The financial crisis faced by the care sector has reached tipping point. Despite a recent decision by Communities Secretary, Sajid Javid, to allow councils to raise extra funds through increasing the dedicated social care precept allowance to 3%, it’s clear this is not enough to solve the crisis. Successive opportunities for the Conservative Government to truly take a stand on health and social care have been and gone.
First there was the Party conference, in which Prime Minister Theresa May neglected to mention social care in her 7,000 word speech. To make matters worse, David Mowat, the Minister for Social Care, even turned down an invitation to attend the main social care fringe event at the conference, organised by the Care and Support Alliance (CSA).
Local government is acutely aware of the funding black hole, with the Association of Directors of Adult Social Services saying £1.6bn is needed just to keep care at the same level it is and, given that social care providers now also have to find funding for a 30p rise in the National Living Wage, care providers are under greater pressure than ever to stay out of the red.
Not surprisingly, the industry as a whole is feeling the pinch. From September 2010 to July 2016, the total number of care homes in England has fallen from over 18,000 to just over 16,600, according to the Care Quality Commission. Research published in CMM February reported that one in four care homes is at risk of going out of business.
As overheads rise and significant government intervention remains absent, action must be taken by providers themselves to secure finances, improve cashflow and ensure there is enough money in the bank. Providers have no choice but to react to the situation they find themselves in, and this begins by examining their own practices. Businesses must open up new financial channels and streamline existing ones.
One way in which providers can begin to shore up the books is to look at how they currently manage their contracts and see what can be done to improve efficiency. Although this may cost a little initially, the rewards outweigh the investment very quickly and save the costs of pursuing or repeatedly having to write-off bad debts.
Failure to have appropriate contractual terms and clear systems in place leaves providers wide open to abuse, at risk of losing money and exposes them to sanctions and fines by the regulators – both the Care Quality Commission (CQC) and the Competition and Markets Authority (CMA).
Three key elements to securing a robust system are having: 1) A clear communication strategy, 2) Enforceable contractual provisions, and 3) An enabling culture to support managers or administrators in asserting rights and interests in an appropriate way.
Some providers aren’t transparent in terms of their pricing structures. Given the competition, it is understandable that care homes may not want to, for example, provide fee rates online, but it is increasingly important to be more upfront about what the real costs of care will be and how these may be met in the longer term.
Issues to be clear about right from the start with a client, whether an individual, local authority, clinical commissioning group or other party, include the status of the placement (eg continuing healthcare (CHC), nursing care, respite, etc), the impact of the 12-week property disregard on the placement, and whether a top-up arrangement is permitted in the particular circumstances. In addition, it is imperative that the responsibility for recovery of payment and the potential consequences of any change in circumstances, such as care needs or finances, are also outlined and properly understood.
Businesses should have a clear communications plan that outlines who is being talked to – the resident, their representative, a person making a top-up payment or the commissioner who has placed them, how it is known if the person has the means to pay the fee or a top-up for a reasonable period and what the policy is when the money runs out. All communications should be open, in accessible language and any considerations about the resident’s mental capacity (both at the time of entering a home and in the future) should be addressed head on.
Care providers can do a great deal to support individuals and their families in accessing sound financial advice as well as supporting them in asserting their right to public funding and other benefits (CHC, etc). Providing managers or administrators with access to template letters and checklists to support existing policies on these matters is a practical means of ensuring the salient points get picked up.
Next, it is important that contract terms are transparent and understood by the client. A well-crafted contract means that not only are issues such as fees addressed, but the resident and their families are assured about the standard of care and support that is being provided, as well as managing expectations around the scope of the package. The whole process of entering into contractual arrangements should uncover any issues early on and allow the parties to resolve these before problems crystallise.
The importance of well-written and enforceable agreements cannot be underestimated from a financial perspective. This makes sense for everyone involved, but for the provider it is essential that it is able to secure prompt payment – fees of many thousands of pounds stack up fast and it is simply wrong for some residents to subsidise those who are not meeting the financial commitment that they signed up to.
Make sure, therefore, that there is full understanding of all terms relating to fees, especially how they are increased and the impact on top-up arrangements; notice provisions, especially the circumstances in which the home can ask the resident to leave; and the management of changing care needs and the consequences for the resident and provider.
Not only are there significant financial incentives to having robust terms in place, there is increasing scrutiny on contracts in the care sector. These must comply with consumer rights regulations and be written in plain English. The CMA has recently announced an inquiry into reports of ‘potentially unfair practices and contract terms being used by some care homes’.
This is on top of the obligations under CQC’s regulatory framework which require care homes to provide terms and conditions for residents, wherever possible, before the individual enters the home. The sanctions that flow from failure to meet these requirements, not to mention the reputational damage this could involve, mean providers can’t afford to get contract governance wrong.
Lastly, look to management. Managers are quite properly focused on the quality of care the home provides, but they should also focus on the finances. It is vital that day-to-day responsibility for applying and managing the organisation’s policies sits with the manager and that they are up to speed with processes and are applying them in the necessary manner. Again, managers already have considerable administrative workloads, but they need to understand the importance of contract governance and keeping proper records of financial arrangements with residents. This is particularly important given the paper trail may need to last longer than their own tenure with the business or time at a specific site.
Simple procedures that can be introduced range from straightforward checklists signed by the manager to ensure all relevant information (both in terms of care needs, capacity and finances) has been brought to the resident’s attention, to clear policies that provide a framework for managers to make judgements, particularly around the minimum level of fee it is acceptable to agree in any particular circumstance.
Of course, managers are not lawyers, and it would be unrealistic to expect them to understand complex legal frameworks. Briefing notes on difficult issues, such as understanding the legal status of a particular ‘representation’, dealing with residents who may lose capacity during their stay, assessing capacity to sign the contract and the right to remain in the home (at the private rate) if their money runs out, should be provided to ensure managers are well-prepared to deal with common circumstances.
To bring all this together, providers need to foster an enabling culture that builds confidence in its managers and other administrators. In this context, what is sometimes neglected but should be at the centre of operations is training. Managers need to have sufficient knowledge of policies and procedures, the relevant regulations and legislative framework and support in dealing with difficult situations, for example, through roleplay or other innovative methods.
While it may seem that the initial outlay in getting these points in place may be expensive, investment around these issues will undoubtedly be crucial to achieve sustainability in the long term.
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