Self-funding, or private-pay, residents are still keeping the care home sector afloat according to the latest figures from healthcare market intelligence provider LaingBuisson, as care homes continue to rely on premium private pay fees to make up for the shortfall in council paid fees.

The latest update to its Care Cost Benchmarks toolkit has found that the average fee per resident paid to care homes typically falls short of the real costs of service provision by more than £100 a week – a situation which means that those residents who pay from their own finances are filling a funding gap of £1 billion a year in financial 2017/18.

Headline figures from the toolkit show that residential care homes for older people in England currently need to charge fees of between £623 and £726 per week, depending on the standard of accommodation and whether or not they are catering for residents with dementia. But councils on average pay only £555 per week for residential care, leaving a shortfall ranging from £68 to £171 per week. Similar shortfalls apply for nursing care as well, which is typically about £200 per week more costly than residential care.

Commenting on the figures, LaingBuisson founder and creator of the Care Cost Benchmarks toolkit William Laing said that the adoption of the National Living Wage and requirements to employ more carers to support residents with increasingly complex dependencies has fuelled an ‘inexorable rise’ in care home costs. Mr Laing said:

“A minority of councils have seen the light, and have raised fees in order to sustain supply, but large shortfalls continue for care homes in most council areas. The Care Cost Benchmark figures we are publishing today show that it will cost £1 billion to plug the hole in fees, before even starting to think about additional services”

There will be no let-up in pressure in the new financial year. National Living Wage goes up to £7.83 per hour in April 2018. This and other cost inflation will add about 5% to the fees that care homes need to charge.


Find out more about the Care Cost Benchmarks tool here

Download press release as a PDF