The root cause of excess covid infections in the care home sector: 30 years of market driven policies

Any root cause analysis into the excess deaths from covid-19 in the UK’s care homes must consider the decisions taken by policy makers over the past three decades which may have created the optimal conditions for the virus to spread among older people in institutional settings. 

Those decisions—taken by long departed government ministers—led to the intentional creation of a market in social care, the consequential casualisation of the social care workforce and the treatment of some care home residents as a source of income and revenue for international private financiers. 

Take for example, the emerging evidence which suggests that the size of a care home maybe a causal factor in the rates of infection from covid and patient deaths. Research from NHS Lothian (published on a pre-print) appears to show a correlation between the size of the home and the spread of the virus; thus in homes containing fewer than 20 residents, the chance of an outbreak was 5%, but in homes with 60 to 80 residents the likelihood increased to between 83% and 100%.  

The average care home size in the UK is around 40 beds so if the NHS Lothian study is replicable across the sector, the homes which were worst hit by the virus were substantially above average size. But why do we now have care homes in the UK which are so large? 

It is not because this way of providing care is associated with better outcomes for residents—in fact, even before the covid pandemic the opposite looked likely to be true. The CQC’s 2017 examination of its care home ratings found that in general the bigger the care home the worse it was rated by the commission

Instead, the reasons for the existence of large care homes lies in the fact that bigger care homes tend to provide better returns for investors. As market analysts Grant Thornton stated in 2018 “a home with between 80 and 99 beds hits the profitability sweet spot.”

But how did we arrive at a situation where returns for investors are determining the size of some of the UK’s care homes? 

The explanation lies in the decision by successive governments from the 1990s onwards to rely on international private finance (private equity, hedge funds and Real Estate Investment Trusts) rather than public borrowing as the major source of new investment in the UK’s care infrastructure. 

In much the same way that the NHS was prevented from using public borrowing to invest in new hospitals by the Blair and Brown governments and so became reliant on the Private Finance Initiative for new capital investment, so too did the same governments prevent local authorities using public capital to build or upgrade their care homes, leading to the mass sell-off of state owned care facilities from the 1990s through to the late 2000s. It is currently the case that 83% of care home beds are owned by for-profit companies.

By restricting access to public capital, former government ministers were happy to let the interests of international private financiers dictate the size and form of our care infrastructure—even though this was never set out as an explicit policy intention. 

We are also starting to see evidence that high occupancy rates in care homes were associated with higher rates of infection from covid. Thus research on a pre-print from University College London shows that the adjusted hazard ratio for confirmed infection was 2.5 times greater in homes with 85% to 100% occupancy than homes with 70% to 85% occupancy rates. 

But what explains the reasons why occupancy rates were so high at the height of a pandemic? Again, there are good reasons to consider that it comes back to the decisions by previous governments to rely on private sector investment in our care infrastructure. As the Competition and Markets Authority pointed out in their 2017 study the current private sector investment model is dependent on an occupancy rate of 90% in order to generate sufficient returns.

For those large for profit companies which have borrowed large amounts to invest in a portfolio of care homes—in some cases owing £35,000 for each bed they operate—there is also a strong financial incentive to keep occupancy levels high in order to generate the income to repay these debts. 

At this stage there is only anecdotal evidence to suggest that the imperative to maintain high occupancy levels during the pandemic led to some care companies choosing to override concerns about the safety of staff and residents to take in potentially infected people. But it is an issue which is being talked about within the sector—as one care home owner told the Financial Times in July “We had to admit people with covid to stay afloat—whether it’s right is a moral question”

Emerging research is also pointing to the fact that the state of the adult social care workforce has contributed to the spread of the virus. As is now well known, the care workforce is amongst the worst paid in the country with excessively high turnover rates, low levels of qualifications and with a large number of care workers on zero hours contracts

The ONS Vivaldi study found a lower incidence of infections in care homes which pay sick pay and a higher incidence amongst those employing agency workers and workers who work across multiple sites. Similarly the UCL study found lower staffing levels in care homes led to increased infections; a ten percentage point increase in the bed to staff ratio was associated with a 23% increase in infection. 

These studies raise the possibility that those care workers who have had to continue working while sick or who have had to work in multiple different jobs to make ends meet may have become unwitting vectors of the disease. 

But this highly casualised, over stretched workforce has not come about by accident. It is again the direct product of government policy which, for over 30 years, has required that local authorities—the main purchasers of social care—keep the unit cost of social care as low as possible. And because labour costs make up the biggest part of the unit cost of social care, any cost reductions translate directly into lower wages and worse terms and conditions. 

These cost reductions have been centrally driven, first by the Major government which required that councils use their bulk purchasing power to drive down prices from private providers (as the former health secretary Virginia Bottomley put it in 1993) but also by New Labour who used the policy of “Best Value” to put pressure on local government to keep unit costs down. More recently the governments from 2010 onwards have reduced expenditure on social care by 13% as part of their austerity drive, leading to a growth in the number of care workers operating on zero hours contracts after 2012. 

If it is the case that deaths in the care home sector are the result of the policies of previous governments—rather than badly handled short term interventions by the current government (for example rapidly discharging potentially infectious patients from NHS hospitals into care homes)—what then does Parliament do with this information? Will any such reckoning cause the current government to change tack and address the systemic flaws which have been revealed by the pandemic? Or will it require those former government ministers whose policies created the current model of low-cost outsourced care to account for their decisions? 

David Rowland, Centre for Health and the Public Interest.

Competing interests: None declared