A crisis in care homes

COVID-19 has had a profound impact on every aspect of our society. Care home populations have been particularly affected and remain amongst the most vulnerable, as the latest information from the ONS 1and CQC2 shows.

This is providing councils with an unprecedented challenge of working out how to effectively support the care home sector - and it is a challenge with highly localised dynamics in play.

The impact differs greatly from region to region, with care homes in close proximity often facing completely different challenges and some not impacted at all. Councils rightly want and need to support the sector but with such large variations across the country, what is the right approach?

More funding is only part of the answer

The outbreak has created an unprecedented financial challenge as well as a human one, for care home providers.

The statement3 released by the LGA and ADASS two weeks ago, in relation to temporary funding for social care providers during the COVID-19 crisis, throws into the spotlight another difficult decision councils are currently needing to make:

  • How much additional funding and uplifts should they be giving to care home providers during the crisis to help them through?
  • Is it 5%, is it 10%, is it 25% and is a blanket approach the best way to go?
  • How long should the uplift in funding last for?
  • What are your nearest neighbours doing and are the market dynamics the same?
  • Should it be different for residential care providers versus domiciliary care ones?
  • Should the number of COVID-19 cases per care home impact the level of additional funding provided (and if so, how)?
  • How close to the edge are providers to collapse if additional funding is not given now, in a week, or in a month’s time?

Whilst the £3.2 billion in additional funding announced by the government in two tranches is welcomed and needed, not all of that is for social care and our own modelling suggests that the current situation has resulted in a local government funding gap of £5-6bn for the current financial year. So, decisions around additional funding to care homes need to be made in light of ever-stretched council finances and multiple competing priorities. 

Hard decisions ahead but a nuanced approach to additional funding should be considered

Never has the need for collaborative working and sharing of information between councils and providers (as well as health partners), highlighted in the LGA and ADASS statement3, been more important. Both are providing truly heroic support to meet the needs of our most vulnerable during this moment of national crisis.

But also, never has the need for actionable up-to-date insight to help councils make informed decisions been greater – to ensure, as far as possible, that the right level of additional funding goes to those providers who need it most, and at the right time. Given that funds are limited.

The reality is that a 5% cost increase for one provider without an immediate mirrored uplift from the local authority may push them towards a financial tipping point in four weeks’ time whilst for another provider, it wouldn’t. A blanket 10% uplift may also not be enough for some providers to meet additional costs caused by COVID-19 – whilst for others, it would cover it and then some. We also need to consider the potential impact to providers of returning unit prices to pre COVID-19 levels, once the immediate crisis has abated.

Working through this complex dynamic is another immediate priority for councils. However, understanding and assessing the following could help councils to make more equitable decisions for all (providers, service users, carers and the wider resident council community) in this most difficult of times:

  • The base financial resilience of care home providers
  • The current and forecast revenue and cost implications of COVID-19 per provider and care home
  • The real risk of care home provider failure on short and longer-term capacity and cost
  • The overall financial implications of uplifts for 1 month, 3 months, 12 months, etc.


Nick Clarke

Head of Social Care Consulting

Grant Thornton UK LLP

Grant Thornton are  welcome sponsors of ADASS which furthers our charitable objectives.



1 ONS (2020) https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/deaths.

2 CQC (28 April 2020): https://www.cqc.org.uk/news/stories/inclusion-cqc-data-ons-deaths-reporting-shows-impact-covid-19-social-care

3 LGA, ADASS (April 2020) Temporary Funding for Adult Social Care providers during the Covid-19 Crisis https://local.gov.uk/sites/default/files/documents/Provider%20fees%20-%20summary%20of%20the%20approach%20proposed%20by%20local%20%20government%20-%20ASC%20final.pdf