Care home 'crisis' could cost NHS £3 billion a year, new report warns

The NHS could be forced to find beds for 37,000 nursing home patients at a cost of £3 billion a year because of a "potentially fatal crisis" in the care sector, a new report warned on Wednesday.

The UK's ageing population, funding cuts and the impact of the National Living Wage will all put a huge strain on the industry, think-tank ResPublica warned.

It said the impact could be greater than the Southern Cross care homes collapse in 2011, which affected 31,000 elderly people.

In that case, private sector providers took many of the vulnerable residents in, but the report says this time there is unlikely to be a "private provider of last resort" and that many would flow into the hospital system.

  • What is the ResPublica report?

The think-tank has undertaken an economic analysis of the future of residential care home services in England.

It looked at the challenges facing the sector and some of the potential responses to the crisis.

The report warns of a Credit: PA

  • What are the main points in the report?

According to ResPublica, within five years care homes will be underfunded by £1.1 billion per year.

It warns that without action to tackle the funding gap, many care operators will be forced to close.

The report predicts this will result in 37,000 care beds being lost within five years.

If the NHS is forced to pick up 100% of the strain, it will cost the service £3 billion a year from 2020/21.

  • Why are we in this situation?

Our growing ageing population is putting more pressure on the care sector. Between 2010 and 2035, the number of people aged over 85 will more than double, from 1.4 million to 3.5 million, according to the Office for National Statistics.

Local authority spending on social care for older people has also fallen in real terms. In addition, local authority fees are failing to cover providers' operational costs.

The report also puts part of the projected funding gap - around £382m - down to the introduction of the National Living Wage. It says the residential care sector would be hit particularly hard by the new commitment, with 700,000 to one million workers benefiting from the wage increase.

The NHS could be forced to find room for patients at a cost of £3 billion a year. Credit: PA

  • What does the report recommend to deal with the crisis?

ResPublica says "urgent action" is required.

"There is no doubt that fundamental systemic reform is needed to deliver the ‘at scale’ personalised, holistic and well-funded care that we all will need," the report says.

The think-tank says it will look at how this could be done in further detail in a separate report, but that there are ways care homes could "radically contain costs" to allow funding to be re-allocated.