Network Of New Older Peoples’ Care Commissioners Could End Mismatch Between Cost-Cutting And Realistic Provider Returns

Healthcare expert LaingBuisson has published a White Paper on the commissioning of care of older people in the UK which pitches a possible resolution to the difficulties faced by local authorities looking to make savings while also addressing the need for independent providers to see a realistic return on their investments in the elderly care sector.

Identifying the current market failures, and in turn seeking ways in which to correct them, health economist William Laing has drawn up a vision of a care commissioning strategy founded on outcomes-based, long term contracts headed by a new group of professionals working for Social Care Maintenance Organisations (SCMOs).

According to the White Paper, launched at a debate attended by a number of leading social care professionals from the public and private sectors, a model based on SCMOs could generate sufficient savings to allow for the correction of the endemic failures which currently damage the healthy functioning of the UK care services market for older people.

Over the past four decades the bulk of long term care services for older people has been outsourced to the independent sector. The welfare of older people across the UK is therefore, for better or for worse, dependent upon a healthily functioning market.

LaingBuisson’s position is that during those four decades the market has successfully created refreshed capacity through investment of around £30bn. On the commissioning side, assessment of need introduced by English councils in 1993 has largely eradicated unnecessary, publicly funded admission to care homes to the extent that there are now approximately 250,000 fewer older people in residential care settings than there would have been if placement practices had remained as they were in 1993.

However, while these changes have brought about whole system successes, the report argues that there have been notable failures on the commissioning side not least the use of monopsony purchasing power by most councils to drive publicly paid prices below the level necessary to sustain investment in existing facilities – a move which has stripped out incentive to invest in new market capacity.

What’s more, the current trend of commissioning services under the ‘task and time’ model as a means to contain costs has resulted in significant problems as has the unwillingness of NHS Trusts to sub-contract post-acute care and rehabilitation to fully-capable independent sector care homes despite the massive cost differential between NHS hospitals and those care homes.

As such, LaingBuisson’s White Paper suggests that while there may be some further cost savings to be made via the closure of the few remaining council in-house residential care and homecare services, there needs to be a radical rethink of current commissioning activities if worthwhile savings are to be made which do not impact negatively on the independent supply chain upon which the entire country is now reliant.

The White Paper describes a SCMO as either a not-for-profit or for-profit organisation, or a statutory body or arms-length company owned by a statutory body, or a consortium made up by any of these, which would contract with one or more Councils with Adult Social Services Responsibilities (CASSRs), NHS Trusts and Clinical Commissioning Groups (CCGs). Effectively the organisation would act as ‘lead provider’ for a comprehensive range of services for social care older people with assessed care needs.

It further develops the system by suggesting three levels:

  • A basic SCMO model, operating within defined geographic areas, capable of being introduced immediately for publicly funded service users with no need for changes in legislative
  • A SCMO-plus model operating on a national basis (no defined geographical operation limitation) which enables users to choose their own SCMO – this would require some legislative change and the introduction of a regulatory body
  • A SCMO-double plus model which would further extend the role of the plus system to allow private funders of care services to use these new organisations

At each level SCMOs would take a lead contract on a capitated basis, probably for a period of 3-5 years (subject to termination for failure to perform) with some risk sharing in the form of recalibration of contract terms in line with experience of demand and service mix. As lead contractor the SMCO may take on many of the functions currently almost exclusively administered in-house by local authorities such as assessment and care management, and recipients of direct payments might choose to use the SCMO as their budget holder. Much of the commissioning activity of councils could be transferred to the SCMO, though the CASSR would have to reserve some commissioning decisions to itself to avoid conflicts of interest.

Pitching the move to a network of intermediary commissioning bodies, Mr Laing said:

‘This paper is a means by which to open up the debate on an issue which dogs providers of care services working for publicly funded clientele – namely the mismatch between public sector commissioners’ need to contain costs in an extended period of austerity, and providers’ need to earn an adequate return in order to sustain existing services and develop new ones.’

Supported by investment management house Smith Williamson, the first edition of LaingBuisson’s White Paper, Strategic Commissioning of Long Term Care for Older People – Can we get more for less?, is available to download from here.

A revised edition with input from speakers who contributed at the launch will be available in the coming weeks. Presenters included: David Pearson, President, ADASS; Dr Nicholas Hicks, CEO, COBIC;  Ian Smith, CEO, Four Seasons Health Care; Alan Long, executive director, Mears Group; Julia Ross, COO, PI and Kyle Holling, partner, Trowers & Hamlins.





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