What happens if a big care provider fails?
One lesson to emerge from Southern Cross is the need for better clarity in the roles of providers, commissioners, regulators and central government, argues Richard Humphries
One lesson to emerge from Southern Cross is the need for better clarity in the roles of providers, commissioners, regulators and central government. Photograph: Tim Ireland/PA
What happens if a big care provider fails? Reverberations from the demise of Southern Cross continue, with the latest report from Commons public accounts committee taking the government to task for not monitoring market developments or having clear arrangements to ensure that residents’ care is not jeopardised.
With widespread public concern about the incursion of private equity into the care home market and the sheer scale of the Southern Cross operation – 31,000 people in 750 homes – no wonder anxieties are running high.
Social care does seem to have sleepwalked into a situation where over 80% of care is provided by independent providers without necessarily thinking through the implications when things go wrong on this scale.
But hard cases make bad law, and the temptation to rush in with a top-down model of economic regulation should be resisted. Despite private sector dominance of the care homes for over two decades, business failures have been relatively unusual – less than 1% of homes closed in 2009/10. The bigger threat to continuity of care has come from closure of council-run homes over the same period.
There is a long and generally good track record of local authorities working with providers to make sure no-one is left without the care they need when closure looms. The recent good practice guidance produced by the Social Care Institute of Excellence will help further.
Initial uncertainty when Southern Cross began to unravel was quickly supplanted by mature and transparent collaboration between the industry, local authority care leaders and the Department of Health that so far has protected the care of all 31,000 residents. The Guardian too played a helpful part through website information about individual homes.
One lesson that emerges from Southern Cross is the need to be much clearer about the respective roles of providers, commissioners, regulators and central government in sustaining a vibrant market that is responsive to needs but protects continuity of care. This involves four different functions:
• Sharpening existing regulatory arrangements that seek to minimise the risk to individual care arrangements for vulnerable people as a result of financial or business failure, for example by building on CQC’s existing powers under regulation 13.
• Market oversight – using intelligence and data about trends and developments at local, regional and national levels that would help spot emerging problems with individual providers.
• Market shaping – where local authorities and other commissioners seek to secure the right type and balance of provision to meet the identified needs of their population; successful market shaping will almost always involve provider exit and entry.
• Information and advice, particularly in relation to financial advice for individuals and a stronger approach to reassuring residents and relatives when homes are experiencing difficulties. The recent mis-selling of investment bonds fund care home fees by HSBC suggests that priorities for improved regulation should be reassessed.
There’s more work to be done in crafting these four functions into a systematic and much more clearly understood regime. But this offers a better way forward than the ill-thought through imposition of new regulation that could inadvertently perpetuate poor quality provision, create disproportionate pressures on providers and thus bring about the very outcomes that everyone wants to avoid.
Richard Humphries is a senior fellow at The King’s Fund, and author of a book on social care funding and the NHS