The Finances of the Care Home sector
How the UK care home industry operates is a very complex subject but it is one which affects the lives of hundreds of thousands of mainly older people as well as those working in the care sector. We have worked with specialists in accountancy and finance as well as those with expert knowledge of the care home industry to understand how the industry is financed and what this means for how care is provided.
We have used this research to highlight problems with the finances of the UK care home sector and explained what needs to change. In 2019 we produced ground-breaking research to show how that around £1.5 billion “leaks” out of the care home industry each year in the form of profits, debt repayments, management fees and rental payments to landlords. In 2023 we worked with Warwick Business School and UCL looking at the Financial Impact of the COVID 19 pandemic on the UK care home sector.
This research found that during the pandemic care home workers worked harder and longer without any additional increase in pay and suffered financial hardship. At the same time a number of private for profit care homes increased the amount that they paid out in dividends to their shareholders.
Solutions
A Care Home Transparency Act – care home providers should be mandated to disclose where their income goes
A new form of care regulation is required to prevent care home companies with unsatisfactory financial models from providing care in the UK
Capital should be made available by the government for the provision of new care homes
Key Facts
In 2019 Out of a total annual income of £15bn, an estimated £1.5bn (10%) leaks out of the care home industry annually in the form of rent, dividend payments, net interest payments out, directors’ fees, and profits before tax, money not going to front line care.
As of 2019 6 Of the largest 26 care home providers have owners based in a tax haven.
In 2019 16% of the average weekly fee paid for a residential care bed in the UK week went towards paying interest costs amongst the 5 largest private equity owned or backed care home providers.
During the pandemic £120m was paid out in dividends by 122 companies providing services to older people after the first year of the pandemic, an increase of £11.7m or 11% on the previous year
Reports on the Finances of the Care Home Sector
Blogs on the Finances of the Care Home Sector
Our impact in the media on the Finances of the Care Home Sector
David Rowland, Director of CHPI spoke on BBC news to discuss the finances of the care home sector in the UK.
Exclusive feature on BBC Newsnight for the launch of CHPI's new report into the finances of the UK care home industry.
BBC News: CHPI Warwick Business School study into care home finances during the pandemic April 2023