When most of us think of healthcare, we probably think of the NHS and its wide ranging ancillary disciplines and services like urgent care, dentistry, walk-in clinics and more. 

Similarly, whenever social care is mentioned then we automatically think of support living facilities or people being supported in their home by social workers and/or carers. 

Actually the health and social care sectors are made up of thousands of individual businesses that work with or are outside of the NHS. 

Healthcare isn’t just about the treatment, control or prevention of disease, illness, injury or disability as well as the care or aftercare of patients with these needs. Social care is all forms of personal and practical care and assistance that supports individuals in a way that allows them to live independently and the companies that provide these services. 

Given the pandemic, it’s illuminating to look at how health and social care businesses have fared over the previous five years. 

The sector is broadly defined into three main categories that are human health; residential care and social work without accommodation. 

Human health is further subdivided into businesses associated with hospital activities; medical and dental practices and other associated activities. 

Residential care is subdivided into residential nursing care; residential care for learning disabilities, mental health and substance abuse and residential care for the elderly and disabled. 

Health & Social Care insolvency statistics (2019 to 2023*)

Hospital Activities3224223710125
Medical Care & Dental7061587529293
Other Human health11310310316868555
All Health215188183280107973
Residential Nursing Care23913311187
Residential Care for learning
disabilities etc
Residential care for elderly251315301295
Other residential2892126791
All Residential6130437424232
Social work for elderly25159241285
Other social work4532315520183
All social work7047387932268

Figures from The Insolvency Service *up to and including May 2023

All health and social care services broadly followed the same pattern – they had less insolvencies in 2020 and 2021 due to the pandemic and restrictions on creditor actions such as winding up petitions.  

Once these were lifted in 2022, insolvencies increased by nearly half in most cases and this strong momentum continues into 2023 and will surpass many of the 2022 totals if they follow their current trajectory for the rest of the year. 

Human health are the businesses that have seen the most closures followed by social work then residential care for the elderly and disabled. 

We take a closer look at some of the factors affecting the health and social care sectors and explore what, if anything, can be done to arrest the rise in insolvencies.

How is social care funded?

Funding for social care businesses has been squeezed from several directions simultaneously in recent years. 

The most important point to state is that unlike the NHS, there is no national government budget for adult social care in England. It relies on a variety of alternative sources being local authority funding; some dedicated taxation; charities and funding from individuals.

Three specific elements have contributed more to this squeeze than others. These are: 

  • An ageing population – the number of older people is rising (this demographic most likely to need social care), and is increasing demand at the same time as asking them to fund the majority of their own care which many are finding hard so the onus falls on local authorities instead.
  • Increase in the cost of care – the Government estimates around one in seven adults aged 65 face lifetime care costs of over £100,000. Local authorities are reporting their concerns about the price of care packages to support people with increasingly complex care needs and the strain it is putting on their budgets. Local authorities also have to fund regular amenities such as refuse collection, pothole maintenance, street lighting etc which get cut back to support the social care leaving many residents upset at reductions in other services they assume they’re paying council tax for.
  • Pressure on local government finances – local government funding has seen a reduction of 29% between 2010/11 and 2021/22. Which means that all other services are squeezed as a result. 

How a lack of funding is having further knock on effects within the sector:

  • Workforce shortages – issues with career progression, combined with issues around pay and working conditions, are making it difficult for the NHS & other health related businesses to recruit and retain staff. In 2021/22 there were an estimated 165,000 vacancies with the number of vacant posts between 2020/21 and 2021/22 increasing between 52%.
  • High levels of unmet or under-met care needs –  Age UK estimated prior to the Covid-19 pandemic that 1.5 million people aged 65 and over in England have some form of unmet or under-met care need.
  • Technology challenges – to help improve efficiency and patient care there is a need to invest in new technologies however due to the cost it can be difficult to implement and make a case for.
  • Impact of COVID-19 – Following the pandemic there has been a backlog of patients on top of new influx of patients resulting in a strain in resources and a long waiting list of patients. This means people are waiting a long time to get the help they need and those that are managing to get seen by specialists are having to travel long distances.

What is being done to help the social care sector? 

Originally the government announced plans to use £5.4 billion of revenue from a new Health and Social Care Levy to fund adult social care reform between 2022/23 and 2024/25. However, the following year (September 2022) this was retracted due to the cancellation of the Health and Social Levy. 

The Chancellor later announced alternative plans at the Autumn Statement 2022, that implementation of the charging reforms, originally planned for October 2023, would be delayed by two years. He also added that the funding allocated for the reforms would be maintained within local government.

However the Government said it would make available up to £2.8 billion in 2023/24 and £4.7 billion in 2024/25 to help support adult social care and hospital discharge. This included:

  • £1 billion of new grant funding in 2023/24 and £1.7 billion in 2024/25
  • Allocating funding for the now-delayed charging reforms through the Social Care Grant for adult and children’s social care (£1.3 billion in 2023/24 and £1.9 billion in 2024/25). The Social Care Grant will be worth £3.85 billion in total in 2023/24.
  • Allowing local authorities to increase the adult social care precept of their council tax by up to 2% per year in 2023/24 and 2024/25.

Further pain for dentistry

One sector of the health and social care industry that might describe itself as facing a crisis is dentistry. 

It’s estimated that 25% of the UK adult population in 25 had unmet dentistry needs. 

This staggering statistic is reinforced by a recent survey from the General Dental Practitioners in England that showed that over half of their members (50.3%) have reported reducing their NHS commitments since the beginning of the pandemic. 

The proportion of dentists now reporting their intention to reduce the amount of NHS work they undertake this year was 74%. 

A further 43% of respondents indicated that they are likely to go fully private and withdraw from NHS care; 42% say they are likely to change careers or seek early retirement 12% stated that they are likely to move to practise abroad. 

Shawn Charlwood, Chair of the British Dental Association’s General Dental Practice Committee said: “This is a desperate warning from this profession, as much for the opposition as it is for the government.  

“NHS dentistry is running out of road. Every day a broken system remains in force we lose dentists, while millions struggle to access care. 

“This crisis won’t be fixed with sound bites or tweaks at the margins. To turn the corner, we need a plan based on real reform and fair funding.”

So many businesses set out with the most noble of intentions and causes – to help people when they need it most with their health or social care needs but the economic landscape is so uphill that hundreds have arranged CVAs, gone into administration or closed via a liquidation. 

Sometimes it’s just too hard to overcome the obstacles facing a company – we understand, which is why we offer a free initial consultation to any business owner or director who wants to explore the options they have. 

If they are encountering financial difficulties then the earlier they seek assistance, the more choices they will generally have in front of them. 

When individuals feel something’s not quite right they will look for medical help – it’s the same with businesses so why wait until the situation is serious?