How we take care of seniors at a time in their life when they are most vulnerable and need the greatest support is an important public policy challenge. It also is a clear statement about who we are as a society. (McGregor and Ronald 2016)
Covid-19 and the related high number of deaths in care homes has revealed the shortcomings in the UK care home sector. While private companies reap large profits, the quality of care is often low and staff is poorly trained and lowly paid. I will argue that only the re-municipalisation of care homes can ultimately address the problems.
Introduction
The purpose of this paper is to assess the state of affairs in the care home sector in England as far as residents’ quality of care as well as staff’s wages and working conditions are concerned. I will not look at the closely related, yet separate sector of home care providers, i.e. companies who operate in the provision of care for people in their own homes. Care homes are generally divided into two sub-groups, residential homes and nursing homes. While the former provide accommodation and a degree of personal care, the latter are specialised in care for people with learning disabilities, severe physical disabilities or particularly complex medical problems. The way this care is provided has changed drastically over the last thirty years. During the 1970s and 1980s, the vast majority of care homes was run directly by the public sector. This was to change in the late 1980s, early 1990s with the passing of the 1990 NHS and Community Care Act (Scourfield 2012: 138). The Conservative government under Margaret Thatcher ‘forced local authorities to put social care services out to competitive tender, creating opportunities for investors’ (Plimmer 2020). Today, the private, for-profit sector provides 84 per cent of beds in care homes. The voluntary, not-for-profit sector provides 13 per cent and the public sector has been reduced to a mere three per cent (Blakeley and Quilter-Pinner 2019: 2).
Neo-liberal economics expects that privatising public services in general would result in three benign consequences due to the competitive pressures of the ‘free market’: (1) the production of services becomes more efficient; (2) the quality of the services is improved; and (3) the cost of services for the consumer is reduced. The same arguments are applied to the social care sector. Privatising services in ‘quasi-markets’ would yield efficiency savings resulting in lower costs, ensure a greater degree of responsiveness to customers’ needs as well as increase the choice available to users (Barron and West 2017: 138). My own area of expertise is the sector of water services. Here, the promises of privatisation have not been fulfilled. Water privatisation has generally resulted in insufficient investment into infrastructure, soaring consumer tariffs, lower levels of efficiency, poor service quality and ‘the failure of private water corporations to contribute investment finance’ (Lobina 2014: 10). Nevertheless, even some free market economists would agree that water, being a natural monopoly, should not be subject to private market competition. After all, beyond the moment of awarding a concession to run the water and sanitation services of a particular geographical area, there is no competition, as you cannot have several pipes of water by different companies potentially providing water to households at the same time. Care homes are different, it is argued, as several providers compete with each other for customers and, as a result, maximise the quality of care provided at the lowest cost feasible so that they attract as many users as possible. ‘The provision of residential and nursing home care is closer to a conventional market than any of the other quasi-markets that have been developed in the UK public service sector in that there is a large amount of choice available to users, many of the service providers are in the private sector, and many users pay for their own care in full or in part’ (Barron and West 2017: 146).[1] Hence, in the next section I will first explore to what extent the promises of the market in the care home sector have actually been fulfilled.
As is known from the cleaning
sector, private operators make large parts of their profits from paying their
staff low salaries without sick, pension or holiday pay. Zero-hours contracts
are widespread. In the second section, therefore, I will investigate to what
extent wages and working conditions in the care home sector are being affected
by the predominantly for-profit nature of their employers.
Quality of care
By way of starting, it is important to note that the problems in the care home sector in England cannot only be explained by referring to the differences between for-profit and not-for-profit providers. Austerity cuts since 2010 have left their marks and put the whole sector under enormous pressure whoever the provider is. ‘Social care has experienced swingeing cuts over the last decade, despite growing levels of need, and this has undoubtedly put pressure on local authorities’ ability to pay higher fees for residential care’ (Blakeley and Quilter-Pinner 2019: 3). The spending power of local authorities has been cut by 28.6 per cent between 2010 and 2018, resulting in a cut of spending on social care by 8 per cent in real terms between 2009 and 2017 (Dromey and Hochlaf 2018: 22). In turn, care home providers, whether for-profit or not-for-profit, have struggled to deliver care at lower budgets.
