Q. In June, the Competition and Markets Authority published emerging findings into its care home market study. What did it find and what does this mean for the sector?
A. Douglas Cooper, Project Director, Competition and Markets Authority
In December 2016, the Competition and Markets Authority (CMA) launched a 12-month market study looking at issues affecting the 430,000 older people in care homes and care homes with nursing in the UK. We are examining whether the industry delivering care for these people is working well and treating residents and their families fairly.
In June, we published an update paper with some emerging findings from the study, which set out our next steps and some possible ideas for the kind of recommendations we could make to address problems identified so far.
This included an announcement that, as a result of information received during this work, the CMA has opened a consumer protection case to investigate its concerns that some care homes may be breaking consumer law. This is focused on concerns about certain care homes charging families for extended periods after a resident has died, and homes charging large upfront fees.
More widely, our evidence gathering and analysis as part of the market study is continuing, and we are beginning to develop our proposals.
What are market studies?
Market studies are one of several tools at the CMA’s disposal to examine possible competition or consumer protection issues and address them as appropriate. They are examinations into the causes of why particular markets may not be working well, taking an overview of regulatory and other economic drivers in a market and patterns of consumer and business behaviour.
The care home market study is also being used to undertake a review of providers’ compliance with consumer protection law.
One option from a market study is to take consumer enforcement action, where evidence indicates that there may be an issue, or it may be appropriate to publish guidance to businesses on compliance with their obligations under consumer law, or encouraging business to self-regulate.
Other potential outcomes from market studies include making recommendations to national and local government (and others, such as regulators) to change regulations or public policy, improving the quality and accessibility of information to consumers, or promoting consumer awareness.
Concerns with the care home market
The CMA launched the care home market study due to concerns raised with us by some consumer groups and charities on whether care home providers are treating their residents fairly, and whether they are complying with their consumer law obligations, relating to information provision, contract terms and business practices.
This is an important sector for people in a vulnerable situation and we also had concerns on how prospective residents and their families were choosing appropriate care and whether they could gather and use the right kinds of information.
We were also concerned with how local authorities played their role in supporting prospective care users, commissioning and procuring care, and how the industry was performing in the light of current market conditions, policy and public funding rates.
The care home market study
We have been looking at care and nursing homes for over-65s across the country. Our study has involved talking to, and receiving views and evidence from:
- Care home residents and their families.
- Consumer associations and charities.
- Care home operators and trade associations.
- Local authorities, national health services and national governments across the UK.
We have been analysing evidence supplied by care home operators, including studying their contracts, and by local authorities and others. We have also commissioned Ipsos Mori to undertake a survey of residents, their families and other professionals involved in choosing care homes. These in-depth interviews have taken place across a wide variety of locations and circumstances throughout the UK.
High-level problems with the care home market
While many care homes provide a good service to residents and many staff are dedicated and caring, our update paper set out some high-level problems, generally applicable across the UK, on how the market is working for residents, their families and the public purse.
For this market to work well, prospective care home residents and their families need to be able to make informed choices. Our consumer research suggests that many people find it challenging to make decisions about care under the stressful and time-pressured circumstances which generally apply. Even when good information is available, these challenges mean that many people cannot seek it or engage with it. In many cases, they are confused by the social care system and funding arrangements, and do not know how to find and choose between homes.
Complaints and redress systems
Where a resident is dissatisfied with their care home, it is generally not realistic to expect them to move to another one. Once settled, the upheaval of moving from a familiar environment can be disturbing and can adversely impact the resident’s health. It is essential that effective mechanisms are in place for residents to express their views and, where necessary, have them acted upon. Our findings, however, indicate that complaints and redress systems often do not work well, as residents often find it very challenging to make complaints.
Breaking consumer law
We have identified concerns that some care homes might not be treating residents fairly and that certain business practices and contract terms might break consumer law. Many of these consumer protection concerns relate to how some care homes treat self-funded residents, including, for example, issues around the lack of indicative pricing information on websites, the charging of large upfront fees and deposits, care homes having a wide discretion to ask residents to leave, and requirements to pay fees for an extended period after a resident’s death.
Some providers have told us of instances where they have found local authority and NHS procurement processes complex, inflexible and insufficiently person-centred. Some providers have also argued there is inadequate provision to encourage and reward quality. It appears that in some areas, making a top-up payment may be the only way a prospective local authority-funded resident will have a choice of care homes to go to, but in other areas top-ups are not always encouraged or facilitated.
Our initial analysis of recent financial performance suggests that returns to the sector overall are sufficient, on average, to cover current operating costs, although there will be a lot of variability between operators and regions; investment will be attractive in some local areas and particularly where there are expected to be substantial further numbers of self-funding customers.
However, returns are insufficient, even at the industry average level, to attract investment in building and modernising new care homes.
It appears likely that short-term funding pressures, current fee rates, the number of placements local authorities make in care homes (rather than meeting needs through other means, such as domiciliary care) and uncertainty over future funding, mean that there are weak signals and incentives for the sector to provide the level of future investment necessary to grow capacity intended to serve state-funded residents. This is concerning given that demand for care home services is expected to increase in the coming years. The number of people aged 85 and over is projected to more than double by mid-2039. We are concerned about whether local authorities are well-placed to adopt long-term plans on the need for care home services and to effectively influence and encourage the investment that is needed.
- We are considering possible recommendations in relation to these and other issues. These will be expanded over the next half of the market study and include examining how:
- People can be supported in making choices, for example, in finding ways to prompt people to consider care needs and do some planning in advance, or else ensuring they receive the right kind of information or direct support when making choices.
- People could find it easier to raise concerns and complaints about a care home and can be made to feel more comfortable in making a complaint.
- Residents and their families can best be protected, and how to encourage fair treatment by care homes.
- Local authorities can be encouraged to share best practice in procuring care home services and planning, and developing provision in their areas.
- To encourage investment for the future, for example, by developing an independent view of future needs, providing information and clarity to support investment. In doing so, we may explore possible ways to ensure providers are paid fee rates by local authorities that reflect the full cost of care and provide an incentive to invest for the future.
We have opened a consumer protection case to investigate concerns about certain care homes charging families for extended periods after a resident has died and homes charging large upfront fees. The investigation is focusing on these two issues because we have identified clear, specific concerns that some care homes may be breaking consumer law, which if borne out, we consider would be most effectively addressed by consumer enforcement action. We have notified a small number of providers that we are investigating them, and we are using our consumer law investigatory powers to obtain further evidence from them to decide whether enforcement action is required.
We expect to issue our report and recommendations before December. We want to engage with all stakeholders as we continue our analysis and develop our recommendations, including adapting these for the different circumstances and policy and regulatory environments that apply in each of the nations of the UK. This will include roundtable events with a variety of trade associations around September, but we are also very happy to receive views from all providers.
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Providers wanting to get in touch with CMA about the market study can do so via firstname.lastname@example.org