01.06.15
County council care market conditions ‘unsustainable’
Care market conditions in England’s counties seem ‘unsustainable’ even before the new demands of the Care Act reforms come into effect, new research suggests.
A report to the County Councils Network’s (CCN’s) Executive Committee this week says that over the past five years, with increasing demand and dwindling budgets, a widening gap between council fees and provider costs has hit provider profitability and ultimately the sustainability of the market.
The latest CCN-facilitated study, based on 12 county and unitary councils, tasked analysts at LaingBuisson with evaluating the sustainability of the care market in the short and long term, in light of changes brought in by the Care Act.
According to the Executive Committee paper, evidence from the 12 councils and providers clearly showed that self-funding older people pay much higher fees for residential and nursing placements than counties do for equivalent support.
“Councils have been able to secure discounted rates from the market, at least in part, due to the extra profit generated from self-funders paying higher fees. This cross-subsidisation is in operation across all 12 councils markets, although the extent to which they are sufficient to cover the shortfall in council fees varies significantly.”
Counties with large numbers of council placements – which tend to have a higher proportion of less affluent residents and a relatively small number of more affluent self-funders – are likely to be at “greater overall financial risk”.
The extent to which council fees fall short of the standard cost of care, and the extent to which self-funder fees exceed standard costs, have also contributed to the risk that cross-subsidies will not be able to cover the deficit.
LaingBuisson also identified that the level of funding shortfall between the fees councils pay and the standard cost of care is likely to increase over the next five years.
“This will be in a large part down to councils being unable to afford to increase fees in line with, or over, the rate of inflation in order to meet sector-specific cost inflation,” said the paper. “Pressure to increase fees to maintain provider profitability and stabilise local markets will come at a time when local authority funding will be further reduced during this Parliament.”
It was also stated that if government does not work with the sector to develop a sustainable way forward then there are likely to be unintended consequences on other parts of the public sector. For example, a reduction in residential and nursing beds available in local care markets is likely to exacerbate the delayed discharge rates from hospitals, which in this past year were up 29% in county areas.
The estimated financial impact of care market equalisation has been projected using the 12 council models through to 2025. These figures have then been extrapolated upwards to the 37 CCN member councils using these models to provide an indicative indication of the likely financial burden on CCN members. These figures will be published, along with the full report in early June 2015.
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