When it comes to issues of quality of care, there are some stark examples in the UK, in which care has completely collapsed:
At the Whitchurch Care Home, emergency buzzers went unanswered, some medicines were not dispensed and many of its frail and elderly residents had not been given a bath, shower or a wash for a month, an official inspector’s report found. A broken elevator meant residents on the second floor could not be taken to hospital appointments (Plimmer 2020).
This does not mean that all care provided in for-profit homes is bad. Nevertheless, examples of this type demonstrate the importance of looking at key factors, which may affect quality of care positively or negatively. Sub-divisions in the sector can be made between for-profit care homes, which are part of large chains, and for-profit care homes, which are run by smaller businesses with the owner at times even involved in providing care. ‘For-profit facilities owned and operated by investor owned corporations may have different motivations than facilities owned by small private businesses or single proprietors’ (Comondore et al 2009: 14; see also Ronald et al 2016: 2). The not-for-profit sector can be divided into the public sector and voluntary, not-for-profit charities. When it comes to a comparison of the quality of care provided in different types of care homes, the focus in the literature is on the difference between for-profit providers on one hand, and not-for-profit providers on the other. There is simply not enough specific data available to come to more precise conclusions in relation to the various sub-groups (Barron and West 2017: 144; Comondore et al 2009: 15). Only Ronald et al point out that care provided in public sector homes tends to be better than in not-for-profit voluntary sector establishments (Ronald et al 2016: 7-8).
At a conceptual level, we would expect a difference between for-profit and not-for-profit care homes. ‘All nursing homes must balance their revenues and expenses in order to survive. For-profit organizations operate on the principle that profits or net income (revenue in excess of expenses) is directed to the owners, investors, or shareholders. In nonprofit organizations and publicly owned facilities, net income is used to benefit clients’ (Ronald et al 2016: 4). There are a number of studies, which have collected all the available research on quality of care in for-profit and not-for-profit care homes. For example, Comondore et al carried out a large-scale meta-analysis of available research on potential different levels of quality of care between for-profit and not-for-profit providers in the USA and Canada. They used four different quality indicators: 1) the number of staff and their level of training; 2) the number of physical restraints of users; 3) the amount of pressure ulcers customers have to endure; and 4) regulatory deficiencies identified by government regulators. They conclude that ‘the four most commonly used quality measures showed statistically significant results favouring higher quality care in not-for-profit homes for staffing and prevalence of pressure ulcers and non-statistically significant differences favouring not-for-profit homes in physical restraint use and regulatory agency deficiencies’ (Comondore et al 2009: 13). Moreover, Barron and West investigate whether the shift from a predominantly public sector to a private, for-profit sector in the UK since the late 1980s has had a positive or negative impact on the quality of care. They draw on data about care quality for over 15,000 homes, which was collected by the Care Quality Commission, the regulator of care homes in England. They conclude that ‘based on the inspection ratings of the care home regulator, care homes and nursing homes that are run by local authorities are, on average, of higher quality than those operated by for-profit providers’ (Barron and West 2017: 144). Finally, Ronald and colleagues assess observational evidence for an association between for-profit ownership and inferior care. Their conclusion mirrors the outcomes of the other studies. When care in nursing homes is ‘provided by the for-profit sector, the evidence suggests there is a greater likelihood of inferior care’ (Ronald et al 2016: 8).
Quality of care in for-profit care
homes is also undermined by the instability of the sector. As it was reported
in the Guardian last year, ‘more than 100 care home operators collapsed in
2018, taking the total over five years to more than 400 and sparking warnings
that patients in homes that close down could be left with nowhere to go but
hospitals’ (Davies 2019a). The collapse of large chains of care homes is most
catastrophic in its implications. In 2011, the care home provider Southern
Cross, the largest provider in the UK at the time with over 750 care homes and
37,000 residents, collapsed (Scourfield 2012: 140). In 2019, Four Seasons
Healthcare, another large chain went into administration, ‘sparking anxiety
among its 17,000 residents and their relatives’ (Davies 2019b). It is this
level of anxiety due to uncertainty about the continuation of a care home,
which puts downward pressure on the overall quality of care. Users and their
relatives are worried whether they have to move, and if so, whether there are any
alternative care homes available in the neighbourhood. Nevertheless, the
collapse of care homes are not only a concern for users. Employees in the care
home sector too are negatively affected by the for-profit dynamics.
