Like lots of people with an interest in social care I have been following the travails of Four Seasons over the last few days. For anyone not up to speed, Four Seasons is a major care home provider in this country, with some 17,000 predominantly older residents and 25,000 staff. Four Seasons is now reportedly in financial difficulty and the regulator of the social care sector, the Care Quality Commission (CQC), has called for its biggest creditor to confirm that it will stand behind the company and not allow it to collapse. [Although it has since won a reprieve until April 2018, the uncertainty over its longer-term future continues].
CQC says it does not believe there is a risk of any Four Seasons care homes having to close due to the company’s financial problems. Let’s hope they are right: most care home residents have significant health as well as care needs, often including dementia or other forms of cognitive decline. These older people are in no position to withstand the stress of losing their home and having to move somewhere else, even presuming anywhere suitable can be found. Nor should they be expected to do so. All strength to the CQC therefore in exercising stewardship in the best interests of the thousands of older people whose futures are tied up, for good or ill, with the fortunes of this care provider.
I confess that I have found it hard to follow the ins and outs of the financial problems at the heart of the Four Seasons story and that’s because I am a social policy thinker and doer, not a financier. But in the end, Four Seasons’ problems are simple: they have been losing a lot of money from running (some of) their care homes. One article I read reports that the company that owns Four Seasons, Terra Firma, has lost £450m as a result of its investment and that’s a lot of money in anyone’s book.
Much of the reporting of Four Seasons’ woes has been unsympathetic, I think largely because there is a lot of mistrust of the role of private companies – big ones especially – in providing care homes. To many people it just feels wrong that something as fundamental as providing a home and support for an older person is tied up with making a profit.
In addition, those who are not totally opposed to the role of private businesses in the provision of care might well feel that it is one thing to have a ‘mixed market’, another to have our care service infrastructure dependent, to a significant degree, on decisions made by global financial interests with little if any stake in our society. I wouldn’t blame anyone for feeling queasy about this and it makes me wonder if, at the very least, there should be tougher rules about who can own providers of social care. As Baroness Ros Altmann put it in a media interview this week, ““Hedge funds [are] playing financial football, while the fate of elderly care home residents hangs on debt restructurings.”
One feature of this situation is that Four Seasons has been continuing to take large numbers of State funded clients, rather than turning to the infinitely more lucrative ‘self-funder’ market exclusively instead. In a carefully drafted but ultimately devastating report published a couple of weeks ago, the Government’s own Competition and Markets Authority (CMA) dissected the state of the care home market and concluded it was broken. Their report states that “the fees currently being paid by LAs are not sufficient to sustain the current levels of care under the current funding model. The implication is that public funding needs to increase if the current model of funding is to continue.”
The CMA’s assessment is that if councils were to pay the full cost of care for all residents they fund, the additional cost to them of these higher fees would be £0.9 to £1.1 billion a year (UK wide, and assuming this money is directed specifically to those homes where LAs pay fee rates below total costs).
How is this shortfall being filled at the moment? Often, outrageously, by older people who fund their own care. They are paying a massive cross subsidy to the State, amounting to £236 a week on average, 41% higher than councils’ fees as an average across larger providers. The CMA also observes that most self-funders “are not wealthy; the current thresholds for support are currently drawn so that practically anyone who owns their property will be ineligible for state funding, regardless of income”.
So if you looking for the villain in this sorry saga I would suggest that rather than turn all your ire on any particular private company, or even onto the private sector more generally, you focus most of it on ‘the State’. Successive governments have failed to create the conditions in which it is possible to run high quality care homes at an affordable rate. Worse, they have bled councils of enough funding to allow them to pay a fair price for the care they are under a statutory duty to purchase for those older people who meet the rigorous eligibility criteria.
I would argue that it is this State underfunding that is ultimately the root cause of the many problems in the care home market – indeed really across the whole of social care. And this seems to me to be true wherever you happen to stand on the question of whether, and to what degree and under what conditions, the private sector ought to have a role in providing it. Some on the Left have been calling for all care homes in private ownership to be ‘nationalised’ and there will probably be many who read the ‘Four Seasons story’ and be sympathetic to this idea as a result. However, even if this is affordable – which is questionable – it would not, in itself, ‘solve’ the State underfunding of a crucial areas of public service which is, in the end, the nettle policymakers have to grasp.