Fair costs of care - Annex C

Published January 2023 An accessible document from southtyneside.gov.uk

Market sustainability plan template

Section 1: Assessment of the current sustainability of local care markets

Assessment of the current sustainability of the 65+ care home market

South Tyneside Council working in partnership with the Integrated Care Board, have recently published our Adult Social Care Strategy, “Living Better Lives”. The strategy has a focus on Home First principles ensuring “People Live Healthy, Happy Lives”. Over the next five years there will a transformation of how we support people, reducing our dependency on 24-hour care home provision, and supporting people within their own homes or in a home environment such as extra care or supported accommodation.

The Care Home Market

The care home market in South Tyneside reflects changes both nationally and regionally, the residential market appears stable, however we are seeing some risks to the sustainability of nursing provision. There have been no closures of homes, but also no new provision in the borough over many years, apart from a specific exercise to create an integrated care hub through a procurement exercise.

  • The Council’s capacity for meeting care demand is tight currently, with high levels of occupancy; occupancy of available beds has been consistently above 90% for 2022/23, with a current occupancy level of 95% of beds available.
  • The council has seen overall increases in the numbers of people being referred for residential care as a consequence of the pandemic and changes to hospital discharge arrangements. The rate of admissions to care homes has increased from 592.6 per 100K pop in 2018/9 to a forecast of 947 in 2022/3.
Diversity in the market

Our homes are varied in terms of bed capacity ranging from 31 beds to 73 beds registered with the Care Quality Commission, though not all beds are currently available due to repurposing of rooms and refurbishments. We currently have 1,059 beds in use compared to 1,112 registered with the Care Quality Commission.

  • With the lack of new entrants to the local market, it is vital that independent providers are sustainable to maintain capacity and meet demand in the next 3 years.
  • Nursing care: There are currently 9 care homes providing nursing care (out of 23 care homes). There is a broader risk to the sustainability of nursing care nationally and regionally.
  • Nursing supply: The other key change in the use of our care homes is the ratio of residential and nursing residents in our dual registered homes. In April 2019, 60% of residents were nursing and 40% residential, in August 2022 this had switched significantly to 37% nursing and 63% residential.
  • In South Tyneside we have two care homes who are de-registering from nursing care
  • Discussions relating to the current risks to nursing care are being held with the Integrated Care Board both locally and regionally.
  • Behaviours that Challenge: There is currently a lack of provision for complex challenging behaviour or specialist units to meet local demand, this ranges from younger males (65+) often with acquired brain injury or substance misuse through to challenging behaviours associated with dementia.
Quality of services

Overall the Council is satisfied with the quality of care on offer in the local market

  • Of the Council’s care home providers, 20 (87%) have CQC ratings of ‘Good’ or higher. The CQC ratings of providers currently stand as:
    1. Outstanding: 1
    2. Good: 19
    3. Requires improvement: 1
    4. To be assessed: 2
    There have been no Older People’s care homes in our Provider Concerns process in the last 2 years.
Cost and fees
  • The Council completed the first phase of the fair cost of care exercise and return to Department of Health and Social Care in October 2022. Having collated and validated costs data from 83% of the older people’s care home providers, the Council has greater clarity and assurance on provider costs for setting fees to enable sustainability in the market.
  • The Council has used the data to model scenarios for costs of care and worked with providers to reach consensus on a position for the fair costs of care for 2022/23 and moving towards this with fee setting for 2023/24.
  • As part of this, the Council has used the provider data to understand inflationary pressures for operational costs and the challenge this poses to providers’ sustainability. For example, the costs data showed an uplift in the median utilities’ costs of c.40-50% and the median staff costs of c.14-24% for providers from 2021/22 to 2022/23.
  • The increases in staff costs are impacted by workforce supply issues and reliance on agency staff (particularly in the case of nursing), as well as increases in National Living Wage (NLW).
  • From the fair cost of care exercise, it could also be seen that the costs of nursing care are significantly higher than those for residential care, this differential is more than the current Funded Nursing Care payments.
  • Going forward, the Council will be working with providers to work collaboratively in respect of the costs of care and the challenge to sustainability on (1) continuing to assess the fair cost of care, and using this information from providers, and increasing fees to move towards this and account for inflation in subsequent years; (2) moving to new models of care home provision and the costs associated with these. (See section 3 for more details on planned activity).
Market conditions and workforce
  • Through our continuous dialogue with providers and engagement as part of the fair cost of care exercise, several care homes have highlighted the challenges with staff supply, local competition for staff and high staff turnover and vacancies.
  • Staff vacancies (for residential and nursing care combined) have increased in 2022/23
  • The cost-of-living crisis and increase in national living wage continue to put pressure on providers
  • We can also see from the fair cost of care exercise, that a significant number of homes have had a dependency on agency staff.

Management and leadership seem to have the biggest impact on the effectiveness of recruitment and retention. Some homes that are observed as having effective and stable management and operations tend to be more successful in recruitment and retention and staff, than others where management is less established.

