Market Sustainability and Fair Cost of Care

Reform of adult social care

The Government is implementing a wide-ranging and ambitious reform of adult social care.

In December 2021 the white paper: People at the Heart of Care, outlined a 10-year vision that puts personalised care and support at the heart of adult social care, ensuring that people:

• have the choice, control and support they need to live independent lives
• can access outstanding quality and tailored care and support
• find adult social care fair and accessible.

Fair Cost of Care exercise

Critical to delivering upon this ambition is ensuring that we have a strong, vibrant and sustainable care market. The Market Sustainability and Fair Cost of Care exercise was the Government’s first step in the journey to achieve this.

In October 2022 all upper-tier local authorities were required to produce and submit a draft Market Sustainability Plan (MSP) and Fair Cost of Care (FCoC) statement to the Department of Health and Social Care (DHSC). These included:

• cost of care exercises for 65+ care homes and for 18+ domiciliary care, using a standard national methodology
• a provisional market sustainability plan, using the cost of care exercise as a key input to identify risks in the local market and which included details of how funding allocated for 2022 to 2023 is being spent in line with the fund’s purpose.

In the East Midlands, during this first phase of work, nine of the ten local authorities commissioned the services of Care Analytics, a specialist in the financial analysis of care markets and the cost of care, to support a wide-ranging engagement of the care market. This included a detailed survey to capture the necessary operational and contextual detail to draw out the inherent costs of delivering care in the local market.

Reform delay

The Government has since confirmed in the Autumn Statement 2022 on 17 November 2022, that the reforms will be delayed for two years in order to focus resources on other areas of adult social care.

The commitment remains to support local authorities to move towards paying a 'fair cost of care' to care providers, particularly through the presently challenging winter period.

For customers, a new £86,000 cap on the amount anyone in England will have to spend on their personal care over their lifetime and changes to the social care means test that will make local authority funding support more generous, are delayed until October 2025.

Annex A and Annex B publications October 2022

The DHSC asked all upper-tier local authorities to formally submit an Annex A document in October 2022, that presented figures from the survey of care providers in a detailed spreadsheet format.  Two accompanying Annex B documents provide details of the methodology used for our care home and home care markets, and we have published them here:

• Annex B - Cost of Care report: domiciliary care‌
• Annex B - Cost of Care report: age 65+ care homes‌‌

Whilst these provide the content that we will be using to help our future approaches to care market sustainability and fees, it is very clear that the resulting figures for median costs (as was required by DHSC) are not in themselves an appropriate basis to inform a council’s commissioning fee rates. Whilst the median is less skewed by high outlier values (as opposed to mathematical averages), the median values themselves can be skewed if the dataset does not comprise an appropriate and representative sample of the existing make-up of providers in the local market. The exercise has however provided insight into the nature of local care provider costs and the different business models employed by those who returned surveys. In Derby, 29 of 52 (56%) of 65+ care homes responded to the FCoC Survey, while in the 18+ domiciliary care market, only 15 of 76 (20%) providers responded.

Next steps

Derby City Council continues to work with Care Analytics to expand upon an analysis of our commissioning and market context using:

• evidence sourced from care providers through the original FCoC survey
• data from the Council concerning placements and packages of care
• data already in the public domain including CQC inspection reports
• data held by Care Analytics themselves to support benchmarking across market areas geographically.

We wrote to all care home and home care providers in November 2022 to give a position statement on both the market sustainability and fair cost of care exercise. It described the fee-setting process and that, inevitably, it will feel different this year to take account of the cost of care submissions and ongoing analysis and publication. Engagement with providers on further pressure points to help inform this work commenced in early December with a further letter sent to care providers asking for the details of pressure incurred since completing the original FCoC Survey.

Our fee-setting process for 2023/24 has now concluded and we remain committed to moving towards a fairer cost of care, and supporting sustainability and growth across the care market. We wrote to all care providers on 1 February 2023 asking for their feedback on the draft Market Sustainability Plan. The final MSP is now complete and has been formally submitted to the Department of Health and Social Care, and we have published it here:

• Annex C – final Market Sustainability Plan

If you have queries about any of these documents, please email commissioningandmarketmanagement@derby.gov.uk.