Salaries and working conditions
Why would private companies invest in care homes in the first place? Throughout the 1990s and 2000s, private investors searched for new profitable investment opportunities. With profits in manufacturing having become increasingly difficult, the opening up of public services presented an excellent alternative. At times when the global economy is in crisis and other investment opportunities have dried up, investing in service provision, ultimately guaranteed by the state, promises sustainable and usually subsidised profits (Fattori 2013: 378). The provision of care for the elderly is no exception in this respect. ‘Regardless of the ownership and delivery of nursing home care, the majority of funding for nursing home care in industrialized countries comes from public sources’ (Ronald et al 2016: 2). Equally, should a care provider go bankrupt, it is the state, which is generally expected to step in ensuring continuation of care.
With profit expectations in the range of 12 to 14 per cent (Plimmer 2020) or 10 to 15 per cent (Comondore et al 2009: 14), investing in the care home sector has become an attractive option for large investment funds. Unsurprisingly, the sector has been increasingly characterized by ‘financialisation’, a process in which large care home chains have regularly changed ownership with new owners buying the company by leveraging additional debt onto the company. In the Four Seasons Healthcare debacle, for example, ‘all the sellers made a profit because the next buyer was prepared to pay more and cover the cost by issuing debt — a so-called leveraged buyout’ (Plimmer 2020). As a result, highly complex corporate structures have emerged, often outside the control of regulatory authorities. Individual corporations often comprise ‘multiple different subsidiaries – many offshore – used to minimise tax liabilities. These are used to drive cost savings and profit increases’ (Blakeley and Quilter-Pinner 2019: 7). Even in times of financial difficulties, senior payment levels are staggering in these large companies. Although Southern Cross was in financial difficulties and failed to meet a £46 million repayment deadline in 2008, the year before ‘three members of the Southern Cross management team left the company, but not before benefiting from “personal windfalls” totalling £36.6 million, the biggest beneficiary being the then chief executive Philip Scott who made £11.1 million from share sales’ (Scourfield 2012: 140-1). Moreover, as Plimmer (2020) reports, ‘even as Four Seasons hurtled towards insolvency in 2016, directors’ pay totaled £2.71m, of which the highest paid received £1.58m. In 2017 five company directors shared £2.04m, and the highest paid received £833,000.’ In general, profits are paid to company directors and shareholders, any losses are imposed onto the workforce. Leicestershire County Care Ltd a subsidiary company of the bigger Johnson Care Group made accumulated profits of £4.8 million in 2019. Nevertheless, at the beginning of May this year, ‘the company announced a package of cuts which will see some workers losing 30% of their weekly wages, holiday entitlement cut by two weeks, axing occupational sick pay and reducing [allowances] to the statutory floor for adoption, paternity and adoption leave’ (Jenkinson 2020). With increasing costs for facemasks and gloves and new admissions on hold due to COVID-19, these drastic cuts would be necessary, the company argued.
1.3 million people work in adult social care including care homes and the number is expected to rise to 2 million by 2035. Over 80 per cent of the workforce is female. Pay is generally low with nearly half of all jobs being paid below the real living wage, as defined by the Living Wage Foundation. Additional characteristics are the denial of employment rights and illegal underpayment of the minimum wage. Zero-hours contracts are widespread in the sector. ‘6.1 per cent of workers in residential care and 9.7 per cent of care workers are on a zero-hours contract, compared to 2.3 per cent of employees across the whole economy’ (Dromey and Hochlaf 2018: 10; see also EPSU 2020). Training levels and opportunities of progression are generally low in the sector. Astonishingly, ‘one in five care workers without a recognised qualification had not even had induction training’ (Dromey and Hochlaf 2018: 11). Considering the low pay and poor working conditions in the sector, it is no surprise that there is an extremely high rate of staff turnover. ‘In 2017/2018, 30.7 per cent of the care workforce and 37.5 per cent of carers left their job’ (Dromey and Hochlaf 2018: 13). The need for more care workers in view of an aging population combined with staff leaving the sector due to poor pay and working conditions, amplified by Brexit and a likely reduction in the migrant workforce, implies that there is a real employment crisis in the social care sector, only to intensify in the years to come.
