The collapse of publicly-funded social care

16 November 2015

The English care home sector currently looks after about 450,000 vulnerable people a year, mostly frail elderly people, many with dementia. Shortage of funding means it is now on the verge of collapse with serious consequences for those in the homes, the businesses and their staff and not least the NHS. The latter has at least 20,000 people in its acute hospitals who shouldn’t be there; and in the past year has lost at least one million bed days for patient care because of this discharge problem. These numbers will dramatically increase if large number of care homes and home care agencies fold or decline to take people who are publicly-funded and the NHS becomes the carer of last resort.

This perfect storm for both social care and the NHS will come with the requirement to pay the National Living Wage with no extra funding. This would mean the collapse of a care homes sector that has been run reasonably well for a quarter of a century by the private and voluntary sectors, with local authorities largely withdrawing from running care homes. Care home providers have looked after both publicly-funded residents and those who pay for all or part of their care from their own pockets without too much tension between those groups, even when the private payers have subsidised publicly-funded residents.

During this period the help for people to stay in their own homes has improved in scope and quality, again from a mix of providers, which for a while took pressure off care homes. However with an ageing population and care home entry postponed by better domiciliary care, the care homes themselves have become populated by increasingly frail people with many co-morbidities. The cost of looking after them safely, both in care homes and their own homes has risen, not least because of tougher regulation following scandals. Yet the public funding for both residential and domiciliary social care has fallen badly behind the true cost of good quality care for this older frailer population. This has resulted in a reduction of between a quarter and a third of the people able to get local authority brokered care over the past decade.

We face imminently the prospect of a rapid exodus of providers from the publicly-funded social care market because they cannot care for their frail elderly clients safely at the rates the Government funds local government to pay and to the standards that the regulator rightly demands. For some time care providers, residential and domiciliary, have made clear to central and local government that their businesses are simply unviable at the rates they are being paid, particularly with an unfunded requirement to pay the National Living Wage in prospect. As their losses mount, their occupancy rates slide and their client base reduces, they are forced to find other ways to use their capital, changing the use of their property and concentrating on privately-funded customers.

These proprietors are not shroud-waving, nor are they uncaring but they need the Government to respond and to do so quickly as part of the 2015 Spending Review. If it does not do this then we can be confident that the publicly-funded social care provider market will shrink further and probably collapse. This will pitch the NHS into further crisis, financially and in terms of patient load. The 20,000 unkindly called “bed-blockers” will rise steeply and delay care access to other patients. This can only increase further the 2020 NHS forecast deficit of £30 billion and thwart delivery of the reforms in the 5-year Forward View.

We all want to see better integration of health and social care and the NHS reform programme succeed but this cannot happen without an urgent injection of funds into publicly-funded social care. On the most conservative estimate this care’s annual budget of about £17 billion a year is underfunded by at least £2 billion. The Government has to start making good this deficit if it wants the NHS reforms to succeed. More urgently it has to find a way to put money into the pockets of social care providers, residential and domiciliary, to keep them in the market. This might best be done for a specific purpose that benefits the NHS, the reduction in the number of vulnerable elderly people wrongly occupying acute hospital beds and transferring their care safely and rapidly to care homes or their own homes.

To achieve this twin goal of benefitting the NHS and preventing the collapse of the social care provider market, the Chancellor should consider a bolder new approach using some of the £8 billion he has promised the NHS over the lifetime of this Parliament. This would involve a new emergency fund of up to £1 billion to be run by NHS England and paid directly to social care providers, either individually or in partnerships with a lead provider. Payment would be for delivery of individual care packages agreed locally for named individuals who are resettled outside acute hospitals or prevented from admission to hospital. The named individuals or families must have agreed the packages with local providers who would be paid direct by NHS England on production of invoices. The packages would need to be funded on the basis of the National Living Wage.

Even if the additional cost of each of these packages was £300 a week more than is currently available locally it would still be cheaper than keeping the older person inappropriately in hospital. Resettling and keeping these patients out of hospital under a scheme of this kind would cost about £310 million a year in direct care costs for 20,000 patients plus say 20 per cent for administration would mean a total cost of about £370 million. Even if this is an underestimate, devoting even £500 million to free up 20,000 NHS beds and prevent the collapse of the publicly-funded social care provider market would still be a good use of public money. The alternative is a much larger NHS bill.

Clearly more detailed work would be needed to implement such a scheme but the collapsing social care provider situation is now so serious that more radical action is required centrally and urgently. It is a very high-risk strategy for the Government to rely on traditional solutions of passing down resources locally to commissioners through systems like the Better Care Fund or government grant to local authorities. There is too much leakage from these traditional trickle down systems with too little money ending up in the pockets of those who provide care for vulnerable people.

The Chancellor has not been afraid to make big calls as he has shown with devolution. He now needs to make one on the £8 billion he has put aside for the NHS. Use a bit of it to help the NHS by freeing up thousands of acute hospital beds for people who really need to be in them and saving the social care market, paying a living wage to those who work in it and giving frail elderly patients the care they really need rather than being stuck in an acute hospital.

Lord Warner, Former Health Minister, Member of Reform Advisory Board

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