NEW warnings have been aired about the crisis facing care homes as the rate of closures increases.

A study carried out by Opus Business Services on behalf of the BBC has determined that more than a quarter of care homes nationally are in danger of going out of business within the next three years.

Earlier this year the Echo reported on the problems facing the industry in Dorset, which include the introduction of the national living wage, a shortage of nurses and managers and a shortfall in the fees paid by local authorities for their supported residents.

Reacting to the BBC figures, Shan Seewooruthun, chairman of the Dorset Care Homes Association, said: “You just need to look at the loss of registrations in Dorset to see we are heading that way.

“The national living wage is a massive issue, the banks are worried that homes won’t be able to sustain borrowing.

“Wages are now up to 85 per cent of a home’s turnover. It has always been a labour-intensive business - it is about looking after people - but with the living wage rising over the next two years there will be massive strain.

“Something is going to give, I don’t know what.”

The BBC’s research, broadcast on ‘You and Yours’ on Radio 4 yesterday, found that nationally, on average, homes make just £17,647 in profit before tax. Many homes are borrowing to cover their costs, but with such small margins some are unable to meet repayment obligations.

Mr Seewooruthun said: “Like any business care homes have borrowed money, for instance if they want to expand or refurbish, but when their turnover is eroded by higher levels of regulation and wages they may not be able to sustain it.

“Nobody foresaw the jump in wages from £6.75 to £7.20 and the rise is ongoing.”

He said Dorset’s local authorities had increased the fees they pay homes for state-subsidised residents by one per cent this year, although staffing costs for homes had risen by as much as eight per cent.

Several care homes in Bournemouth and Poole area have closed in recent months, with plans submitted to demolish or redevelop the buildings as flats.

Pinebeach Nursing Home, at Friars Cliff in Christchurch, closed before Christmas and an application has been submitted to replace the building with a modern block of 10 flats.

In January, Poole council granted permission for the renovation of the former Ormonde Nursing Home in Branksome as five flats and a semi-detached house.

The following month the demolition of Canford Cliffs Rest Home in Bessborough Road was approved, to be replaced with a four-storey block of 14 flats.

Both Marlborough House, in Bournemouth Road, and Avalon Nursing Home, in Pinewood Road, also closed last year.

The applicants in these cases claimed the businesses were no longer commercially viable.

Mr Seewooruthun said that while some new homes had opened in recent months, these were expensive and would not accept local authority supported residents, as they would be subsidised by paying residents.