Agenda Item No
The Vale of Glamorgan Council
Cabinet Meeting: 28th April, 2014
Report of the Cabinet Member for Adult Services
Setting a standard contracting rate for places in independent residential care homes for older people
Purpose of the Report
1. To outline the process used to determine the fees that the Council will pay when contracting for places in residential care homes for older people run by the independent sector.
2. To seek Cabinet approval for the final fee the Council intends to set for 2013/2014 and for the period 2014/2015 to 2016/2017.
1. THAT Cabinet agrees the proposed fees for 2013/2014.
2. THAT Cabinet agrees the three-year funding proposal set out in this report.
3. THAT Cabinet gives delegated authority to the Director of Social Services, in consultation with the Leader, the Cabinet Member for Adult Services and the Managing Director, to vary fee levels in appropriate circumstances.
4. THAT the Leader and the Cabinet Member for Adult Services, with relevant officers, continue discussions with representatives of the independent sector and return to Cabinet with a further report should this agreement require updating before the end of the three-year period.
Reasons for the Recommendations
1. To establish the final fee for 2013/2014.
2. To establish care home fees for the period 2014/2015 to 2016/2017.
3. To deal with exceptional circumstances where use of the agreed contract rates operates against the interests of individual service users or the Council.
4. To facilitate appropriate decisions about future fee levels.
3. With the assistance of external experts, the Council adopted a robust methodology for use when determining the fees payable to independent providers of residential care for older people. The toolkit takes into account the actual costs incurred in delivering care. It has been used on an annual basis since 2007/2008 to determine fee levels in the Vale of Glamorgan.
4. Statutory guidance on commissioning social services was then provided by Welsh Government, setting out the responsibilities of local authorities in this area of work. 'The Commissioning Framework Guidance and Good Practice' was issued under section 7(1) of the Local Authority Social Services Act 1970. The Framework has two parts. Part 1 contains thirteen standards; these provide the benchmark against which the effectiveness of local authority commissioning activity will be measured. Standard 9 states that: â€œContracted social care services offer value for money and are fit for purposeâ€. Standard 10 states that: â€œCommissioners have understood the costs of directly provided services and have acted in a way to promote sustainabilityâ€. This guidance has been an integral part of our ongoing work to establish a fair price for independent sector residential care home placements on an annual basis.
5. In November 2011, the Vale of Glamorgan Council set the care home fees for 2011/2012. The fee was determined following extensive work by a small group of representatives nominated by the sector and officers of the Council. Partly as a consequence of changes made to the toolkit in response to issues raised by the independent sector, the fees for 2011/2012 were 13% higher than those for 2010/2011.
6. When the fees were approved by Cabinet on 29th November 2011, the following minute was also agreed:
· "Cabinet values the dialogue between officers of this Council and the independent providers of residential and nursing care, and authorises officers to pursue further discussions in respect of the few areas where agreement has not been reached in this financial year, in order to negotiate the fees for next year."
7. The fees for 2012/2013 were set following further work with the sector which involved additional changes to the toolkit. The uplift for 2012/2013 was a further 4.5% and continued providing incentives for the provision of EMI placements for older people with dementia related illnesses. When the fees were approved by Cabinet, it was agreed that work should be undertaken with the independent sector to establish whether it might be possible to reach a three-year agreement as a means of providing additional business certainty for both providers and the Council.
Relevant Issues and Options
8. In the 2013/14 financial year, all care homes in the Vale of Glamorgan were requested to provide the Council with up-to-date financial information. The purpose of the exercise was to determine the cost of providing care homes services locally and then to use the information as the basis for a potential three-year agreement on fees.
9. Despite requests from Council officers and from members of the sector who worked with us on this issue, the response was slow initially. However, by the end of September 2013, all but one of the homes had returned financial information. This return rate has provided the Council with its most robust data set since the toolkit was introduced in 2007/2008. As agreed by Cabinet, all the care homes that provided financial information have received a 2% interim uplift in fees, backdated to April 2013.
10. A working group consisting of officers and representatives from the independent sector then worked on the data. As promised, the information was anonymised so that individual homes could not be identified as part of this exercise. In addition, because some anomalies became apparent when the information was examined in detail, officers visited a number of homes in order to verify their financial data. This exercise also served to improve officers' understanding of the costs incurred by care homes. No changes have been made to the toolkit as a result of the work undertaken during the year.
11. The working group met three times to examine the data and to discuss what figures would be included in the toolkit. Table 1 summarises the outcome of applying the Council's toolkit to the financial information supplied by the homeowners about the costs of providing independent sector placements.
