Private Sector Dominance Raises Fears for Britain’s Care Homes

(Bloomberg) — Britain’s care homes are increasingly run by profit-making companies, according to a report that questions the quality of care given to vulnerable adults and children.
Researchers from Oxford University found almost all residential services in adult social care are now outsourced, while more than 80% of children’s homes are run by for-profit companies, including some private equity firms.
The level of outsourcing to the private sector has risen by 20 percentage points since 2010 for children’s homes, the report said, and the same amount for adult homes since 2001.
Children are often moved to care homes in parts of the country where property is cheaper, “miles away from everything they know – their school, their friends, and, sadly, often, brothers and sisters,” said Katharine Sacks-Jones, CEO of Become, a charity for children in care.
The study was funded by the Nuffield Foundation — a large research charity — and carried out by Oxford University’s department of social policy and intervention. It said profit-making operators underperformed in inspections compared with those run by the public sector or nonprofit or charities.
“Early data suggests that outsourcing has failed to deliver the expected benefits of private sector efficiencies,” said the report’s co-author, Benjamin Goodair. “Instead, the use of profit-driven providers risks worsening care services.”
Political Headache
The care sector has become an ongoing political headache for the UK government. In 2017, Britain’s then-prime minister Theresa May botched a general election campaign when she revealed and then quickly scrapped a plan for people to pay more toward their social care. In 2019, Four Seasons — a care home operator previously owned by private equity veteran Guy Hands — collapsed, casting doubt over the future of hundreds of homes for elderly people.
Still, Britain’s regulator for education and children’s services — Ofsted — has said that children’s homes operated by local authorities and those run by private providers have similar outcomes.
“We are aware that some registered children’s homes have become an investment vehicle for private equity, often based overseas,” said Yvette Stanley, national director of social care at Ofsted, which monitors the sector. 
“Many private firms do a good job. But we are worried about the risks of so many services supporting vulnerable children being held in so few private hands.”
A majority of the UK’s looked-after children are in foster care. But about 17% were in children’s homes, secure units or semi-independent living accommodation as of March last year, according to Ofsted.    
Private investors are involved in both running children’s homes as well as providing adoption and foster placement services. 
Ofsted’s own findings said that more than 80% of children’s homes were owned by private companies.
In 2022, the UK’s Competition and Markets Authority said the largest private children’s homes were making higher profits and charging more than if the market was functioning effectively.
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