Summary of the case study
Around 45% of care home residents pay the fees themselves.
The local authority pays all the fees of 36% of residents. The remainder are mix of state and personal payments.
Because local authorities are unwilling or unable to pay the full rate it forces the care home to overcharge the private paying residents £100/week for exactly the same service.
The upside for the care home is that selling to local authorities is B2B but the private payer is B2C. So there will be a difference in the cost of acquiring customers.
This is a quote from one of the experts in the care home industry
“The entire care home sector for older people is being kept afloat through cross subsidies from . . . residents that pay privately,” said William Laing, founder of the consultancy. Self-funding care home residents were in effect being charged an additional £8,000 a year “care tax”, he said.
Read this press comment for a summary of the situation.
So marketing director what do we do?
Change to only accepting private payers?
Try and increase the percentage of private payers?
Put out head in the sand and hope for the best?
At the moment the care industry is adopting the last of these options plus appealing for more money to be spent by central government on care. At best this will be too little too late. At worst it will not happen.
An interesting dilemma. If you want to see the 'model answer' to the case study then read my new book This I Know. Dick Stroud