LONG-TERM CARE: Private providers of long-term care do not only cater for elderly people. Alison Moore reports on this diverse sector and the role it could play in intermediate care

Two decades ago, as the NHS closed long-term nursing beds and local authorities sold off their old people's homes, a profitable new market in providing residential and nursing care opened up for the independent sector.

The government still funded many of the places but the provision became almost entirely private.

Now the market has imploded. The late 1990s saw a rash of home closures as local authorities put strict limits on the amount they would pay.

The independent sector still provides 420,000 residential and nursing beds and employs 660,000 people, but it certainly does not look like a goldmine for potential investors any more. Care for elderly and physically disabled people may be a£9bn a year market but the sector has lost beds over the past few years - 12,600 in the year to April 2001, according to independent healthcare analysts Laing and Buisson.

It is a diverse sector: though caricatured as care for old people, it includes convalescent and rehabilitation care for any age group.

Ironically, given the high level of dependency of the people being cared for, little funding comes direct from the NHS.

Most public funding comes from local authority social services departments. Philip Blackburn, an economist with Laing and Buisson, suggests 56 per cent of beds are publicly funded and privately supplied.

William Laing, editor of Laing's Healthcare Market Review, says around 10 per cent of nursing home places are NHS-funded.

This is changing, however, as more intermediate care is funded in the private sector and as the state funds the nursing component of long-term care.

This major change comes into force in October, with primary care trusts playing a key role.

The development of PCTs, with their unified approach to health and social care, could give another boost.

But many in the sector are sceptical about how much difference these changes will make. Current plans are for funding to be offered at£35,£70 or£110 a week for 'registered nurse contribution to providing planning and supervising care'.

Independent Healthcare Association public affairs director Dr Tim Evans says: 'If you want to give someone high-quality nursing care in a nursing home, it costs about£450 a week. But when you look at what it costs to keep someone on an NHS ward, It is upwards of£1,000 a week.

'It would have been simpler, cheaper and easier if the government had said it would stop the decline of nursing homes by insisting councils gave an extra£30-£40 a week to stop bed blocking. Further bed losses could threaten the national plan.'

Frank Ursell, chief executive of the Registered Nursing Homes Association is extremely pessimistic, suggesting the NHS does not understand the nursing homes sector and has failed to engage in long-term planning.

But some innovative ideas are developing. Clive Bowman, medical director of BUPA Care Services, suggests homes could concentrate on residents with particular needs - Alzheimer's or Parkinson's for example. These centres of expertise could also provide intermediate care - stroke sufferers could be cared for within these settings once their acute hospital treatment is over, he suggests.

Intermediate care could be the salvation of this sector but is the NHS willing to commission?

Experience is mixed: at Westminster Senior Living, chief executive Dr Chai Patel says there has been increasing demand from PCGs for stepdown care, and from trusts for 'winter pressure' beds. But the National Care Homes Association says only a third of its local groups were involved in winter planning last year.

And what commitment there is, may be short-term.

Mr Ursell suspects that only a minority of the planned 5,000 extra intermediate care beds will come from the private sector, with most trusts opting to build their own.

But some longer-term contracts are being signed. In Leeds, not only is there a threeyear contract for intermediate care with the local private sector, there are plans to include care homes in capacity planning and staff training.

'We are the replacement for the old geriatric hospitals, ' points out chair of the Leeds Care Home Association Peter Hodkinson. 'We are treated as part of the whole system. If one part fails, it has a knockon effect on the whole system.'

But elsewhere, Mr Ursell feels there is little understanding from the NHS of the private sector's role. Unlike social services, 'health is still on a learning curve', he says.

He is also worried about how HAs and PCT/Gs will commission care. 'If you are not on HAs' list for block contracting, then it is death by 1,000 cuts.'

And PCTs' lack of knowledge about nursing homes could mean they 'are going to be commissioning services in homes that can't provide them'.

Biggest players

BUPA Care Services Size: Owns or manages 238 care homes with over 16.500 beds.

Value: Over two-thirds of residents get some funding from the state.

Distinguishing features: Largest operator in the field with 4 per cent of the market. Large provider of respite care (7,000 residents a year), trying to develop joint working with health and local authorities. www. bupa. co. uk Ashbourne Homes Size: 145 homes with over 8,200 beds.

Value: Turnover£135m a year - about 66 per cent of residents get some funding from the state.

Distinguishing features: Second largest provider in the UK; has done much work on intermediate care with the NHS. As well as residential and nursing home places for older people, it works with younger people with brain injury and physical or mental disabilities. Tel: 01753-869777 (website under construction) IDUN beds: over 6,600; tel: 020-7929 3444 Four Seasons beds: over 6,000; www. fshc. co. uk Southern Cross beds: around 6,000; tel: 01753-842 742 Westminster Senior Living (owned by Westminster Healthcare plc); beds: nearly 6,000; www. whc. co. uk Craegmoore beds: over 4,700; www. craegmoore. co. uk Highfield beds: over 4,700; www. highfield-group. com