Addressing the challenges for publicly-funded home care

1.  Home care in crisis?

There is ample evidence that meeting the needs of people who are eligible for publicly funded home care is becoming more challenging for English councils. Successive reports from think tanks, commissioner and provider representative bodies, charities and even CQC and the NHS have painted a bleak picture of a sector in crisis, with the outlook set to get worse.

Following cuts in central government funding, councils’ spending on adult social care fell by 13.4% in real terms from 2010 to 2015 (Burchardt et al, 2015). Taking into account factors such as age and gender profiles, Standardised Mortality Ratios and rates of limiting longstanding illness, academics at the London School of Economics estimated an annual social care funding gap of around £1.5bn  (Fernandez et al, 2013). More recently, the Local Government Association, Association of Directors of Adult Social Services and others (LGA, 2016) estimated that the shortfall would be over £1 billion every year to 2020. This shortfall in funding has led to a reduction in the number of older people accessing publicly funded social care of at least 26 per cent – more than 400,000 people. .

The consequences of reduced resources are being felt in the home care sector in the shape of problems with staff recruitment and retention, providers going out of business and contracts being handed back. The Centre for Workforce Intelligence estimates that England alone will need at least two million more carers by 2025. As things stand this is entirely unachievable: around 340,000 carers in England are leaving the sector each year and, as rising vacancy rates show, they are not being replaced in full. Eighty-five per cent of DASS surveyed in October 2016 believed that care providers were facing quality challenges and financial difficulty. Forty-eight councils had experienced at least one home care provider cease trading in the last six months, and 59 councils had experienced home care contracts being handed back to them. This is affecting thousands of people (LGA, 2016).

Are we really facing a home care crisis? If so, what can we do to come back from a ‘tipping point’? Based on interviews with a small group of commissioners and our own analysis of some of the factors affecting the market, we look at the root causes of the problems in home care and make the case that an integrated approach could be the answer.


2. Factors affecting the home care market

2.1                   Measuring the pressure – a home care barometer

In responding to concerns about the state of social care, central government has suggested that the problems may not be systemic but rather a result of variations in councils’ ability to manage their responsibilities. Announcing an additional £2 billion for social care over the next three years, the Chancellor of the Exchequer noted the variation in delayed discharges - without acknowledging the impact of the age profile of a local population - adding that the health and communities secretaries would ‘identify and support authorities which are struggling, and ensure more joined up working with the NHS’.

Our analysis of the factors affecting demand for home care, and providers’ ability to recruit people to provide it, shows that forces beyond the control of councils and providers are the key drivers of market stability. To get a sense of where the challenges were likely to be most acute, we looked at:

  • Delayed transfers of care (DToC) attributable to social care over the 12 months from April 2016 to March 2017. High rates of DToC suggest a shortage of suitable social care options, including home care.
  • Deprivation levels and unemployment rates by local authority area. These are likely to be a proxy indicator of both providers’ ability to recruit staff at rates they can afford and demand for publicly funded home care.
  • Hourly rates paid for home care by local authorities.
  • Population aged 65 and over by local authority.

Our analysis shows that:

  • Authorities with the highest rates of DToC due to social care in 2016/17 are those with the highest population of people aged over 65, i.e. where there is the greatest potential demand for home care. Areas with the highest levels of deprivation (and therefore more people eligible for publicly funded care) are, by and large, not those with the highest rates of DToC.
  • DToC is inversely related to unemployment rates – suggesting that in areas of high unemployment it may be easier to recruit care staff and thus to maintain an adequate supply of home care. Unsurprisingly, there is a strong correlation between deprivation and unemployment. Cordis Bright’s annual survey of 120 independent care providers has shown the relationship between levels of unemployment and providers’ ability to recruit and retain staff. As unemployment falls, so providers have found it hard and harder to recruit. The survey showed recruitment of care staff was seen as the single greatest threat to organisations.
  • There are four large metropolitan councils that seem to be facing the most serious problems. They do not have particularly high numbers of people aged over 65 but do have high rates of DToC. There is likely to be high demand for publicly funded home care in these areas because they are among the most deprived. They also pay amongst the lowest hourly rates for home care. They are likely to be areas where the increase in the national living wage, effective from April 2016, is having most impact on providers, who will have had to increase their rates of pay.

2.2                   It’s all about money

The requirement to pay the national living wage will mean around £300m per year being added to the combined bill for publicly funded home care. An increase in the NLW is an absolute cost driver in the delivery of home care that neither commissioners nor providers can do anything about. This is the hard problem at the core of home care; in the absence of robots able to provide the same service as human carer, it will carry on getting more expensive and the workforce will bear the brunt of many organisations’ drive for efficiency.