Importantly, from the perspective of care workers, it also matters whether their employer is a public, local authority or a private for-profit company. ‘Median hourly pay for care workers directly employed by local authorities in England in 2017 was £9.80, compared to just £7.76 for those employed by independent providers’ (Dromey and Hochlaf 2018: 8). A similar picture emerges when it comes to zero-hours contracts. ‘Care workers employed by independent providers in England are over three times more likely to be on zero-hours contracts than those employed by local authorities’ (Dromey and Hochlaf 2018: 10). In the case of for-profit care homes, profit is often maximised by reducing staff levels to the lowest possible minimum. Additionally, there is the temptation to draw on less qualified and, therefore, cheaper staff.
In order to overcome the problem in the
social care sector, Dromey and Hochlaf recommend the introduction of the real
living wage in their report, estimated to cost the public sector an additional
£445 million. An emphasis on stronger trade unions, able to enforce employment
rights and secure the real living wage in collective bargaining is one way to
achieve this. The example of Scotland, which introduced the real living wage in
2016 through offering local authorities additional funding provided they
negotiate a pay rise for care workers, is another (Dromey and Hochlaf 2018:
30).
Conclusion
There is clear evidence that the quality of care provided in not-for-profit care homes is better than in for-profit facilities. The unstable nature of the latter further undermines care quality. Lower levels of care quality can be linked back to lower and less-skilled staffing levels in for-profit homes. Focused on making significant margins of profit, minimising staffing levels and low wages are often the way private providers go. A high turnover in the workforce due to low pay, poor working conditions and lack of progression opportunities further undermines quality of care. Thus, ‘there is extensive evidence that the poor working conditions and the failing workforce model is undermining quality of care and impacting on care recipients’ (Dromey and Hochlaf 2018: 19). In short, both the for-profit nature of the majority of care home providers and employees’ low pay and poor working conditions, closely linked with and conditioning each other, severely undermine the quality of care provided in English care homes.
How to improve the situation? Demanding the introduction of the real living wage across the sector is an important measure. Higher pay is likely to improve carers’ life, which in turn will result in lower levels of staff turnover. ‘When asked what could be done to encourage more care workers to stay in the sector, nine in 10 (89 per cent) highlighted the need for better pay’ (Dromey and Hochlaf 2018: 13). Higher pay is also likely to attract more, and more highly qualified, workers into the sector. Paying the real living wage is the absolute minimum improvement in this respect. In itself, however, demanding the real living wage cannot solve the general problem in the care home sector. Only in combination with more public funding – see the example of Scotland above – and a shift towards public sector provision, can the situation be improved on a more fundamental and permanent basis. Hence, there first needs to be a social contract in favour of proper public funding of care homes similar to the consensus on funding for the NHS. Second, the question of for-profit versus not-for-profit provision of care homes needs to be addressed. The private, for-profit sector siphons off a massive amount of public money and transfers it into private profits. Low quality care for users and poor pay and working conditions for employees are directly linked to private companies’ expectations of securing profit levels above 10 per cent.
In their report for the Institute for Public Policy Research, Grace Blakeley and Harry Quilter-Pinner (2019: 9) argue that a nationalisation of the whole sector would be too complex – there are 24,000 providers in England – and too expensive, considering that the private sector had provided £30 billion in investment over the last four decades. I am not fully convinced that these costs would not be affordable, considering the amount of money the government is currently spending in view of the coronavirus pandemic. Nonetheless, Blakely and Quilter-Pinner also provide the alternative of a phased transformation. A strengthened financial care regulator, able to monitor and control not only the quality of care provided but also the financial set-up of care home providers, combined with a commitment that additionally required care homes in the future are shifted back into the public, not-for-profit domain may provide a constructive way forward. ‘We recommend that government should commit to filling the gap between demand and supply itself by borrowing the £7.5 billion necessary to build these homes’, Blakely and Quilter-Pinner (2019: 10) conclude.
In sum, whether in one go or slowly
over time, care home provision has to be returned into public hands. Of course,
just because a service is run by the public sector does not automatically imply
that it is run well. As it is the case in other areas, currently being explored
for re-nationalisation, such as water, public transport, energy or postal
services (We Own It 2019), the precise model of public ownership in the care
home sector would also have to be discussed.
Key summary points
· Cuts in public funding for social care have severely undermined the viability of the sector as a whole and, thereby, the quality of care provided.
· The quality of care provided by for-profit providers is on average below the quality of care provided by not-for-profit providers.
