Care homes closures are at an increasing rate – protect yours

If you run or manage a care home, you may already be familiar with the struggle that care homes across the UK are facing. Keeping your business afloat is a challenge, especially whilst you continue to maintain standards and provide vital services to your residents and their families.

The sad truth is that almost 1,000 care homes, housing more than 30,000 residents have closed over the past decade and at an increasing rate1.

Life expectancy in the UK is increasing, and pensioners now spend twice as long needing care or support services2This means that demand for care home services will continue to rise, and almost 190,000 new care home spaces will be needed by 20353. But cuts in funding and rising costs of care have left many care homes unable to continue running or to invest in the future.

From the introduction of the National Living Wage which saw a 5% increase in payroll cost, to budget cuts of up to 50% by local authorities , there are a number of conflicting factors causing care homes to struggle.

Local authority funded care is not sustainable

It’s estimated that about a quarter of care homes have more than 75% of their residents funded by the local authority5. You’re at most risk of losing local authority residents from your care home due to funding shortfalls, estimated at around £200m – £300m6.

According to reports local authorities pay care homes on average as much as 10% less than it costs the care home to look after a resident7. This means that the local authority residents you’re taking on could be making you a loss. If your care home is heavily reliant on funding from local authorities4, the Competition and Markets Authority have stated that you’re “not currently in a sustainable position”8.

Some care homes are holding back on investing internally to stay in budget. The inability to modernise facilities or grow in capacity makes it difficult to compete against private care homes9, and some care homes could be winning contracts with local authorities that they cannot sustain long term.

Staff recruitment and retention

The social care sector has an estimated turnover rate of 27.8% which is very high when compared to the national average of around 15.5%10. These figures show that there is a constant struggle to recruit and retain staff.

Staff recruitment and retention is a huge problem in the care industry. According to Skills for Care 2017, 350,000 care professionals leave their job each year11. And yet, new applications for nursing have fallen by 23%12.


Uncertainty around Brexit is causing further problems for staff recruitment. The care industry has become increasingly reliant on EU workers, as 95,000 of England’s adult social care workers are EU migrants13.

So, what is the answer?

  • Diversify

Care homes with privately funded residents can provide more competitive facilities and a higher quality of care. On average a self-funding (private) resident pays £12,000 more than a local authority for the same place in a care home14.

To survive in the current market, many care homes are looking to increase the number of private beds they offer. This might be something to consider discussing with your business advisers as a long-term solution. 

  • Manage your risks

Carrying out regular risk assessments and having effective procedures in place could play a huge role in protecting your business.

There are a number of risks that could come about, from lack of maintenance to staff shortages.

Any of these could lead to damage or injury that might result in a costly insurance claim:

  • Manual handling and lifting: it’s such an everyday activity, that it can be easy to forget the importance of proper manual handling procedures. Be sure to regularly update this policy, especially for new and/or agency staff.
  • Slips and trips: many claims for trips and falls are due to the general condition of the building. Carry out regular checks to prevent residents and staff tripping on frayed carpets/uneven flooring.
  • Pressure sores: pressure sores can cause a lot of distress to both the resident and their family. Sores can be easily prevented by having regular checks and dressing changes. Make sure your care plan is clear to all staff (long-term and agency), to maintain a high-quality of care.
  • Insurance

If something bad should happen, you need to be confident that you have the right insurance to protect your business. Jelf’s specialist team of care home insurance experts can arrange package insurance, stand-alone insurance and risk management solutions for all types of care risk.



  1. https://www.telegraph.co.uk/news/2018/01/13/nhs-crisis-fuelled-closure-1000-care-homes-housing-30000-pensioners/
  2. https://www.telegraph.co.uk/news/2017/08/16/lancet-70000-extra-care-home-places-needed-2025/
  3. https://www.telegraph.co.uk/news/2017/08/16/lancet-70000-extra-care-home-places-needed-2025/
  4. https://www.theguardian.com/society/2017/jan/11/care-home-closures-funding-crisis
  5. https://assets.publishing.service.gov.uk/media/5a1fdf30e5274a750b82533a/care-homes-market-study-final-report.pdf
  6. https://assets.publishing.service.gov.uk/media/5a1fdf30e5274a750b82533a/care-homes-market-study-final-report.pdf
  7. https://assets.publishing.service.gov.uk/media/5a1fdf30e5274a750b82533a/care-homes-market-study-final-report.pdf
  8. https://www.ft.com/content/84bcef60-d5c3-11e7-8c9a-d9c0a5c8d5c9
  9. https://assets.publishing.service.gov.uk/media/5a1fdf30e5274a750b82533a/care-homes-market-study-final-report.pdf
  10. http://www.hrmagazine.co.uk/article-details/turnover-rate-reaches-new-high
  11. https://www.kingsfund.org.uk/publications/articles/brexit-implications-health-social-care
  12. https://www.theguardian.com/society/2017/mar/08/uk-social-care-crisis-staff-shortages
  13. https://digital.nhs.uk/data-and-information/find-data-and-publications/supplementary-information
  14. https://www.theguardian.com/society/2017/nov/30/funding-shortfall-uk-care-homes-close-watchdog



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