Increases in FNC funding shows promise but still requires improvements

Bromson Hill Nursing Homes, part of BM Care Homes, welcomes the increase in the Funded Nursing Care to £165.55, representing an increase of just over 5%. The FNC is a supplement paid to nursing homes to provide nursing care (over and beyond the costs of providing residential care).

Laing Buisson, a healthcare consultancy, was asked by the NHS to undertake a review of nursing home costs. In discussions with BM Care Homes, Laing Buisson acknowledged that the methodology used by the NHS was flawed as it focussed solely on incremental nursing and manager costs. In practice, nursing homes typically deploy more care staff on their rota than a similar sized residential care home would.

Nursing homes also have other costs not incurred by residential care homes, for example, specialist beds, hoists and other equipment. Equipment costs would typically be capitalised and the depreciation charge would be the annual cost that should be recoverable from the FNC (as well as from private residents).

It could also be argued that nursing homes are likely to have a higher level of resident ‘turnover’ and hence have empty rooms for longer. If this was the case, there would be a case to assume a higher cost of capital for nursing homes against which to apply to the relevant assets of the business.

More generally, local governments pay for care on a flat basis irrespective of the dependency of the resident. Combined with a FNC that is (still) too low and also the same for each nursing resident irrespective of needs, the Government still has a long way to go to ensure sustainable long term funding arrangements for this vital sector.