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Is a minimum fee for care much to ask if it saves the NHS?

Advinia Health Care

4 min read Partner content

Advinia Healthcare is a major provider of social care in UK with around 3,000 beds and 3,500 employees. Here, Sanjeev Kanoria, the company’s chairman, co-founder and group CEO, provides comment on how a higher minimum fee for care beds could save not only social care but the NHS too…

In the current economic climate, with rising inflation, there is a significant increase in interest, food, energy and staff costs.

It is vital that providers of care fulfil their duty under the Health and Social Care Act to provide safe, quality care with financial viability.

The government commissioning bodies of social care who are the main source of funding for care home clients have significant market power and pay below the cost of care (National Audit Office) and with delayed assessments and payments have created a vicious cycle of financially unviable, poor-quality care and increased hospital bed blocking.

Any attempt to ask for right fees by providers is treated unfavourably and one played against another to keep fees low or placements stopped, creating a cycle of deteriorating quality and unsafe care to vulnerable people.

As it is a provider’s statutory duty to provide safe, quality care with financial viability, it is also the statutory duty of commissioners to ensure right fees which is revised as dependency of residents change, which is bound to happen.

The shortage of nurses and care staff and commissioners’ unwillingness to pay for agency staff (two to three times higher) further compromises financial viability of providers.

Underfunded providers just cannot invest in training, quality and physical environment and bad news of safety in care homes will continue.

Last year another 20,000 beds were lost in care with a 400% increase in insolvency.

Commissioners must take into account that increasing dependency and an unwillingness to change initial terms is contrary to the care act requiring them:

• To evidence that contract terms and fees are appropriate for delivery of care packages with agreed quality of care;
• Have regard to guidance on minimum fee levels necessary… taking account of local economic environments;
• Not to undertake any actions that may threaten sustainability of market as a whole by setting fees below an amount not sustainable in the long term.

The National Audit Office reported following a Department of Health assessment that most local authorities paid below the sustainable rate for care home placements for adults aged 65 and over. A similar requirement would be applicable for Scotland.

This failure is having a significant impact on viability of providers who play an important role in reducing NHS bed blocking and assisting working age people to remain at work for a productive economy.

Currently 14,000 older people are blocking the only 100,000 acute NHS beds for 63 million with 1,700 blocked beds in Scotland. The Cosla rates in Scotland are not financially viable for providers.

The average company cost (including NIC, pensions, training, holidays, Living Wage and wellness) for four hours of care per day by a carer is £60 and by a nurse £100.

This does not take into account energy, residential, food, Capex and finance costs.

Therefore the following national minimum level of fees for different types of care without extras is needed for social care to survive:

  • Standard residential care: £1,050 per week;
  • Residential care for enhanced needs: £1,150 per week;
  • Standard nursing care: £1,250 per week;
  • Nursing care for enhanced needs: £1,350 per week.

Where individual dependency is high or agency staff is needed, fees should be adjusted.

Annual index linked fee increases are not sufficient and needs to reflect real wage inflation and other costs including capex where VAT reclaim is not allowed to providers.

It is important for providers to generate a minimum 10% cash surplus to reinvest in estate and staff for without this care ratings will suffer.

The average cost of a week’s stay in hospital is around £5,600 per week (£800 a day). Compare this to what is needed for social care: £1050-1350 per week.

Commissioners not paying the right fees creates a vicious cycle where providers cannot invest in safe, quality care with financial viability.

This has reduced beds in social care, increased NHS bed blocking and reduced productivity due to delayed healthcare delivery to the working-age population.

Unfortunately, government regulation penalises providers if they are not financially viable but government-funded commissioners responsible for this are not regulated to pay fair fees, with both CMA and the regulator turning a blind eye to this market discrepancy.

Without commissioners fulfilling their duty, it will be difficult for providers to fulfil their duties in a market so controlled by them.

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