Exploring differences between private and public prices in the English care homes market

This work quantitatively assesses the potential reasons behind the difference in prices paid by care home residents in England. Evidence suggests that the price paid by private payers is higher than that paid for publicly supported residents, and this is often attributed to the market power wielded by local authorities as the dominant purchaser in local markets. Estimations of private prices at the local authority level are used to assess the difference in price paid between private and public prices, the fees gap, using data from 2008 to 2010. Controlling for local area and average care home characteristics, the results indicate that both care home and local authority market power play a role in the price determination of the market.