The plunder of older people and their families by private care homes

Nick Kempe – The Common Weal Care Reform Group

The Sunday Mail provided some of the best coverage of the failures of the care system during the Covid pandemic and this week ran another story which should be read by everyone who cares about care.

Margaret Mackie, an 87 year old with dementia, faces eviction from her care home, Northcare suites in Edinburgh, because her money and that of her family has run out and she can no longer pay £1,600 a week in fees.  

It used to be generally accepted that when self-funders money ran out, care home providers would continue to care for them until they died at the local authority rate (currently £855.78 a week). Care home providers are now merciless. Nothing, not even the fact that in Margaret Mackie’s case she had provided Northcare Suites with a large amount of free publicity through her charity fundraising efforts during the Covid crisis, is allowed to get in the way of maximising revenue.

Northcare suites is part of Northcare Scotland Ltd, a small but rapidly expanding care home company controlled by the Sawer family. Its homes receive far better inspection grades than most private providers, which makes them attractive to relatives wanting the best for older people. Its last published accounts, for the year to 30th November 2021, record turnover of £24,583,280, that it employed 536 staff, including the directors, and the total cost of staffing was £12,645,526.  

Three of the four directors of the company are from the Sawer family and one of them, Margaret Sawer, owns 75% of the shares. The staff costs for the company show £825,876 in pay and pension contributions was paid for the four directors, while the related party transactions section of the accounts suggests they received the vast majority, if not all, of the £2,512,106 paid out in dividends to shareholders. The total value of those shares, as represented by the net assets of the company, is now £54,603,914. The directors have become very wealthy through the operation of the care homes and are handsomely rewarded.

This context helps debunk what William Sawers, one of the directors, said to the Sunday Mail. He claimed they had “offered Mairi [the daughter] a £10,000 discount for her mothers fees for 2023 and no annual increase for the duration of her mother’s stay” but “unfortunately, Northcare Suites could not offer the standard of care and services that they do based on a £41,500 discount, which is what Mairi was seeking….Northcare would run at a significant loss if the rate was £832 due to the level of our service and standard of environment””.  

This is highly misleading. Northcare’s accounts show it could easily afford to accept self-funders at the public funded rate once their savings were exhausted as its gross profit for 2021 was 35.5% and in previous years had been even higher. Out of the £200,000 Margaret Mackie’s family had paid for her care, the company appears to have made over £60,000 in profits.  

That analysis is confirmed by Northcare’s staff costs. Take out what was paid to the directors and these accounted for under 50% of turnover, a very low figure for the care home sector, where staffing can account for 80% of costs. Extrapolating to Margaret Mackie’s case, it is likely that just under £800 of the £1,600 she paid in fees went on staff. The explanation lies in the accounts: “close control over direct costs and overheads continues”. Northcare may be spending a little over the national care home contract rate to provide what appears to have been high quality nursing care, but not that much: possibly around £1000 a week taking capital costs into account compared to the £1600 Margaret Mackie was paying. If Northcare now accepted Margaret Mackie at the local authority rate, it would take several years for the company to make a loss out of her care.  

The wider point is that private care home providers often try to justify their very high fee levels by an alleged need to subsidise publicly funded residents. The National Care Home contract rate might not be enough to pay staff what they deserve but it is sufficient to cover the wage rates currently prevalent in the private sector. Follow the money and you can see this is far less than often claimed and in Margaret Mackie’s case would require nothing like the £41,500 discount claimed by Mr Sawer.  

Care Home providers, however, still manage to fool people with their business speak.  Mairi Hunter has done a great public service in highlighting her mother’s case but I disagree with her statement that the failure by local authorities to match what private providers are demanding has created “a postcode lottery”. The truth is that it is private care which is a lottery and the families of Margaret Mackie and thousands of older people like she, should never have had to pay the fees they have.

This was never supposed to happen. The Sutherland Report in 1999 highlighted the unfairness of people having to pay for care that was once provided under the NHS and the Scottish Parliament to its credit responded by introducing Free Personal and Nursing Care (FPNC). The payments towards the cost of care, currently £338 per week for nursing homes, were intended to reduce the amount that older people would have to pay private providers. Instead, the opposite has happened: the payments enabled private care home providers to hike their fees which have increased above the rate of inflation ever since.  

This scandal could have been prevented. The Scottish Government has a number of powers through which it could control care home fees. When Free Personal and Nursing Care was introduced, self-funders, people whose level of savings meant they had to pay care homes fees, were supposed to have a choice. They could either arrange their own care with providers and negotiate the fees or have their care arranged through the local authority and pay the publicly funded rate, now £855.78 for nursing home care. Legally, that choice should still be offered to all self-funders but in practice it has been abandoned.  

A primary reason for this is hospital discharge. With the cuts in the NHS, the Scottish Government and the Integrated Joint Boards have been trying to get older people out of hospital as quickly as possible. In doing so have driven them into unfair contracts with providers, rather than respect their rights. The Care Home Relatives Group explained in their response to the consultation on the National Care Service:

“At the very minimum, relatives ordered (as they are) to find a place in care to ensure someone leaves hospital should be given clear advice on what they are committing to. The contracts they are currently forced to sign are potentially costlier than any contract they will ever have entered into in their lives. They are coerced into doing this at times of acute stress.”

This is totally wrong and completely opposite to what the Sutherland Report envisaged and recommended. If families of self-funders were supported to refuse to accept placements except under the National Care Home Contract but with specific agreements for “additional care charges” (e.g. higher staffing levels) and “extras” (e.g. larger rooms) which is what used to happen, the private care home racket could be stopped tomorrow.

A number of other powers are available to the Scottish Government to control care home fees. Most importantly, despite inquiries from first the Office of Fair Trading and then the Competition and Markets Authority into care home fees, the Scottish Government has never asked or resourced the Care Inspectorate to check care home providers contracts with self-funders, let alone use the regulations governing care homes to control profit levels as happens in other countries.   

Other changes would not even require legislation. For example, the Scottish Government could amend the model contract for FPNC, which applies when families negotiate their own fees, to require providers to accept older people at the National Care Home Contract rate when their savings reduced to a rate that makes them fully eligible for public funding. That would prevent people like  Margaret Mackie ever being faced with eviction from their home.

Most people in Scotland are now probably aware of the care home providers owned by companies registered in tax havens who suck money out of the care system and Humza Yousaf has stated publicly he wants to stop this. Such providers, however, still comprise a relatively small proportion of the market. Very little attention has been given to Scotland’s care bourgeoisie and in this Northcare is far from being exceptional.  

This week it was reported that another Edinburgh care home, Cramond Rise, was charging £2000 a week and included in the sum are visits from a private GP twice a week. Care home residents should have a right to see a GP on the NHS like anyone else but the providers, under the guise of choice and the market, and now starting to prey off the collapse in public services. Cramond Rise publishes only minimal accounts so it’s not possible to see how much money its owners are making out of care.

Many of these same providers pleaded poverty during the Covid crisis, failed to provide or train their staff in the use of PPE and then raked in yet further money in the form of grants from the Scottish Government to pay for staff sickness etc. This week the Scottish Covid inquiry launched “Let’s Be Heard”  in which it asked people to report their experience of the pandemic. Common Weal’s Care Reform Group would encourage any relative of someone in a care home during that period not just to report experiences of visiting and care provision, which have been well aired as a result of the fantastic work by the Care Home Relatives Group, but also any fee increases.  

While the National Care Service is paused, the Scottish Parliament’s Health and Care Committee could take the opportunity to instigate some work into the fees charged by private care homes and what to do about this.

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