A RESEARCHER at Coventry’s Warwick Business School has co-authored a study which found government financial support merely postponed a financial crisis in the care home sector during Covid-19.
Marianna Fotaki, who is a professor of business ethics at the school, worked on the new report called ‘Bailed out and burned out?’.
This followed a two-year study conducted by Warwick Business School, University College London, and the Centre for Health and the Public Interest looking into the financial impact of Covid 19 on the sector.
Ms Fotaki said the government’s decision to end financial support for care home companies after the peak of the pandemic had passed, even though its financial impact ‘clearly wasn’t over’, has likely contributed to current financial and operational difficulties.
During the first year of the health crisis, the four UK governments provided £2.1billion of financial support to the care home sector to prevent a financial collapse being threatened due to high death rates and fewer new guests.
Without this, businesses providing 60 per cent of all care home beds would’ve been at risk of financial collapse.
To cope with the economic shock of the health crisis, care home businesses also reduced their costs including staff budgets.
Half of companies employed fewer care staff during the first year of the pandemic, while 82 per cent of care home staff surveyed said their working hours increased.
The study showed the care home sector has faced a new financial crisis since the pandemic’s peak but despite this government emergency funding has been removed.
The study also found there was a risk government money designed to support the pandemic response would’ve ‘leaked out’ in profits and dividends.
This was due to there being no plan in place to deal with the impact of a pandemic on care homes.
The government also had ‘very poor data’ about care home companies’ finances.
During the first year of the pandemic, the operating profit of for-profit care home businesses went up by three per cent, and a quarter of the 460 companies in the study paid out £120million in dividends – an increase of 11 per cent on the previous year.
A Department of Health and Social Care spokesperson said: “We know the pandemic was hard for every sector and that it will take some time for the economy to fully bounce back.
“The government provided over £2.9bn in specific funding to support the adult social care sector through the Covid pandemic.
“We are supporting social care with up to £7.5bn over the next two years and last week set out the Next steps to Put People at the Heart of Care, our plan to reform social care, backed by £700m over the next two years.”
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