?

NEWS RELEASE FROM THE
REGISTERED NURSING HOME ASSOCIATION

6th March 2001

WHERE'S THE MONEY COMING FROM?
NURSING HOMES WARN OF FURTHER CLOSURES IF MINIMUM
WAGE RISE IS NOT MATCHED BY HIGHER FEES

'Fine in principle but where's the money going to come from?' was the reaction of the UK's nursing homes to the news that the Government proposes to increase the national minimum wage to ?4.10 an hour, a rise of ten per cent.

Speaking on behalf of over 1,000 nursing homes throughout England, Scotland, Wales and Northern Ireland, the Registered Nursing Home Association (RNHA) said the increase, justifiable though it may be for the individuals receiving it, threatens to plunge yet more homes into financial crisis unless the fees paid for State-funded patients - around two thirds of the total - are increased.

With nursing homes already struggling to meet the pay awards of up to eleven per cent for qualified nurses, the RNHA claims that more closures and bankruptcies are virtually inevitable if the rise in the minimum wage is not matched by equivalent increases in fee levels.

Commented RNHA chief executive officer Frank Ursell: "Generally speaking, nursing homes have received only between one to two per cent increases in fees from social services departments for the coming year. Since over two thirds of their costs are accounted for by staff, it is difficult to see how they will manage to cover this latest minimum wage increase."

He added: "We certainly do not begrudge hard-working care staff their rise. That's not the point. What we object to is being told on the one hand to pay a ten per cent increase in wages by law and being offered a minuscule rise in fees on the other. How can the government expect standards of care to improve when it puts such impossible pressures on the providers of that care?"

RNHA calculations suggest that, in a typical 30-bed nursing home, the extra costs incurred by payment of the higher national minimum wage will more than swallow up any increases in fees in the pipeline from social services departments.

Overall, around two thirds of nursing home patients are funded from public expenditure, although in some homes the proportion of patients reliant on State funding can be much higher. This, the RNHA points out, leaves the nursing homes with very little room for manoeuvre.

News about the minimum wage increase comes hot on the heels of new national minimum care standards published by the government last week. Compliance with the standards is mandatory for nursing homes to remain registered and will, in many cases, require substantial additional expenditure.

"The government wants to have its cake and eat it," said Mr Ursell. "In isolation, it is making decisions which adversely affect the economics of providing nursing home care. We must keep repeating the question to Mr Blair - where is the money going to come from to pay for your policies?"

END

For further information, please contact Frank Ursell, Chief Executive Officer, RNHA (Tel: 07785 227000 mobile or 0121-454 2511 office)