This note considers the current state of the market for residential care (i.e. care homes).Jump to full report >>
The rather fragmented nature of the care home market combined with the fact that local authorities are the largest single purchasers in most parts of the country, means that local authorities have what has been described as monopsony purchasing power (a single buyer, but many sellers).
Given the pressures facing local authority budgets, they have sought to negotiate lower prices for the care home places they finance; this has prompted care home providers to seek further cross-subsidisation from self-funded residents, in a situation where many care home providers have significant debts and the introduction of the National Living Wage has increased costs.
The briefing paper also considers the role of the Care Quality Commission (CQC) in monitoring the financial health of strategically important care home providers, and the duties of local authorities in the event of the failure of a provider.
There is a separate Library briefing paper entitled Social Care Funding (England) which considers the funding for the social care sector, including care homes, and recent Government announcements.