Funding For Care: The Eternal Struggle?

Jacqueline Cullen, Chief Executive of Scottish Care, discusses the latest funding settlement for the independent and nursing home sector.

To appreciate how Scottish Care has reached the latest funding settlement it is necessary to give a little history…

Scottish Care began life in a Glasgow hotel on 11 January, 2000, when a group of independent nursing and residential home owners met to discuss how to counteract chronic under funding of council referred clients. Years of sub-inflationary fee increases threatened the sustainability of the independent care sector in Scotland, and existing representative organisations had failed to unite home owners in a common cause.

Scottish Care emerged with the single purpose of persuading the government and other statutory bodies that funding for care of the elderly in residential and nursing care homes in Scotland was woefully inadequate.

By 2001 there was growing acknowledgement that there was no national strategy for the development of nursing and residential care provision in Scotland. The Care Development Group’s ‘Fair Care for Older People’ highlighted the fact that provision of care services across the country was uneven, with determination of the need for places being undertaken within each local authority. There was no detailed capacity planning.

By this time Scottish Care representation had grown to more than 80% of all independent nursing homes and residential homes in Scotland and the organisation was recognised by all the authorities as ‘the voice’ of the sector, but was paid scant attention by them.

Despite long and laborious attempts to persuade the government of the crisis facing care providers as they struggled to meet the increasing and costly demands of legislation with insufficient means by which to do so, Scottish Care members agreed to a defined course of action. Scottish Care members systematically, week after week, area by area, gave notice to councils that providers were terminating council contracts and refusing to accept new council referred clients. Existing clients were unaffected. Lanarkshire was first to adopt this course of action, followed by Aberdeen City. {mospagebreak}

The government responded by setting up a National Review Group (NRG), under an independent chairman. The Scottish Executive, the Convention of Scottish Local Authorities (CoSLA) and Scottish Care were the three main participants in this process and eventually the government conceded that a major increase had to be made in fees if care homes were to survive.

The NRG Group secured a significant national uplift over a 3 year period which lifted residential and nursing fees from pre-NRG averages of £270 (residential) and £330 (nursing) in 2001/2 to £346 (residential) and £406 (nursing) by 2003/4.  Setting these apparent gains in the context of spiralling costs associated with legislation to improve quality, standards, and workforce training targets, minimum wage increases of 6% affecting carers wage rates, and the Agenda for Change, pushing up nursing wage rates, all impacted on care providers’ costs, and once again fees were falling below the costs of providing care.

This time in 2003 CoSLA, facing budgetary pressures in the purchasing of care, approached Scottish Care with a proposal to carry out a new cost of care analysis to impress upon the Scottish Executive the scale of under funding of the sector. The outcome of this piece of work, scheduled for completion early 2004, was to inform CoSLA’s bid for Scottish Executive funding for care over the period 2005-2008.

There followed two lean years for independent care sector providers. The years 2004/5 and 2005/6 brought little more than fees adjusted for inflation, funded from local authority budgets. But the Scottish Executive was persuaded to pledge an additional £37 million to the sector for the year 2006/7 with a further £20 million in 2007/8, conditional upon the introduction of quality criteria.

The 2007/8 care sector financial agreement negotiated with CoSLA and the Scottish Executive for care homes in Scotland is hugely significant not just because of the link with quality, but perhaps denoting the end of a negotiated ‘across the board’ national uplift.

What has been made clear by Deputy Minister for Health and Community Care, Lewis Macdonald, is that the £20 million to be allocated will be disbursed through a quality related fee payment mechanism. Further, the Scottish Executive has placed the emphasis on local authority purchasers of care on the one hand, and independent providers of care on the other, to devise and agree the new system of rewarding quality through fee payments. {mospagebreak}

Scottish Care is now having to turn its attention to the implications of this development. The introduction of quality criteria, the threshold at which they apply, and the establishment of quality differentials and quality payments will undoubtedly impact upon investment decisions and thus entry and exit to the care market.

Many questions remain unanswered at this juncture. For example, will the quality assessment system adopt quality indicators which are based on the National Care Standards? Are the Care Standards themselves minimum or aspirational? What will be the relative weighting between physical factors (room sizes, facilities, new-build standards), and service related factors (trained staff complement, staffing ratios and skills mix)? How will efficient delivery of care be compensated for?

Will local quality factors be brought into the equation? Nor is there clarity as to which agency will be monitoring and evaluating quality. Potentially, the care provider could assume this role if the resultant system is based upon self-assessment criteria. Alternatively external validators of quality could emerge in the form of the local authorities themselves under their ‘duty of care mantle’, or the Care Commission as care service regulator, or a yet to be identified alternative external assessor. The details of the system, and its operational aspects have yet to be unwrapped, but the timescale is short, with the Scottish Executive expecting proposals to be available by September of this year.

The current focus on the development of quality related fee payments in the residential and nursing home sector will serve to emphasis the already apparent trend towards segmentation of the sector. This, coupled with the policy emphasis on care in the community, is likely to herald a further shake out of purely residential care providers.

The trend in the emergence of more specialised care provision, including palliative care, dementia and high dependency units, young physically disabled, learning difficulties, drug and alcoholism care facilities, brain injury units etc. etc. is already well established.

The application of quality criteria in care homes will add to differentiation in service provision, and changes in the funding mechanism will only act to intensify this development.

Although quality may be foremost on the agenda in terms of current care home fee negotiations, there is a clear need to progress the wider care debate in Scotland through national negotiations, debate and discussion forums.

Other strategic issues of free personal and nursing care funding, training, recruitment and retention, changing public procurement practices, the decline in local authority and voluntary sector provision of care in a residential setting, the impact of care in the community policy, the cost of NHS acute service provision are all factor with the potential to impact significantly on longer-term stability and sustainability of the independent care sector.