Select Committee on Health Appendices to the Minutes of Evidence


Letter from the Chief Executive IHA to the Clerk of the Committee (DD 13B)


  I am writing to clarify the Independent Healthcare Association's (IHA) position on bed losses in the independent sector, post the Health Select Committee on Delayed Discharged evidence session at which the IHA gave oral evidence on 24 April 2002.

  Two sets of figures are currently being cited by a number of organisations and politicians, 19,000 and 50,000. These numbers are respectively net and gross figures. As far as I can determine, essentially, both these figures are correct and are contained in Laing & Buisson's "Care of Elderly People Market Survey". The IHA feels that the 50,000 gross bed loss figure (since 1996-97) is more relevant because of the impact those closures had on 50,000 residents. We are basing this number on Table 4.2 of the Survey which summarises a total of 51,147 deregistrations (Laing & Buisson, Care of Elderly People Market Survey, 2001, page 64) so we are confident in quoting the gross loss figure of 50,000 beds over that period.

  I believe that the 19,000 figure which the Government has been using may be based on the "Total Net Change" figures in this same table (from 1996-97 to 2000). The IHA's view is that at a local level, it is important to conisder the gross bed deregistration figure as the new beds opening (approximatley 30,000) may not necessarily be in the same geographical area of the country nor of the same type (ie, nursing, EMI, etc), as those which closed and thus vulnerable people will be faced with the upheaval, uncertainty and anxiety of moving out of what they regard as their home, often with little hope of an alternative place of any sort available in their immediate area. Equally, though, quoting 19,000 may be justified when looking at the national bed stock.

  The figures quite apart, our main conern is that these closures are largely happening in a haphazard and unplanned way and that the principal reason for many of these closures is the low local authority fee rates in many areas of the country. This fact has been borne out by the PSSRU reports which the Department of Health commissioned, "The Rate, Causes and Consequences of Home Closures" and "Care Home Closures: The Provider Perspective". These reports looked at the causes, process and consequences of closures of care homes for older people, they clearly state that the trend of the closures is continuing across the country (varying by region and type of home) and conclude that the two factors most often identified as a decisive factor in the decision to close a care home were:

    —  Local authority prices not covering costs (including past failure to cover costs and future expectation that local authority prices were unlikely to cover costs);

    —  Cost implications of the National Minimum Standards.

  In their Market Survey Laing & Buisson were also concerned about prospects for the future and say:

    "The continued slowdown in the number of new registrations is a reflection of inadequate returns available to developers, flowing from below-RPI revisions in local authorities' baseline fee rates. The year 2002 may prove to be a watershed . . . the year in which new National Minimum Standards for care homes are expected to be implemented. The rate of de-registrations is likely to climb and a plausible scenario is that capacity shortages will become commonplace". (Laing & Buisson, Care of Elderly People Market Survey, page 27), and that:

    "The new National Minimum Standards to be implemented in 2002 may precipitate a much more rapid shake-out. Its scale will depend in part on how banks view the transitional arrangements that the government has put in place for care homes to achieve compliance." (Laing & Buisson, Care of Elderly People Market Survey, page 67).

  The PSSRU report containing the provider perspective identified the following as being factors which might improve the situation:

    —  Fee increases—on average an increase of 22 per cent was indicated as being needed.

    —  Fee structure/link to dependency levels.

    —  Relaxation of regulatory environment.

    —  Higher occupancy levels.

    —  Greater certainty—referrals and contracting.

    —  More partnership working with local authority (to diversify).

    —  Labour supply and retention (improved local labout supply).

  I hope this helps to clarify both our reasons for concentrating on 50,000 gross figure and our concerns about the difficulties being experienced by both users and service providers at the front line of delivery of care. I would be happy to speak to you or other members of the Health Select Committee or your advisers about this further.

24 May 2002

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