Dilnot proposals will ease the long-term care funding gap but it will not remove it as a record number of care homes residents are continuing to pay for their own care, Laing & Buisson has stated.
In Laing & Buisson's latest Care of Elderly People UK Market Survey 2012/13 175,000 older residents paid the full costs of their long term care fees last year.
A further 14%, while being supported by councils, also relied on ‘top-ups' from family or friends; in total 231,000 older residents paid in full or in part from their families' resources, marking a record high of 57% of all (403,000) older residents of independent sector care homes in the UK.
The report said implementation of the Dilnot would "certainly" reduce the burden on private payers but the proposal is that only ‘care' costs will be paid by the state leaving the individual to pay for ‘hotel' and other costs which are included in care home fees.
William Laing, chief executive of Laing & Buisson, predicted a further shift to private pay in the future.
He said: "The private payers' share is projected to continue growing in the future as the rate of owner occupation continues to expand among the very old population at risk of entering care homes.
"Meanwhile, the quasi-private, top-up market will be reinforced by the minimal or zero local authority fee uplifts which look likely to continue in the medium term."
The survey showed wide regional variation with a much higher proportion of ‘pure' private payers in affluent areas including; the South East, 55% of residents; the South West, 53%; and the East of England, 50%.
The North East, Northern Ireland and the Isle of Man have the lowest level at just 22% compared with the UK average of 43%.
Laing said that market polarisation meant three of the four largest groups, including market leader Four Seasons Health Care, were becoming increasingly unrepresentative of the market as a whole which was reflected in operating margins.
He said: "Four Seasons, Bupa Care Homes and HC-One all have significantly higher than average exposure to publicly paid residents, and each has reported a significant decline in EBITDAR as a percentage of revenue since the austerity measures began.
"Meanwhile, the operating profitability of private-pay focused Barchester Healthcare remained above 30%. The 2012 results of the largest groups will be awaited with great interest."
Laing & Buisson stated that with the weekly fees being paid by councils either frozen or subject to very minor uplifts, the disparity between council funding and what private payers are being asked to pay is "opening up to an alarming extent".
On average, according to the report, English councils are paying just £480 each week for residential care in 2012/13 which is approximately £50 to £140 less than the ‘fair market price' range of £528 to £623 calculated by Laing & Buisson.
Laing said: "The reality is that independent care home providers are having to rely more and more on cross subsidies from private payers. Without these subsidies, large numbers of care homes would be literally bust.
"It is understandable that cash-strapped councils are seeking to pay care homes as little as they can, since this is now the biggest single cost that councils have to bear, but it needs to be recognised that this amounts to a ‘hidden tax' on private payers, who are in effect bearing the brunt of austerity measures."
According to the reports calculations, it would still be necessary post-Dilnot for most private payers entering care homes to sell any house they own to pay for fees - either at the outset, or at death for those benefiting from deferred payment arrangements.
Laing & Buisson added: "There are also hidden dangers from Dilnot for care home operators. In particular, moving the upper limit of the asset threshold from £23,250 to £100,000 would mean that large numbers of care home residents who are presently private payers would be drawn within the ambit of local authority payment.
"This would mean that a significant proportion of the premium fee rates which are presently needed to cross subsidise inadequate local authority fee rates may gravitate towards the low fee regime of councils."
The report highlighted the ongoing trend that, despite public policy which seeks to divert elderly care away from residential settings, the overall number of people in care homes is on the up.
In 2012 there were 432,000 older or physically people in all residential settings compared to 422,000 in the previous year, representing growth of 2.2%.
