Toby Porter: The cost of living crisis is creating a perfect storm for hospices

Toby Porter, CEO of Hospice UK discusses the current cost of living crisis and how it's creating a "perfect storm" for Hospices up and down the country.
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The term ‘perfect storm’ is probably as over-used as any in charity policy and advocacy circles. But, I can't think of a better way to describe what hospice chief executives are experiencing as they think about how the cost of living crisis is and will continue to impact the people they support, their staff and their organisations.

In one important way, the cost of living crisis feels like the start of the COVID-19 pandemic – with everyone and everything impacted in some way. Planning strategies and setting budgets is hard, because the context and assumptions seem to, once again, be changing week by week.

One such significant change happened earlier this month – with worrying implications for hospice care. The cost of energy continues to spiral, yet support for hospices is set to be reduced. On 9 January, the Treasury outlined the new Energy Bills Discount Scheme, which will run from April 2023 until March 2024. Hospices will be eligible for some support but – along with many other charities and businesses – they have been excluded from a higher level discount offered to designated Energy and Trade Intensive Industries, such as museums and pulp manufacturers.

No one can deny that hospices are intensive users of energy. Making people comfortable in their dying days, or during hugely important respite care, is expensive, with significant heating demands and energy-thirsty medical equipment. Energy costs are just one part of this – inflation is obviously also affecting how much hospices spend on everyday items like food and petrol.

We’ve heard shocking stories from hospices who are facing five-fold price increases in their energy bills. Many more are in fixed-term contracts, concerned about costs ballooning even further as these expire. Under the previous energy support scheme, a price cap provided some security and clarity, but the new (and modest) discount limits how much hospices can plan and leaves them vulnerable to market forces. This poses a real threat to the care people receive at the end of their life.

But the largest additional cost to hospices is probably still to come, which is a year or more of far higher than average pay awards for our staff. Most hospices accept they will have to match any additional NHS pay award, whether that is a one-off payment, a regular pay award, or both. Matching any pay rise is essential for hospices to attract and retain the exceptional nurses and healthcare assistants who care for dying people with dignity and compassion.

Please don’t misunderstand me. Hospices want and are determined to pay their brilliant staff a fair wage – but in our sector, finding the additional income to meet those additional costs poses a huge challenge to our business model.

All in all, we estimate that hospices are facing additional costs of more than £100m this year. Where will this money come from? Currently, hospices receive some government funding, but on average two-thirds of adult’s hospice income and four-fifths of children’s hospice income is raised through fundraising - the bake sales and marathons run by ever-supportive local communities. This funding model would be unacceptable in any other area of our health care – if maternity care relied on second-hand clothes sales, there would rightfully be uproar. Yet to care for dying people hospices must rely on increasingly fragile sources of income.

Many hospices are increasingly concerned about the ability of their local communities to continue to give so generously and are finding it harder and harder to fundraise in the way they have for so long.

People know and appreciate the value of their local hospice, yet recent research by our partners Dreamscape Solutions found that average gift values, donor acquisition and income from major and corporate donors have all decreased in the last few years. Over the past week, the debt charity Stepchange confirmed this downward trend had accelerated further, estimating that 60% of people had cut back on donations over the past six months. The ongoing cost of living crisis is now expected to squeeze donations whilst hospices’ own costs spiral.

Many hospices are finding it hard to get increases in their local NHS funding that come anywhere near the level at which their costs are going up. They fear that hospices, and their donors, risk being taken for granted, with an assumption that money will always be found from donors to fill the gaps. We think this assumption is misplaced, particularly in more economically challenged parts of the country, where charitable donations tend not to be able to cover the full costs of hospice care.

This perfect storm, it should also be said, comes at a time when hospices are being asked to step up to support an NHS under immense pressure. We know that hospices help to keep people out of hospital and, where possible, support the discharge of those fit to be released. More and more people with complex palliative care needs are being referred to hospices due to missed diagnoses and appointments during the pandemic. Additional patients will see costs increase even further, heaping even more pressure on hospice finances already stretched by the rising cost of living.

This is a very serious situation now and our hospices are genuinely concerned. The UK Government must now find a funding mechanism to provide hospices unable to fully fund their care services greater support, a safety net to enable them to weather this perfect storm and continue to provide their essential services, now and in the future.

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