Homecare Provider Viability Threatened by Late Payments

New research by the Homecare Association, based on responses from 225 providers representing just over 23,280 careworkers supporting nearly 42,995 older and disabled people, indicates that over 8 in 10 (80%) of homecare providers that hold contracts with the NHS and local authorities have experienced late payments. Nearly half (47%) of homecare providers say almost all of their invoices are paid late.

The definition of prompt payment for a small business supplier, contained in the voluntary Prompt Payment Code, is to pay 95% of invoices within 30 days. Shockingly, nearly a quarter (23%) respondents said their average payment length was over 90 days from the NHS. 21% of respondents said their average payment length was over 90 days from local authorities. Some small providers are owed as much as £350K and have been waiting for over a year. Larger providers report local authority debts of over £1 million.

Late payments have a significant impact on businesses, leading to cash flow difficulties, which can affect their ability to pay bills and the business’s own suppliers. Without predictable payment terms, homecare providers find it difficult to remain sustainable, invest and expand.

Worryingly, the survey also found that 8 in 10 of respondents who are being commissioned by local authorities have experienced a reduction in the number of hours available to them to provide. Nearly half (48%) said they had seen a 25% or above reduction in the number of hours available to them from their local authority. Reduction in volume of hours available per provider appears to be a particular issue in local authority areas which rely heavily on framework contracts. Where local authorities commission to a limited number of lead providers in specific geographic zones, volume of hours has remained more constant.

The cost of delivering homecare is highly sensitive to the volume of hours delivered. Not only do all registered homecare providers need to cover overheads such as a employing a registered manager and back office staff, training, recruitment, PPE, CQC registration, insurance, IT, telephony, office rent, rates, utilities, but the volume of hours can also impact on the experience of careworkers.

With a lower volume of hours, careworkers are more likely to have significant gaps in their rotas and this can reduce the salary they receive each day. It can also lead to inefficient use of their time; for example, careworkers may be out on the road for 40 hours in total, but deliver only 20 hours of paid contact time. It is difficult for them to use the time in the gaps productively. Employment conditions like this exacerbate staff turnover.

Losing 25% or more hours creates substantial risk to the viability of homecare providers. In some local authority areas, many smaller providers are handing back packages or ceasing to trade. Local authorities then have to manage potential safeguarding risks and find alternative provision, which has a negative impact on people drawing on services and careworkers.

Data from other sources, including the ADASS Spring Survey, suggests there has not been a reduction in the total number of hours of local authority commissioned homecare; if anything, it has increased. Instead, the number of hours are being fragmented across more providers.

Homecare Association’s CEO, Dr Jane Townson OBE, said:

‘’Late payment of invoices by the NHS and local authorities is a serious issue, threatening the financial viability of many homecare providers. Some are having to spend months fighting for thousands of pounds owed for care delivered, being pushed from pillar to post without resolution.

‘’Local authority commissioners need to appreciate the importance of the volume of hours available per provider, as the reduction of hours delivered severely impacts on financial sustainability of services.

’’When the number of hours delivered are spread across a greater number of providers, it can mean that individual careworkers are more likely to have gaps in their rotas reducing the amount of pay they receive each day. This risks even more homecare workers choosing to leave the sector.

‘’Providers need greater security of hours and prompt payments. Without proper change we will not be able to meet the growing demand for care, take pressure off the NHS and reduce costs for the health and social care system.’’

The Homecare Association calls for:

1. Local authority commissionersto appreciate the importance of volume of hours available per provider in ensuring staff retention and financial sustainability of services
2. Local authority and NHS commissioners to abide by the Prompt Payment Code.
3. Local authority and NHS commissioners to offer greater security of hours and income to trusted providers.
4. Central governmentto provide adequate funding for local authorities to enable them to move towards approaches to commissioning and purchase of homecare which encourage quality and sustainability of services.