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The changing cost of care


The second stage of what the government is calling the ‘most significant reform of care and support in more than 60 years’ will come into place in April 2016 and will radically affect the cost of care within the UK.

The Care Act cost cap

The Care Act aims to address the issue of spiralling expenses for users and unpaid bills for care organisations by introducing a cost cap. This follows on from the first stage of reform of the Care Act which came into force in April 2015 and focused on the need for personalising care and promoting wellbeing.

From April next year the cost cap for care will be set at £72,000 for people aged 65 and over, with any needed care expense above this covered by the local authority. People assessed as requiring care will be means tested to decide how much they can pay a care organisation before the local authority would need to step in.

A bidding war

The Care Act has recently been criticised in the media for potentially creating an ‘eBay’ style bidding war where care home organisations compete to give the cheapest prices in order to fill empty spaces. With this level of competition there is the fear that services will be negatively affected as organisations slash prices to gain contracts. But where would these cuts come from? The media has predicted that the standard of care would fall as organisations would not have the extra revenue needed to sustain standards. This is worrying news for those within the care system, and with a media spotlight already on the industry, any further failures would be a disaster for its already damaged reputation.

Embracing change

The majority of care home resident places are currently privately funded, and this trend would potentially continue.  However, the care home industry needs to recognise that a proportion of their resident’s care will be funded by their local authority and that monitoring payments and budgets will be vital in order to stay profitable and keep in control of their finances. With the changes being made via the Care Act, the sector needs to consider techniques and strategies that will help them fulfil the new management challenges.

One way of dealing with the complex funding streams would be to implement a software system that would monitor and support financial analysis as well as wider management processes, ensuring financial stability. Current care home software available on the market will vastly improve back office management and enable managers to balance the payment schedules of their residents. This technology has the ability to manage funding sources, monitor payments, expenditure and also residents’ personal budgets.

Future predictions

On paper the cost cap  is a good idea to stop mounting costs, but with few people qualifying for local authority support and with many never reaching the cap and having to use their assets to pay, does it really make a major difference to the general public’s care expense?  Also, for those who do qualify for help, local authority charges will still be negotiated, it’s difficult to know what impact this will have on care standards?

We are unable to predict how care homes will ultimately be effected when the cost cap comes into place. However it is important for the industry to recognise that these changes are coming and to make sure they are prepared by embracing technology designed to meet these new requirements.

To find out more about the Care Act and how your journey as a care provider or care service user will be effected please visit our website

By Polly Roberts, Commercial Director for Care at Advanced Health & Care


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