There is a clear tension between trying on the one hand to reduce the cost of the workforce and on the other to attract and retain sufficient numbers of employees to ensure the delivery of quality services. Providers have handed back contracts because they can’t secure a workforce at a price they can afford. In some areas – particularly London and the South East - the basic rate national living wage is not sufficient to attract people.

It is clear then that additional funding has to be key to solving the problems in home care.

What of the new money announced in the March 2017 Budget? The cash injection is principally intended to support authorities in reducing delayed transfers of care and the majority (90%) will be distributed as part of the improved Better Care Fund. In his Budget speech the Chancellor claimed the new funding would ‘allow local authorities to act now to commission new care packages’. However we estimate at best just under half of the new money will be needed to fund cost pressures on existing provision – the national living wage and payment at NLW rates for sleep-in cover – meaning that only just over half will be available to pay for ‘new care packages’. While welcome, the extra funding will not solve councils’ problems in securing an adequate supply of affordable home care. It is not the type of systemic solution which is needed to sustain these services in the longer term.


3. Towards a sustainable home care sector

Some authorities are working with providers to redesign the way that home care works. For example, our research shows that in one area there is a commitment to move away from a ‘time and task’ approach and towards commissioning based on outcomes. Recognising that if the only currency is hours nothing will change, this authority wants to do things differently. Service users and providers will be able to design their own care to fit the outcomes the service user wants, without specifying that certain tasks will happen at specific times. The hope is that eventually this approach will cost less, as unnecessary interventions are reduced, although it does require more time and input to assess people’s needs and agree outcomes at the beginning. Commissioners also recognise that progress towards being able to measure outcomes rather than outputs has been slow, and this is one of the reasons why councils continue to think in terms of hours of care.

Other approaches which do not necessarily involve finding more money include commissioners being more proactive about making sure that the most important providers in their areas remain stable, for example through on-going communication and support. Some commissioners are working with Skills for Care and grant funding providers to receive support to address recruitment and retention issues.  In another authority, commissioners and providers are considering a salaried staff model rather than an hourly rate, with more security for staff and more freedom to design care within an overall financial envelope. There has also been work on trying to engage the wider community in some aspects of support for individual members but to date these have only succeeded at a relatively modest scale.

The reality, though, is that to ensure a good quality, secure supply of home care, the people who provide the care need to be paid more. It really is all about money. So where can the money be found to pay more for home care?

Home care has enormous potential as a preventative service, keeping people out of hospital and care homes. In some of the NHS vanguard areas multi-disciplinary teams, including GPs, nurses and home carers, are providing care targeted at those most at risk of hospital admission. Although the notion of proactively finding people to provide a service to may be counter-intuitive, some of the vanguards we are evaluating are already showing evidence of reduced admissions and cost savings. It is worth asking, then, why is it that home care is a uniquely social services funded proposition?

We suggest that in particular circumstances home care could be recast as a new form of integrated health and social care provision, with a contribution from health to help pay for a sustainable service. Home care paid for out of an integrated budget could be time-bound, with specific outcomes attached. For anyone who needed longer term support, social services or the individual themselves would continue to pay. Under this system it might also be possible to deploy six weeks’ re-ablement before someone goes into hospital, to prevent an admission happening in the first place. We know of one hospital which has developed an effective hospital diversion scheme, but is now struggling to find community providers who can respond in a timely and flexible way to deliver this type of re-ablement support. They are beginning to see the value of investing part of the health budget in the development of this type of service.

For health, home care is a far cheaper alternative to hospital or continuing healthcare. For little more than the £9.16 per hour lowest Agenda for Change rate for an NHS-employed domestic assistant, NHS commissioners could invest in home carers, many of whom are earning around 18% less per hour. Investment in outcomes-based home care would also bring peripheral benefits, such as linking people into community support, which health care staff generally do not have the time to do. Finally, paying more for home care opens up the possibility of creating more plurality in the market, with the possibility of local government returning to direct provision. In terms of creating a stable market, this may be no bad thing.

With the year on year rise in the national living wage, increasing costs in home care are unavoidable. Not only that, but the cost must increase competitively to be able to recruit and retain the people the sector needs to do the job. There is no sustainable alternative but to find more money for home care. A joint health and social services funding proposition would not be a bail out to councils, but an investment in an effective preventative service which could ultimately ease the cost pressures on the NHS.