Assessment of current sustainability of the 18+ domiciliary care market

  • The market appears stable with a strong core of national & local providers within the borough. There has been no closure of providers within the region and we have seen new provision into the borough as part of our Help to Live at Home service.
  • The Council’s capacity for meeting home care is challenged, with high levels of staff vacancies within the provider market along with increasing demand which is being driven by (i) hospital discharge (ii) increased complexity (iii) significant domiciliary care pressures, as being seen nationally.
  • In managing the demand and capacity issues in the next 3 years, the Council plans to work with providers to support the sustainability of their businesses including through the fair cost of care exercise and joint recruitment and training strategies. We aim to develop our approach for “Home First” through the ongoing development of trusted assessor schemes, with this taking full effect in 2023/24. This will make best use of and maintain capacity by right sizing support, improve career opportunities in the provider market, as well as to improving outcomes for our residents.
Market Diversity
  • We have a range of providers in the market with 4 large Regional/National providers and 4 smaller local operators. The Council are working with all providers to support them during these demanding times and have ensured that 95% of the fee paid is passed down to subcontracted providers to ensure smaller operators are able to sustain services and maintain provision over the next 3 years.
  • We also have a range of 4 specialist domiciliary providers in the area which are again a mix of local, regional and national providers.
Quality of Services
  • Overall, the Council is satisfied with the quality of care on offer in the local market
  • Of the Council’s contracted home care providers, 7 (87.5%) have Care Quality Commission ratings of ‘Good’
  • The Care Quality Commission ratings of providers currently stand as:
    1. Good: 7
    2. Requires improvement: 1
  • In addition to the lead and specialist contracted providers, 4 sub-contractors are all Good Care Quality Commission rated.
Current fee rates
  • In 2022, the Council agreed an uplift above inflation rates to account for lower fee rates paid.
  • The Council uplifted domiciliary care rates by 12.5% and Home Independence and Crisis Support by 17.9%
  • The Council worked with providers to agree a standard pay rate for all Care and Support worker roles.
  • In addition, the Council currently block purchases Its Home independence and Crisis Support Service (HICSS)
  • Through our continuous dialogue with providers, they have highlighted the challenges with staff supply, with local competition for staff and high staff turnover and vacancies. This seems to reflect the national picture.
  • The cost-of-living crisis and increase in national living wage continue to put pressure on providers to be able to pay staff salaries to meet demand, whilst remaining sustainable within the current fee envelope.
  • The cost-of-living crisis is expected to have an impact on the recruitment and retention of a range of key staffing roles where National Living Wage or low pay rates exist, while other commercial sectors can offer higher rates of pay
  • The council continues to work with providers on joint recruitment and training schemes, including the development of a ‘Care Academy’ over the next 12 months.
  • The Councils zoned approach to its Help to Live at Home provision supports providers and workers to reduce travel time and mileage which supports retention in the sector and maximises the use of non-drivers
  • In addition, the development of Help to Live at Home and trusted assessor roles is aimed at improving career pathways for staff in domiciliary care

Section 2: Assessment of the impact of future market changes between now and October 2025, for each of the service markets

Demand and capacity

  • It is anticipated that older people’s demand for care will continue to increase in the next 3 years, with landscape forecasts financial year 24/25 showing a potential 18% increase from 2022/23 to end of 2024 for older peoples care homes and a 2.8% increase for home care. However, implementation of the Living Better Lives strategy is expected to see a greater increase in the need for home care and to reduce the increased demand for care home provision.
  • With no new entrants to the care home market likely (based on the record to-date), increased demand would increase the pressure on the existing group of providers to meet local need. This combined with increasing care costs and sustainability challenges for care home providers, would risk the loss of providers from the market; the loss of just a small number of providers would seriously limit the Council’s ability to meet demand until alternative capacity becomes available.
  • However, whilst demand is expected to continue to increase, it is anticipated that planned market and system changes will help to address increasing demand and capacity challenges in the care home market. This includes growing the Council’s ‘Home First’ approach through domiciliary care and alternative services such as extra care and assistive technologies.
  • The Council plans to continue to develop the domiciliary care market and workforce to ensure more people’s needs can be met with care at home, whilst working with care home providers on alternative models of care to ensure sustainable occupancy levels and costs (see section 3).
  • The needs for people with complex challenging behaviours, are also expected to rise over the next five years and the council are looking at how we develop services to meet these needs.

Inflationary pressures and fair cost of care for fee setting

  • Based on the current economic outlook it is anticipated that high levels of inflation and borrowing are likely to remain in the upcoming years.
  • This will continue to put pressure on providers and their ability to make business models viable and to recruit and retain staff. The Council has already committed to moving towards the local cost of care and addressing inflationary pressures with its fee setting for 2023/24 to limit this impact on providers.

Nursing care home sustainability

  • With the observed trends in nursing beds occupancy over recent years and the low levels of nursing versus residential occupancy currently, combined with the reported high costs of nursing care from the fair cost of care exercise, it is anticipated that the Council could see supply from the market reduce in the coming years, as delivering nursing care becomes increasingly unsustainable.
  • There are ongoing discussions with the Integrated Care Board to address the pressures within nursing care locally and regionally, and we are monitoring the situation closely with our providers. Workforce supply challenges (as detailed in section 1), combined with the cost effectiveness of delivering nursing care, means that the Council will need to mitigate this risk working with the Integrated Care Board.

