Care home fees continue to rise across the UK

The increasingly expensive cost of care is a conversation that crops up at most family dinner tables, where elderly relatives are concerned. Data from our Care Home Trading Performance Index 2019 shows that fees in the corporate care home market have increased by 40% in the last decade, reaching £837 in 2018/19 (Figure 6). The increase was particularly severe in the last year, with average fees up 8.3% from £773 in 2017/18. 

The sharp rise is often attributed to the growing influence of “for-profit” operators that, according to reports, are maximising earnings by raising the fees they charge for self-funded residents. If this were the case, we would expect regions like the South East and South West, where there is a greater concentration of wealth and a greater proportion of self-funded care, to have seen the greatest increases. This was not the case in 2019 with less wealthy regions like Wales and the North West seeing circa 9% year-on-year rises (Figure 12). Hence, there are a much more complicated set of reasons:

• Inflationary environment: When we adjust for fees inflation, we can see that in real terms fees have only just reached the 2008/09 level (Figure 6). Price inflation is not unique to residential care and has occurred across all goods and services. 
• Rising staff costs: These costs have risen 50% over the last decade, forcing many operators to adjust their fees to protect earnings.
• Increasing medical needs: Elderly people continue to enter care later and with more severe medical needs, resulting in a shift towards more expensive nursing or dementia care.
• Improving care standards: Pressure from regulators is forcing many providers to improve and reinvest in their facilities and the operations. Increasing fees is one way to offset increasing capital expenditure.