Fair Cost of Care - Annex B

65+ care home places without nursing

65+ care home places without nursing, enhanced needs

65+ care home places with nursing

65+ care home places with nursing, enhanced needs

Median values for each care home care type

18+ domiciliary care

18+ domiciliary care – Average number of appointments per week

18+ domiciliary care – Average cost per visit

Background

The UK Government has set out its requirement for all Councils nationally to complete a Fair Cost of Care exercise as part of their wider reform of the Care Act 2014 relating to Adult Social Care Funding. South Tyneside Council was required to work in partnership and collaboration with Care Home providers to complete this exercise by the submission date of the 14th October 2022.

Older people’s care homes

There are currently 23 care homes for older people operating within South Tyneside. This includes facilities that provide residential care, residential care enhanced (with additional extra mental health intervention) and those that provide general nursing care and enhanced nursing care (with additional extra mental health intervention). One of these homes also operates as an integrated care hub, which offers end of life support, short term, long term, and rehabilitation beds. All 23 homes fall into the scope of this exercise.

Response rate of the exercise

• Total number of providers in-scope and invited to participate: 23
• Response rate: 19 submissions received in total (82.6%)

Data used for the exercise

The Care Home Cost of Care Tool (delivered by the Local Government Association and Association of Directors of Adult Social Services: ‘CareCubed tool’) was used to obtain data from providers, with providers able to submit the following data:

• Annual 20211/2022 operational costs
• Uplifts to 2021/2022 operational costs to give uprated costs as at April 2022
• Annual values for Return on Operations (ROO) for 2021/2022 and uprated for April 2022
• Annual values for Return on Capital (ROC) for 2021/2022 and April 2022
• Direct staff costs as of April 2022
• Submissions put into query in the CareCubed tool – 10 provider submissions queried; 8 providers updated submissions

How provider data has been used for the return

The data collected from providers for 2021/2022 and April 2022 figures (based on their uplift’s of 2021/2022 costs), was used as the baseline for the data return.

In reviewing the distributions of costs and possible outliers, the Council has applied an approach based on the principle of retaining as much data as possible for its analysis. A small number of data points were excluded following discussions and information submitted by providers.

It is noted that the data submitted by providers during this phase 1 of the exercise is recognised as the provider perspective of baseline costs for 2021/2022 and is not an agreed cost of care going forward. Since completing the first phase and submitting the data to the Department of Health and Social Care in October 2022, further collaborative work has been completed with our providers to move from a submission of initial data, to developing a shared understanding of the cost of care in the context of further information and intelligence at a national and local level, including but not limited to:

• The limitations of the CareCubed tool
  • Differential costs of the different care categories
• Understanding costs and market issues relating to nursing care
• Understanding Return on Operations
• Understanding Return on Capital
• Understanding current and forecast occupancy levels
• Current economic position
• Inflationary uplift for April 2022 and 2023
• National funding of Fair Cost of Care
• Affordability
• Market sustainability over the next 3-5 years
• Timescales and potential phasing

South Tyneside Council remain committed to working in partnership with our providers, to agree fee setting moving forward, as part of the process of managing the market and sustainability. The data collection using the CareCubed tool is recognised as the first stage of a complex piece of work using a range of information and intelligence to agree a process of fee setting going forward. Since submitting the Fair Cost of Care data return in October 2022, the Council has continued engagement with providers on this process (as outlined in section 6 below).

How the cost of care exercise has been carried out

Strategy and principles

The Council sees this exercise as a unique opportunity for providers and local authorities to set out the evidence of the true cost of care to the Government. The adopted strategy was to ensure a process of engagement between this authority, the national care home association and the regional association, as well as all providers of our 23 care homes to arrive at a shared understanding of a local cost of providing care.

To start this process, South Tyneside Council in consultation with our homes developed several commitments and principles that both the authority and providers could work within to ensure equity among all participants as seen below. These commitments and principles were agreed at our first engagement meeting and have been used to underpin our engagement throughout this exercise.

The Council’s process for the cost of care exercise

The process for completing the exercise ahead of the October 2022 submission deadline was developed and agreed with providers in the initial group meetings held with all providers. The process for this first phase was based on 4 key steps as outlined below. Following the data submission to Department of Health and Social Care in October 2022, a second phase of engagement with providers has been carried out to work towards a shared understanding of the local cost of care, to inform future fee setting with providers. The Council is committed to continuing the process of engagement and collaboration with providers to work together on the costs of care on an ongoing long-term basis.

