The introduction of the National Living Wage has increased the financial pressure for care homes, particularly for smaller homes, a report says. Accountancy firm Moore Stephens says 12% of care homes have at least a 30% chance of going insolvent within the next three years.
It says care homes have been under extra financial strain in recent years.
Living Wage costs ‘put strain on care homes’
Rising costs and reduced funding from local authorities have come as demand for places at care homes has grown.
Moore Stephens also points out that a report by the Care Quality Commission (CQC) in October showed 2,444 residential care homes closed between October 2010 and December 2015, with 1,433 being smaller care homes.
The National Living Wage, which was introduced in April this year, currently stands at £7.20 an hour for workers aged 25 and over.
‘Unsustainable situation.’
“It’s become increasingly difficult for care homes, particularly smaller providers, to keep up a consistently high level of care while breaking even or worse, remaining solvent,” says Mike Finch, restructuring partner at Moore Stephens.
