We need to talk about social care providers

Amid growing concern that most NHS providers are sliding into deficit, arguably we should be even more worried about social care providers.

This is a complex and sprawling sector – more than 12,000 independent organisations, ranging from big corporate chains to small family-run businesses, charities and social enterprises, which makes the NHS provider landscape look like a sea of organisational tranquillity. Less than 10 per cent of social care is actually provided by councils or the NHS – their retreat from long term care provision is virtually complete. But unlike the NHS, when a social care provider hits the financial rocks, bankruptcy not bail-out is the more likely scenario.

Our health and social care system is highly dependent on residential care and nursing homes – there are three times more care home places than hospital beds. And nearly half a million people rely on home care services to be able to live at home. The consequences of failure are potentially calamitous for individuals, families, staff – and indeed the NHS and social care system as a whole.

So we should take the mounting evidence about the fragility of the social care market very seriously. The underlying malaise stems from the widening gap between the actual cost of care and the amount local authorities can afford to pay, which has fallen by almost 5 per cent in real terms over the past five years. Local authorities have frozen provider fees for several years but analysts LaingBuisson reckon an average annual increase of 2.5 per cent is needed simply to keep up with inflation.

Another pressure on costs, especially for nursing home providers, will be familiar to NHS colleagues – higher spending on agency staff because of a shortage of qualified nurses – up by 55 per cent according to one survey. These pressures are making it tougher for providers to deliver good care that meets regulatory standards within the rates paid by councils. Last year, the Care Quality Commission (CQC) found that one in five nursing homes did not have enough staff on duty to ensure residents received good, safe care.

It is not surprising that many see the Chancellor’s announcement of a so-called national living wage as a potential tipping point – it will add at least £1 billion to providers’ pay bill by 2020 with no indication of how or whether it will be funded from the public purse. If big providers are struggling, spare a thought for smaller operators, grappling with the same cost pressures but without economies of scale.

The warning signs are clear; 56 per cent of directors of adult social care report that providers are facing financial difficulties now. Three of the country’s top five home care providers are planning to pull out of publicly funded home care or have already done so; many more have handed uneconomic contracts back to local authorities. Many care homes are charging higher rates for people who pay for their own care – as much as 40 per cent higher in one study – in order to compensate for or ‘cross-subsidise’ the lower fees paid by local authorities. Inadequate local authority rates are prompting new investment to be targeted at self-funders in better-off areas. Fears grow that there will be another major care provider failure on a similar scale to the collapse of Southern Cross plc in 2011 which put at risk the care of 31,000 older people.

The risk of failure is greatest among very large providers who are heavily dependent on local authority funding. The new market oversight regime introduced by the Care Act should ensure these are spotted, but options to rescue them remain limited. Along with the withdrawal of some providers from the publicly funded market, the cumulative effect of these responses will be to make it much harder for people reliant on public funding to get the care they need at a rate local authorities can afford.

There are two fundamental issues, the more obvious being the failure of successive governments to address the now chronic underfunding of the public social care system. But a deeper problem is the failure to think through the consequences of shifting the bulk of our care provision to a private business model. This worked financially when the economic sun was shining but austerity is exposing its fragility when the requirements of commerce and the values of care point in different directions.

As prospects for people with care needs worsen, the need for better evidence about the impact of these trends has never been greater. The King’s Fund has begun a major new research project, in partnership with the Nuffield Trust, to understand the effects of public spending reductions on social care services over the past five years.

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#544896 George Coxon
Various inc care home owner & Chair of Devon Care KiteMark coalition

A big thanks for this Richard. In combination with the various words said and features seen over the last few days most notably Norman Lamb's prediction of a major H&SC meltdown within the next 2 hrs (I fear much sooner than that unless we see some new insights and action) your comments add further credible opinion to a system in peril. I'm well known as a strong loyal advocate for positive promoting of solution focused thinking and ideas for sustainable H&SC integration. I am more & more being accused of naivety by colleagues when speaking out on the need for greater cooperation and enthusiasm and particularly KPOOH & GPOOH as the essential focus for us all - keeping & getting people out of hospital. My broken record moment there. As a pluralist with a senior clinical and commissioning NHS history I feel better qualified than many to commend your view that we need to talk to SC providers having become one in recent years! You've said it , I've said it and others are saying it now too- 'keep squeezing SC and increasing volumes of older frail people with complex needs inc dementia will end up in acute hospitals where they will stay too long many not managing to get any onward care and tragically many dying there after what,for many, was and avoidable admission and avoidable long stay
We had a fantastic Dementia Friendly Community launch event in Teignmouth on Saturday. c170 people attending, our local MP energised us all as did several doctors - GPs and research focused specialist too. - my presentation was titled ' looking forward to 24/7 care when the time is right'. I've had lots of people contact me very reassured that they can look forward to care home life in their later years- ' taking the worries away' as was my sub heading to my talk - I can only hope we are still going when that time comes! Sorry about my outpouring here. But your blog is another voice to add influence I hope to the need for system reflection and change.

#544897 George Coxon

Correction!!! The risk may be imminent but perhaps not within 2 hours as I suggested above !! I of course meant 2 years It just feels like 2 hours to many providers. - I do know some who are beyond the 2 hour crisis point to be honest. I'm sure many of us read to poignant tale included in Roy Lilley's blog on care homes last week.

#544911 Adam Penwarden
Project Director
Lifeways Group

It is really good to see the King’s Fund undertaking this very important research. However, there is one statement here that gives me cause for concern, and that is this;

"…a deeper problem is the failure to think through the consequences of shifting the bulk of our care provision to a private business model. This worked financially when the economic sun was shining but austerity is exposing its fragility when the requirements of commerce and the values of care point in different directions."

The problem with this is that the opposite argument could be made.

Private sector organisations have spent much of the last five years finding efficiencies to help keep the model of social care afloat. We work with people to maintain and increase independence. We have developed new models of care that keep people out of hospital, and have attracted capital investment into a sector that has been starved of public funds.

We have developed assistive technologies that reduce cost. We work with individuals with personal budgets and help them to develop packages of care that are sustainable within tight budgets. We have absorbed cuts in hourly rates while raising pay rates to staff and continuing to invest in learning and development.

In short, there is a strong case to be made that without the dynamism and focus of the private sector, social care would be in a far worse position than it is. I think that the Kings Fund should guard against starting out on this piece of research with a “private provision bad – public provision good” mind-set.

Kind regards

Adam Penwarden

#544912 Terry Roberts
Member of the public

A good read but when are we going to stop advocating 'talking' rather than demanding action?
Senior leaders and managers must do what they are paid to do, and often paid very well, namely to manage what they have much better.
The public is fed up with hearing when things go wrong 'measures have now been put in place to prevent a reoccurrence'... It prompts the comment 'why weren't they before? - that is if the job is being done properly.
I find it beyond believe that managers do not appear to be able to manage following scrutiny and sub standard leaders are left in situ only to 'reoffend'.
The NHS and Social Care still remains not joined up - after how long? Yes it is a big task but are we really saying we have not got competency and quality at the top to achieve this? - sadly I think we are, so 'talking' about problems is of little use.

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