Impact of Section 18(3) of the Care Act 2014

  • The Council has commenced work to collect data and develop the baseline data for self-funders to analyse the potential impact of future changes to care fees, which have been delayed until 2025.

Section 3: Plans for each market to address sustainability issues, including fee rate issues, where identified

South Tyneside Strategic Approach to manage sustainability of the markets

Plans to develop the social care market in South Tyneside will be carried out through a joint approach between Health and Social Care; any assessment and shaping of the market needs to be done with consideration of the whole local health and social care system.

The South Tyneside Health and Wellbeing and Adult Social Care Strategies have clear objectives, in respect of supporting people in their communities and the principles of ‘home first’, with a focus on 4 strategic areas of development:

  1. prevention and early intervention
  2. choice and control for people over their care
  3. quality and safety of services
  4. development of the workforce

To manage the sustainability issues for 65+ care homes and 18+ domiciliary care markets in the next 3 years, the Council plans to work with providers to support the sustainability of their businesses through 2 routes:

  • Developing the strategy and models for care provision: Developing new models of care home provision to help meet future local need through more innovative approaches and specialist provisions, through co-design with providers.
  • Moving to fair costs of care: Continuing to assess the cost of care, working collaboratively with providers, increasing fees to move towards this and accounting for inflation in subsequent years.

Overall strategy and model for Older People Care Homes and Home Care provision (care homes and home care)

South Tyneside has recently published its new Adult Social Care Strategy and will be developing a detailed delivery plan in the coming months. The strategy for older people’s care is driven by the key strategic objective of “home first” and we will continue to explore opportunities for more people to remain in their own homes.

  • Models of care: As part of the fair cost of care process, providers outlined a key priority for them is to focus on the local model of care and commissioning approaches. The Council plans to explore changes to the profile of care homes and processes for commissioning and managing capacity with providers. This includes exploring a new commissioning model for nursing beds with Integrated Care Board partners as well as looking at alternative care models across care homes, home care and other services.
  • Supply and occupancy: The Council in partnership with the wider system is reviewing hospital discharge processes and flow through domiciliary care services to reduce pressure on bed-based care. The Council will maximise capacity in the system by working with providers to ensure maximum capacity is available for residents.
  • Continue to develop our Help to Live at Home service, which will see more effective use of service capacity including the use of trusted assessors and review processes
  • Challenging behaviour: The Council has identified several existing providers where there is the potential to develop provisions to meet demand locally; the Council will work with these homes to explore this.
  • Implement a technology first approach to increase the use of technology to support people to remain independent in their own homes
  • Maximise the use of trusted assessor models to right size support and improve capacity for new care packages, implementing singlehanded care systems to reduce double handed care and maximise capacity
  • Provider sustainability: The Council will carry out regular reviews of risk stratification for our service to continuously monitor and identify risks of provider failure.
  • Workforce: South Tyneside are exploring the development of a social care academy as a programme to attract more people into the social care market. This includes training and development and career pathways for people in the market. This is with the intention to address the workforce supply gaps and recruitment and retention challenges.
  • Extra Care capacity: We have recently opened a refurbished extra care facility to increase our alternative care capacity options. The Council has plans to build its extra care capacity further with 3 large service developments which will help to manage demand. This is expected to be in place from 2024/5.

Our Help to Live at Home model will continue in its development to reduce non-contact time for providers reducing unnecessary costs and will continue to develop provider services to improve career opportunities for staff in the sector.

The Fair Cost of Care Grant has been distributed to all care home and home care providers on a pro rata basis based on actual activity, following council costs in line with national guidance.

Moving to fair costs of care for Older People Care Homes and Adult Home Care

Following the completion of the first phase of the fair cost of care exercise and return to Department of Health and Social Care in October 2022, the Council has continued with work to use the insight gained from the cost of care data and engage with providers to establish local costs of care for commissioning of services in the future. The Council has taken the costs of care output from the data gathering exercise and modelled the outcomes from several scenarios in terms of affordability for the local authority, considering the new national allocations for local authorities.

The Council has continued to engage with care home providers to consult on the cost of care scenarios and reach consensus on a baseline local cost of care for April 2022. The Council is now working with providers to identify the cost of care for 2023/24 (applying inflation to the April 2022 baseline).

The Council’s approach to implementing the 2023/24 cost of care (and future years costs) is based on applying phased increases to fees over time that account for (1) year-on-year inflation, and (2) moving towards the cost of care. This will be an iterative process with continuous dialogue with providers to ensure that fees are affordable for the Council and ensure sustainability of local provision.

The Council has also identified the nursing care market as a key priority and joint discussions are now commencing with the Integrated Care Board to look at the gap in cost between residential and nursing care, and address the wider issues in terms of workforce, occupancy and nursing assessment.