Question to the Department of Health and Social Care:

To ask the Secretary of State for Health and Social Care, what assessment his Department has made of the (a) potential implications for his policies of trends in the level of profits generated by private care homes in the last three years and (b) potential impact of this has on the funding and sustainability of social care.

Provider profits are a necessary component of any healthy industry and play an important role in attracting investment to the sector. The Department monitors financial health using the Earnings Before Interest, Tax, Depreciation, Amortisation, Rent and Management (EBITDARM) margin, a recognised accountancy measurement for businesses with assets and incomes such as care homes. Latest published data is from the Care Quality Commission’s Market Oversight scheme last year and suggests that non-specialist care homes had an EBITDARM margin of 26.9% as of March 2024.

We have provided the Market Sustainability and Improvement Fund (MSIF) to local authorities since 2023/24, with one of the three target areas local authorities can spend their allocations on being to improve fee rates to providers. MSIF is designed to support increased adult social care capacity and improve market sustainability.

Under the Care Act 2014, local authorities are tasked with the duty to shape their care markets to meet the diverse needs of all local people.  This includes a duty to work closely with local provider to promote best practice and achieve a sustainable balance of quality, effectiveness, and value for money.