Friday, May 06, 2016

The Care Industry cannot go on like this - something must change

There are few markets where you can guarantee a rising demand, year on year, for the foreseeable future.

There are few markets that are operating with technologies and practices that haven't change much since the 1950s.

This is the state of the Care Business and you would think with these characteristics it should be making a fortune,

So why the problems. I will talk about the UK but the situation is not that much different in the US. Read Laurie Orlov's most recent blog on the subject

Providing care is labour intensive and the cost of labour is rising because of the increase in the minimum wage,

It is a tough job and not one that most young people want to do. Hence the large number of overseas workers

The job has low status - as reflected in the wages that are paid.

The state, that pays for much of the care in the UK is strapped for cash. Already private residents pay 40% more than those paid for by the state.

Many of the large care companies have unsustainable amount of debt on their balance sheet.

That will do as a list of reasons but there are many more.

Put simply, if you need care you need care, but you probably will not have the money to pay for it and neither does the state.

There are few options for how the industry will develop. To be honest I can only think of one sustainable strategy.

There are two distinct groups of customers. A small number of private fee payers and a large group that will require state assistance.

It is grossly unfair that the private payer supports the state and one that is unstable. It will soon come to an end.  

Provision of care by the state either needs a significant injection of new money or it must be adapated to function on what is available. There is little chance that new money will be forthcoming so it must change.

It is better to provide a third class service that works than a supposed second class service that continually fails.

It is an area of business that I glad not to be involved with. Dick Stroud

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