Phase 1 – Data gathering and submission to Department of Health and Social Care (up to October 2022)

Step 1 – Support providers with data submissions

• Initial engagement with a face-to-face session to discuss the exercise and principles.
• Fair Cost of Care clinics held every 2 weeks to discuss any issues providers had with submissions.
• 1-to-1 support sessions with providers to support and assist with submissions.
• Ad hoc support for all providers with daily response to provider queries.

Step 2 - Review data and resolve data submission issues

• Review of each provider’s data submissions to identify any possible issues or omissions impacting their returns.
• Meetings held with providers to raise these issues/errors and to provide advice on resolutions.
• Resubmission of provider data points to address issues/errors and improve the quality of the dataset.

Step 3 - Identify any outliers and feedback to providers for rationale

• Review of each provider’s submissions to identify apparent outliers and queries relating to figures.
• Observations and queries shared with each provider, along with a view of the wider dataset and spreads (with appropriate anonymisation).
• Responses to queries obtained from providers with narrative and explanation for outliers.
• Workshop 1 held with providers to review cost spreads and discuss any areas of challenge transparently.

Step 4 - Review responses from providers and confirm approach to any outliers

• Provider responses obtained with written response over email.
• Responses reviewed to understand narrative and rationale for specific provider data points.
• Decisions made on excluding specific provider data points following discussion with providers
• Workshop 2 held with providers to present the final median costs based on their data submission, and confirm the approach to defining and implementing local costs of care.

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Following completion of phase 1, the following steps have been undertaken as part of phase 2, to continue to work together with providers to establish and move towards local costs of care that are reasonable.

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Phase 2 – Analysis and engagement to move towards local costs of care

• Developed draft approaches for uplifts to operating costs, Return on Operations and Return on Capital ahead of review and consultation with providers, through scenario analysis of the costs of care data obtained from the first phase.
• Workshop held with providers to present and consult on adjustments and rationale for uplifts, Return on Operations and Return on Capital, and to reach consensus on an April 2022 baseline local cost of care (to use as the basis for identifying the cost of care for 2023/2024).
• Additional workshop held with providers on the development of the market sustainability plan, following the national data submission and reflecting on the national and local financial pressures for the Council and providers.

Moving beyond this second phase, the Council will continue the process with providers, with next steps including:

• Defining the 2023/2024 local costs of care to move towards using the April 2022 baseline.
• Council to confirm its fee offer for 2023/2024 based on applying inflation to current fee rates and moving towards the Fair Cost of Care.
• Ongoing dialogue and working between the Council and providers on identifying future costs of care and moving towards these over time.

Engagement with providers

The process above was carried out with extensive engagement and collaboration with providers over the two phases. The table below provides further detail on the engagement activities carried out through the process.

Regional engagement and working

South Tyneside Council has been an active participant of the regional collaboration on the Fair Cost of Care exercise through the North East Commissioning Network, which has included weekly Fair Cost of Care meetings, and regular discussions with the Local Government Association. Where possible we have collaborated on approaches such as principles of working through the process of the Fair Cost of Care data submission.

How the Fair Cost of Care will be developed going forward

The Council has considered a number of options for adjusting the Fair Cost of Care baseline data (2021/2022 medians based on provider submissions through analysis of a number of scenarios for operational cost uplifts, Return on Operations and Return on Capital .This work is being carried out collaboratively with our local providers to reach a baseline local cost of care for April 2022 in the first instance, and to continuously review costs of care on an ongoing basis to move towards this over time with fees paid by the Council to providers

Operational cost uplifts

From the provider data, percentage changes (uplifts) in median operational costs from 2021/2022 to April-2022 have been determined. On reviewing these, the Council has considered scenarios based on the uplifts determined from the provider data and use of inflation benchmarks for specific operational costs. These have been reviewed and discussed with providers as part of the engagement carried out in phase 2.

