CCN Blogs | 09 January 2019
Most markets don’t work perfectly without regulatory attention. And it is no different in social care. Below is an analysis of some of the problems currently being experienced, with some suggestions of where Counties could make more progress:
In Adults in particular, investment in estate is in jeopardy. High reliance on public pay creates thin or negative margins. And care gets worse (and ratings go down) if there is no investment. There are lots of actions Councils can take, but chief amongst these will be to use cheap capital to invest to save. This doesn’t mean going back to operating care homes but it will mean that County Hall is a more active investor in care than before. Whilst there is capacity on the older adults supply side, we can expect significant market exit over the medium term.
For Children’s residential care and more specialist Adults provision, we have the converse problem. A shortage of supply means that some providers are ‘naming their price’. Again, the response must be for Councils to become more interventionist in these markets, whilst doing their best to manage demand.
Most practitioners in learning disabilities will reflect that some (or many) adults are still in the wrong kind of care. A shift from residential provision to supported living and home-share arrangements can not only allow individuals to fulfill more of their capacity but also save money. But progress can be painfully slow and Councils need to be very active in pushing providers to shift their offer.
Providers continually tell me that their relationships with councils could be better – and indeed they could be delivering much more for the want of better communications. Such is the stress of local government at the moment that commissioners can be forgiven for treating their supply chain relationships as transactional, but we need to remind ourselves this is not the path to creating superior care for residents.
Providers will always be exiting the market, but when it happens at scale the cost to councils can be very significant. Our analysis suggest that for some Counties their ‘at risk’ spend in their care supply chain is as high as 35%. The cost of remediation for such a large risk is eye-watering.
Councils continue to be surprised by care demand volatility. No-one has a crystal ball, but whether it is SEND, Mental Health, Learning Disability or Dementia, data foresight and forecasting is within our gift. Our ability to anticipate demand stress – and adjust market management accordingly – could be the difference between a Council going under or surviving the next few years.
Making it happen
My discussion with County Leaders and Portfolio Holders at the recent CCN conference suggest Counties are up for this future challenge. The regulation in this area is very weak; and so care market shaping is going to be down to us. I don’t see the legislation changing very soon, for obvious reasons.
To be clear, the financial benefits from high quality market management are in the tens of £millions for most Counties. It has been a neglected area for focus that now deserves much closer attention.
Partner, Grant Thornton