impact of COVID-19, as it is likely that providers have not yet borne the full cost of the pandemic.

Fewer new adult social care community services (including homecare agencies) registered this year, compared to the same period in 2019. As with care homes, the changes in the overall numbers of community services between March and June this year are relatively low, given that there are around 9,000 homecare agencies in England.

Section 4: The impact on the use of Deprivation of Liberty Safeguards