Healthcare Focus 2022 - Spotlight on domiciliary care services

Health & Care Focus DRIVING LIFELONG PROSPERITY

Spring 2022

SPOTLIGHT ON DOMICILIARY CARE SERVICES

SIGN UP TO RECEIVE OUR BUSINESS UPDATES INSIDE Overview The rates councils paid to home care providers and the number of hours delivered > Conclusion > >

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The Hazlewoods Healthcare team examined the data on fee levels and fee uplifts paid by local authorities in England to home care providers in the last fiscal year.

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Freedom of Information Request To obtain an up-to-date picture of the state of the market, we sent Freedom of Information Act 2000 (FOI) requests to all the local authorities in England.

The first set of questions aimed to establish the rates councils paid to home care providers. We requested that each council provide the prices it pays to independent and voluntary sector home care providers for regulated home care services in the homes of people aged 65 and older in the week commencing 24 April 2021 and compared it to the previous year.

We wanted to differentiate between elderly care and specialist care, so we limited the scope of the inquiry to the care of the elderly.

We also requested information on the number of hours delivered by the independent sector or the councils themselves.

Overview Adult social care helps older people and working-age adults who need personal or practical care.

Adults in England may receive informal care from family, friends, and neighbours or formal care from services paid for by them or their local authority. Social care is means-tested and primarily funded by local authorities: those with eligible needs, assets under £23,250, and low incomes can receive assistance with their care and support costs. Adult social care now accounts for most of the discretionary spending by local governments.

Local governments source these services from a vast and varied market. According to the Care Quality Commission (CQC), which inspects and regulates home care services, approximately 7,263 providers operated out of roughly 10,735 registered locations in 2020.

A breakdown of domiciliary care locations by region can be found in Figure 1 below: (taken from CQC data.)

No. of Locations

Home care (sometimes called domiciliary care) is considered the ’first line’ of social care and is critical to enable people to ‘age in place’ and provide care as close to their homes as feasible. In 2020, almost 814,000 older people in England received home care, with local authorities funding 351,680.

1025

1298

1703

377

1241

1862

1027

East Midlands

East of England

London

North East

North West

South East

South West

Figure 1: Number of domiciliary care locations by region

1231

971

West Yorkshire Midlands & Humber

< £11 / hour < £12 / hour < £13 / hour Findings < £14 / hour

AVERAGE RATES

As Table 1 below shows, for actual fee rates, the average hourly fees paid to external home care providers, weighted for the volume of hours purchased, were £18.68 per contact hour in 2020/2021.

< £15 / hour < £16 / hour

Home care: £ per contact hour

External providers for home care

Local authority average fee 2019 to 2020

£17.54

Local authority average fee 2020 to 2021 actual

£18.68

% increase

6.5%

Number of local authorities with increase (uplift)

141

Number of local authorities with no change

4

Number of local authorities with decrease

5

Number of local authorities with missing/invalid data

0

5.1% £16.34 £15.54

Table 1: Changes in hourly fee rates by external home care providers

Over 90% of local authorities increased average costs paid to external home care providers in 2021 over 2020.

On a weighted average basis, considering reported fee rates paid, local authorities stated that fee rates for home care increased by 6.5%.

Comparatively, the national living wage increased by 6.2% from £8.21 to £8.72 per hour in April 2020, and the CPIH inflation rose by 1.0% in the 12 months to April 2021.

6.2% £17.26 £16.25

The South West had the highest increase (9.3%), while the South East had the lowest (2.6%). For the few cases where unit costs fell, there was additional commentary which included the following explanations: >

a new Complex Cases Team had identified joint packages of nursing care with health

>

t he local authority’s fee rates had fallen due to variation in demand, intensity, and location of placements

9.3% £21.84

Although inconsistencies in respondents’ calculations may also play a role, the small number of very high uplifts are in some cases described as being driven by the following factors: >

£19.96

paying staff on a shift basis in an area of

high employment >

commissioning of additional capacity

from providers with a higher rate than the prime provider >

increases in enhanced payments for

dementia support

6.1% £18.05 £17.03

8.4% £16.56

HOURS

£15.27

We estimate that councils purchased 2.85 million hours of domiciliary care for people 65 and older in the reference week, equating to an approximate figure of 148 million hours of care per year.

As shown in Figure 2, the South West had the most combined hours, while the East of England and Yorkshire and Humber both had significantly more specialist care hours.

8.1%

8,832 Elderly

£18.36

Specialist

17,485

£16.99

17,461

3,080 14,589

17,629

East Midlands

East of England

7,295

4,999

5,368

6,057

10,702

9,844

12,461

11,785

London

North East

North West

South East

35,634

South West

6,116 15,883

16,359

West Midlands

Yorkshire & Humber

Figure 2: Number of domiciliary care hours purchased in the reference week

6.7%

We found that local authorities with the highest average home care prices were generally in very rural areas with low population density, such as in the South West. A possible explanation for this is the significantly longer travel time in such sites than in urban areas or in the South, where tight labour markets exist. Moreover, recruitment is notoriously more difficult in remote rural areas, and some councils recognise this by paying rural premiums, which increase delivery costs.

£19.06 £17.83

COMMISSIONING

6.0% £18.24 £17.20

Our FOI request found that Local Authorities are heavily reliant on independent service providers, the great majority of whom are small to medium-sized enterprises.

100% 80% 60% 40% 20% 0%

80.9%

73.5%

89.4%

97.0%

85.8%

79.8%

87.9%

80.1%

96.3%

East Midlands

East of England

London

North East

North West

South East

South West

West Midlands

Yorkshire & Humber

Independent

2.6%

Local Authority

Direct Payments / Independent Budgets

Figure 3: Composition of service providers by region

£19.45 £18.96

KEY Percentage increase in hourly fees from 2020 to 2021 Average hourly fees paid to external home care providers in 2020 -21 Average hourly fees paid to external home care providers in 2019-20

Conclusion Domiciliary care spending by local authorities is increasing.

The rise is attributable to a growth in the number of older adults needing care and the cost of that care.

based on their situations in different regions. But, overwhelmingly, the imperative is to keep the cost of care down.

Now, as demand continues to rise, our latest research exposes the ongoing issues confronting local governments, such as keeping prices under control.

For example, councils have deployed various strategies

As a result, councils often offered one set price to the whole market in areas with a steady supply of providers, but in areas with a limited supply of providers (often rural areas), the authorities must pay more.

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RICHARD DADE Partner 01242 246670

SIMON WORSLEY Partner 01242 237661

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Hazlewoods LLP and Hazlewoods Financial Planning LLP produce regular updates, using our expert commentary to provide you with information about our services, events and topical premium business news.

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