More than 100 care homes went bust in 2018, accountancy firm reveals


Another 101 care home operators went insolvent in 2018 as the sector continued to struggle with limited funding, accountancy and business advisory firm BDO LLP has revealed.

BDO said reduced funding and high operational costs, combined with rising interest rates and lower Government spending, had ramped up pressure on operators.

Lee Causer, Partner at BDO, sad: “The very tough trading environment for care homes is continuing to grind on into 2019.

“Restricted local government funding combined with high operational costs continues to be the biggest driver of care home insolvencies.”

Research by the Association of Directors of Adult Social Services revealed that local councils are planning social care budget cuts of £700m in 2018-19, despite the growing demand for services.

Reduced funding for the sector comes as staff costs continue to increase following the rise in National Minimum Wage from £7.50 to £7.83 in April 2018. This figure is set to increase again to £8.21 in 2019/20.

Lee added: “Rising minimum wages and a decrease in care staff coming to the UK from Europe adds to the list of complications. The Brexit uncertainty is compounding the issues with regard to the free movement of people and the potential availability of drugs.

“But it is not all bad news for the sector. Increased integration of the commissioning of care is starting to have a positive impact. Providers that innovate with flexible pricing models and are able to invest in technology and staff retention plans will continue to do well.

“In addition, the Care Quality Commission has equipped itself with specialist resource in the shape of the market oversight team. This means the CQC is able to more quickly engage with larger providers and analyse financial recovery plans in a way that would not have been possible historically.”

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