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A Minimum Tariff for Adult Social Care Will Reduce NHS Costs

Advinia Health Care

3 min read Partner content

The adult social care sector in England is seeing fee increases of 9-10% for the next financial year, based on the current RPI and a "fair cost of care exercise." However, these increases are still below market costs by as much as 40%, which puts pressure on providers to fill beds with self-funded residents to compensate for the low prices paid by commissioners. A minimum national tariff for adult social care is urgently needed to avoid further bed blocking in the NHS and to reduce insolvencies, but without it, adult social care in the UK will be unviable.

Finally for the next financial year, the adult social care sector is seeing some fee increases from commissioners of adult social care who are basing it on the current RPI and the “so called” fair cost of care exercise and increasing last years’ fees by 9-10%. 

The “so called” fair cost of care exercise, is based on incomplete, partial and skewed data. The base price was already 50% below the actual cost of care, on which the current 9-10% increases have been made. 

These low fees have been referred to by the national audit office and the kings fund report. Years of low fees - 50% below the cost of adult social care has resulted in numerous bed closures, insolvencies, unemployment and increased pressure and costs to NHS hospitals.

Most commissioners in England are now setting average fees for 2023-2024 at circa £760 for nursing care which is only £108 per day per resident.  A minimum of 4 hours per day of nursing care is required per resident which alone costs approx. £95 leaving only £13 for food, utilities, capex, financing costs, support office costs and returns etc which is inappropriate by any standard.

Such inadequate increase does not create a stable environment for adult social care. The new fees are still below market costs by as much as 40% putting onus on the providers to care at their own costs and try to fill at least 40% beds with higher fee paying self-funded residents to compensate for the low prices paid by commissioners. It is increasingly difficult to get self-funded residents to compensate for the low fees paid by commissioners, except in some select locations in the country. A requirement not to charge top ups to cover costs puts further pressures on providers. 

A minimum national tariff for adult social care is urgently needed starting with £150 per day (£1050 per week) for residential care and £179 per day (circa £1250 per week) for nursing care to avoid further bed blocking in the NHS, to reduce insolvencies and help create a productive economy through reducing sickness days.  

Compare this to circa £3000 per day (£21,000 per week) - actual and hidden costs of cancelled surgeries/procedures due to blocked NHS hospital beds. This costs the NHS close to £5 billion per annum and by ring fencing fair fees to adult social care there could be net savings of close to £3 billion with better discharges and a viable adult social care. The maths is simple, if policy makers were to analyse the data critically. 

Without, a minimum tariff adult social care in the UK will be unviable and with increased regulatory requirements, providers will not be able to provide safe, financially viable care to older vulnerable adults. Commissioners of care will continue to exploit market power to keep prices down.

The further benefit of increased productivity through reduced sickness days to the economy is obvious. Ringfencing fees for adult social care with a minimum tariff could be a powerful electoral message by any political party who has the will to implement this much needed change and rescue the NHS from its current crises. Throwing money at the NHS alone is not the answer.

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