Costs of Care and Accommodation – Note from the Care Providers Alliance (CPA)

ADASS has recently published a costing model for care homes and you may be approached by your council to use this model locally. It will be your decision how to proceed but you may be interested in the following information.

  • The CPA (of which ECCA is a member) did not sign up to the model with ADASS as it did not agree with the model and it was not jointly produced
  • The CPA believes that there are already respected costing models such as the Laing and Buisson model and the Care Funding Calculator (CFC) which should be used nationally to determine a fair price for care homes
  • The assumptions used in the model are not realistic there is currently no data collection or evidence base sitting behind the model.
  • The model is ageist in its assumptions particularly around activities for older people
  • The CPA does support a model that separates out care and accommodation but the profit element must also be separated out and matched against the different elements of the costs.  The model must incorporate an assumption of reasonable profit margins that properly reflect all of the risks associated with providing care and accommodation services in a variety of environments.
  • The assumed profit mark up does not reflect the risks associated with the services being provided

The CPA believes the key principles underpinning the work to develop a new cost model are:

  • The identification of the key “building blocks” that separate care costs and returns from ‘accommodation’ costs, recognising these will be different for people living in, for example, extra care housing, supported living and people living in care homes. This will be developmental in approach.
  • There should be greater transparency of the costs of different sorts of care so all parties understand how the costs of care are made up.
  • Any modelling tool should not supersede the agreed principles of ‘think local act personal’ (TLAP) or the need to develop outcomes based packages of support for individuals.  The model should therefore form the basis of the calculation of the cost of providing a “core service” upon which the costs of individually-tailored services may be added-on as necessary.
  • The model should reflect an enabling and independence philosophy that is consistent across all users of adult social care services including older people.

Whilst we acknowledge that local market conditions in terms of supply and demand may indeed have a legitimate impact upon price, in accordance with their obligations under the National Assistance Act 1948 (Choice of Accommodation) Directions 1992 and the Building Capacity and Partnership in Care Agreement 2001, where commissioners are in a dominant market position, they must not use this dominance to drive prices down to unreasonably low levels – this would be short sighted and likely to destabilise the market. Building Capacity says, “Providers have become increasingly concerned that some commissioners have used their dominant position to drive down or hold down fees to a level that recognises neither the costs to providers nor the inevitable reduction in the quality of service provision that follows. This is short-sighted and may put individuals at risk. It is in conflict with the Government’s Best Value policy. And it can destabilise the system, causing unplanned exits from the market” (6.2 BC&PIC).

Procurement should also be carried out on the basis of outcomes being achieved (and this aspiration is clear in the White Paper) and it is of concern that there is no scope for commissioning for outcomes in this model. For instance, a council may decide to spend more on care in the short term which generates better outcomes and lower associated costs in the long term.

It is incorrect for the model to assume that all additional costs associated with the provision of nursing care over and above those for residential care can be properly covered by the NHS-Funded Nursing Care Contribution. The reason for this is that, in addition to expenditure on nursing and equipment, there is also an increase in the numbers of care assistants employed to meet the higher staffing levels of nursing homes. Furthermore, it is not appropriate for the model to rely upon any additional NHS funding (e.g. in respect of NHS Continuing Healthcare) which will relate to individuals whose care and support falls outside of local authorities’ commissioning responsibilities.  In order for the user of the model to have a proper understanding of the cost of providing nursing care and accommodation, the actual costs must be properly considered in the model itself.

In noting that there may be circumstances where the value of high volumes of business from a local authority may warrant a discounted price, we suggest that this would be most likely to arise under a block contracting arrangement where the local authority agrees to carry the risk of empty beds.  In circumstances where margins are low and risks to the provider are high, local authorities must recognise that there is unlikely to be scope for providers to offer volume discounts.  Local authorities must also recognise that any discounts shall be subject to negotiation and agreement and cannot be imposed upon providers.

It is hard to see how this model could be applied to the provision of Shared Lives or other non-traditional models of care, and also autism, learning disabilities and mental health services. This one model will not fit all client groups. In the narrative it says costs for dementia care have been excluded – we know that 70% of people residing in care homes have some degree of cognitive impairment although many without formal diagnosis of dementia. This implies that the sample cost given is the lowest that could be paid. It does not appear to be linked to individual assessed need.

In summary, our initial impression of the model is that its functions are already effectively covered by the Laing & Buisson (L & B) model or the CFC model.  ECCA supports the L & B model which has much greater functionality and is more evidence-based.  Indeed what is suggested here adds nothing to that already covered by the L& B model.  Additionally, following its recent revision, the L & B model is now more flexible to be able to manage the calculation of the costs of care and accommodation not only for a residential care environment but also for other settings such as Extra Care Housing.  VODG support the CFC which offers a well developed costing tool for individual placements – originally for people with LD and is widely used. An enormous amount of time and money has been spent on the CFC, with it going through lots of iterations to arrive at where it is today. The issues of return on capital and property costs for example have been well rehearsed by the CFC team over a number of years and with input from academics and specialists.

Rather than spend further time “reinventing the wheel” we advise that efforts should be concentrated upon the current models mentioned above.

If you require detailed CPA comments on the Assumptions employed in the model please e mail

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