Return on Operations (ROO)

The Council has considered a number of scenarios for applying different Return on Operations percentages to the 2021/2022 median operational costs for the different care types (after applying uplifts as per 7a. above). This takes into consideration regional discussions, where local authorities in the region have commonly cited a 5% Return on Operations mark-up. The Council as part of its market sustainability planning, recognises the pressures providers are facing in the next few years and is committed to rewarding providers with reasonable rates of return on their operations to help secure their businesses. This has been reviewed and discussed with providers as part of the engagement carried out in phase 2.

Return on Capital (ROC)

The Council has considered a number of scenarios for Return on Capital, including applying the local Local Housing Allowance rate (excluding repairs and maintenance costs) and applying percentages of property valuations (where applicable), based on the national guidance. These approaches align with methods for determining and applying Return on Capital for investment across the public sector. This has been reviewed and discussed with providers as part of the engagement carried out in phase 2.

Home Care Aged 18+

At the time of the Fair Cost of Care exercise there were a total of 7 providers directly providing domiciliary care in South Tyneside. This includes specialist providers.

Response rate of the exercise

• Total number of providers in-scope and invited to participate: 7
• Response rate: 4 submissions received in total (57.14%)

Data used for the cost of care exercise

The national home care, Cost of Care tool was used to obtain data from providers, with providers able to submit the following data:

• Unit Price
• Profit/surplus
• Business overheads
• Other wage related costs
• Direct Care related staff costs related to delivery of care
• Care hours/volumes

How provider data has been used for the return

The data collected from providers for 2022/2023 has been used as the baseline for the data return. South Tyneside recognise this data is an initial submission and does not represent the final cost of care. We will continue to work in partnership with our providers to consider further information and intelligence, and to agree approaches to key areas such as, but not limited to inflationary uplifts and Return on Operations.

How the cost of care exercise has been carried out

Strategy and principles

The Council sees this exercise as a unique opportunity for providers and local authorities working in partnership, to set out initial data from the Fair Cost of Care exercise, and later further information to the Government of the cost of care. The adopted strategy was to ensure a process of engagement between this authority, and all 7 providers of our in-scope providers to arrive at a shared understanding of a local cost of providing care.

South Tyneside recognise this data submission is the first phase of establishing a local cost of care and does not reflect the final local cost of care and further work will be carried out with providers to develop our understanding of market sustainability, and affordability in the coming months.

The Council’s process for the cost of care exercise

The process for completing the exercise was developed and agreed with Help to Live at Home providers in a provider group meeting.

Phase 1 - Support providers with data submissions

• Initial engagement through provider meetings to discuss the exercise and principles.
• Department of Health and Social Care and Local Government Association guidance was provided with the tool to providers
• 1-1 dialogue was made available for providers
• Additional time allowed for providers who were unable to achieve the initial deadline

Phase 2 - Review data and resolve data submission issues

• Review of each provider’s data submissions to identify any possible issues or omissions impacting their returns.
• No further reviews/consultation was necessary at this stage

Phase 3 - Identify any outliers and feedback to providers for rationale

• Review of each provider’s submissions to identify apparent outliers and queries relating to figures.
• 3 outlier areas were found, however when reviewed these related
  1. Size of organisation meant the management overhead was an outlier, provider confirmed overhead is spread over very low volume,
  2. Mileage with one provider paying very low mileage rate – provider confirmed the rates paid as accurate,
  3. One provider rolled up travel time into hourly rate, provider confirmed they do not pay separate travel time.
  In each case the median provided was used, so no changes to the provider data has been made. Further work with providers in understanding the data in the context of the market position and the current economic climate will be taken forward.

Engagement with providers

The process above was carried out in collaboration with providers over the phases. The table below provides further detail on the engagement activities carried out through the process.

How the resulting cost of care has been developed

Requirement: how the resulting cost of care for the local area has been determined, including the approach taken for return on capital and return on operations; justification of the proposed approach to return on capital and return on operations.

In reviewing the distributions of costs and possible outliers, the Council has applied an approach based on the principle of 100% of data for its analysis and development of scenarios.

The resulting cost of care data returns were determined from the median values.

Operational costs

We have used the 2022/2023 data as submitted the domiciliary care providers, recognising this will not be the final local cost of care and further work will be completed with our providers in the near future.

Return on Operations (ROO)

We have used the 2022/2023 data as submitted the domiciliary care providers for the data submission and local cost of care work will continue in the near future.