· Competition in this quasi-market has lowered costs, but cost reduction comes at the price of quality of care and low wages and poor working conditions.
· Wages are generally at the minimum wage level with some employers not even paying that; especially the for-profit part of the sector is characterised by zero-hours contracts, low qualification levels and high turnover of staff.
· Demanding the real living wage for workers in the care home sector is an important first step, but on its own is unlikely to address the fundamental problems in the sector.
· The sector requires a drastic increase in government funding. Not-for profit, public sector provision provides the best opportunity of improving the quality of care as well as wages and working conditions. Improving the latter is highly likely to have positive implications for the former.
· Nationalising the sector as a whole is deemed too expensive by some observers. Strengthening the regulator combined with providing any new, additional care homes directly through the public is regarded as a more feasible alternative of transforming the sector over time.
·
Ultimately,
nationalising/re-municipalising the sector is essential to facilitate
high-quality care combined with living wage salaries and good working
conditions for staff. Social care must not be subject to profit-making.
·
If/when
re-municipalisation occurs, additional reflections on how to run public care
homes effectively will be necessary.
References
Barron, David N. and Elizabeth West (2017) ‘The quasi-market
for adult residential care in the UK: Do for-profit, not-for-profit or public
sector residential care and nursing homes provide better quality care?’, Social Science and Medicine, 179:137-46.
Blakeley, Grace and Harry
Quilter-Pinner (2019) ‘Who Cares? The Financialisation of Adult Social Care’, Institute for Public Policy Research;
available at https://www.ippr.org/research/publications/financialisation-in-social-care; accessed 16/05/2020.
Comondore, V.R. et al (2009)
‘Quality of care in for-profit and not-for-profitnursing homes: systematic
review and meta-analysis’, BMJ, 339,
2732.
Davies,
Rob (2019a) ‘400 care home operators collapse in five years as cuts bite’ (11
March); Guardian; available at https://www.theguardian.com/society/2019/mar/11/over-400-care-home-operators-collapse-in-five-years-as-cuts-take-toll; accessed
16/05/2020.
Davies,
Rob (2019b) ‘Four Seasons care home operator collapses into administration’ (30
April), Guardian; available at https://www.theguardian.com/society/2019/apr/30/four-seasons-care-home-operator-on-brink-of-administration; accessed
16/05/2020.
Dromey, Joe and Dean Hochlaf (2018)
‘Fair Care: A Workforce Strategy for Social Care’, Institute for Public Policy
Research; available at https://www.ippr.org/research/publications/fair-care; accessed 19/05/2020.
Fattori, T. (2013) ‘From the water
Commons Movement to the Commonification of the Public Realm’, The South Atlantic Quarterly 112(2):
377-87.
Jenkinson,
Chris (2020) ’Profits Protected as Care Homes Crisis Deepens’ (4 May);
available at https://eastmidlands.unison.org.uk/news/regional-secretarys-blog/2020/05/profits-protected-care-homes-crisis-deepens/; accessed
16/05/2020.
Lobina,
E. (2014) Troubled Waters: Misleading industry PR and the case for public
water. London: PSIRU/Corporate Accountability International; available at http://www.psiru.org/sites/default/files/2014-11-W-TroubledWaters.pdf,
accessed 24/12/2014.
McGregor,
Margaret and Lisa Ronald (2016) ‘Opinion: For-profit care of seniors proven to
be inferior’ (8 October), Vancouver Sun; available at https://vancouversun.com/opinion/opinion-private-vs-public-residential-care/; accessed
16/05/2020.
Plimmer,
Gill (2020) ‘Private equity and Britain’s care home crisis’ (9 February), Financial Times; available at https://www.ft.com/content/952317a6-36c1-11ea-a6d3-9a26f8c3cba4; accessed
16/05/2020.
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Lisa A. et al (2016) ‘Observational Evidence of For-Profit Delivery and
Inferior Nursing Home Care: When Is There Enough Evidence for Policy Change?’,
PLoS Med, 13(4): 1-12.
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[1] Even here
it can be questioned to what extent the care home sector actually represents a
free market. People in need of a care home place rarely have the full
information about their options, there may be few alternatives in their neighborhood,
and choice may be further limited by financial constraints. Residents rarely
have a voice. If the quality of care in their home is poor, opportunities of
moving to another care home are limited on practical grounds.
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