Type of provision
Outcome of applying the toolkit
(including a profit margin)
Indicative increase in fees required
Residential Care for Frail Elderly
£539 per resident per week
Residential Care for Older People with dementia -incentivised
£574 per resident per week
12. As outlined above, some of the anomalies within the information were examined but the homes were not requested to provide validated evidence of their expenditure by making available copies of invoices, staffing rotas or audited accounts. Hence the figure for costs obtained through applying the toolkit supplies helpful evidence but this should not be regarded as a definitive exercise when judging appropriate fee levels. Also, the Council has a duty to ensure best value with regards to the services it provides or arranges for local citizens and, in doing so, it must ensure that organisations providing services on behalf of the Council are doing so as efficiently as possible. No assessment has been undertaken to determine if the level of expenditure reported by the independent providers is efficient. The figures in the table have been calculated using figures about occupancy levels submitted by the homes. During 2013/2014, the level of vacancies in the care home sector in the Vale of Glamorgan rose, partly because the Council increasingly supports individuals to remain in their own homes by providing enhanced community based support. If this trend persists, the independent sector will need to review their service provision as the Council cannot be expected to pay increased fees to cover the costs of the voids. Data regarding vacancy levels within the independent care home sector is available on a regular basis and further work on this issue will be undertaken during 2014/2015 in dialogue with the sector.
13. When setting a standard rate for care home fees, the Council is able to take into account also:
· the need to maintain stability within the independent sector
· the need to ensure sufficient placement capacity so that service users can exercise choice
· the quality of care provided to residents and
· the resources it has available.
14. An increasing level of vacancies has produced financial strains for at least one home in the Vale and the Council has adopted a supportive stance in helping the provider to address the issues. During 2013/2014, the Council has been obliged to invoke the Provider Performance Protocol in relation to three care homes in order to ensure that concerns about the quality of care were monitored and resolved. Earlier work around placement capacity did identify the need to incentivise the provision of places for older people with dementia related illnesses and a higher fee level was put in place last year for this category of placement. The Council is facing unprecedented financial pressures which have been reflected in the budget settlements for services during 2014/2015, including an expectation of considerable savings in expenditure and the use of reserves. In setting the budget for 2014/2015, the Council was mindful of the severe demand pressures which Social Services continue to face, particularly in relation to the cost of care packages. Consequently, it deferred some of the savings required and these savings (at least £3.9 million in the period 2014/2015 to 2016/2017) will have to be met in future years.
15. The figures emerging from the toolkit about the costs of providing independent sector residential care for older people and the current financial situation within the Council were discussed at a meeting between the representatives from the sector and the Leader and Deputy Leader of the Council. The following proposal was put forward by the Council in relation to care home fees as a means of bridging the perceived gap between current fees and the costs of service provision during the period of the agreement.
· a further 1% uplift for 2013/2014
· 4% uplift for 2014/2015
· 3% uplift for 2015/2016
· 3% uplift for 2016/2017.
16. On the basis of this proposal, the proposed standard fees for 2013/2014 to 2016/2017 are set out in Table 2 below.
Type of Provision
Fee for 2012/2013 per resident per week
Fee for 2013/2014 per resident per week
Fee for 2014/2015 per resident per week
Fee for 2015/2016 per resident per week
Fee for 2016/2017 per resident per week
Residential Care for Frail Elderly
Residential Care for Older People with dementia – incentivised
17. The Council has also obtained information from other local authorities in Wales about their current fee levels, to test out how they compare with those proposed by the Vale. With regard to 2013/2014, the proposed rates for the Vale of Glamorgan are the third highest across Wales for frail elderly care and EMI care. The range of fees per place per week for frail elderly is £309 to £535 with an All Wales average of £461. With regards to EMI provision, the range of fees per place per week is £450 to £587 with an All Wales average of £509
18. For 2014/2015, fee levels have been set in 14 local authority levels and, of those, the proposed fees for the Vale are the highest for both frail elderly and EMI care. The range of fees for Frail Elderly is £427 to £524 ( All Wales average £473) and for EMI the range is £479 to £580 (All Wales Average £519)
19. At a meeting of the Care Home Provider Forum on 20th March 2014, the funding of nursing care was raised as a particular concern because of the difference between the proposed rates and the current cost of providing nursing care as calculated by the independent sector. Nursing home placements are funded by the Local Authority and the Local Health Board. The funding from the Health Board should cover the nursing costs associated with running a nursing home, over and above the care costs. The Health Board payment for 2013/2014 is £140 per bed per week. There are issues about whether this payment meets all the additional costs of providing nursing care and the extent to which the increased frailty of residents in a nursing home can mean that care costs are higher. About half the local authorities in Wales pay an enhanced amount for nursing home placements but the Vale of Glamorgan does not. As part of the work undertaken with the independent sector, non-nursing costs were collected. Applying the Council's toolkit to the figures provided by the independent sector produced a figure of £618 per resident per week. It is proposed, therefore, that Council officers will initiate discussions with the Health Board and representatives of the independent sector to review the remuneration for nursing care placements.
Resource Implications (Financial and Employment)
20. Within the overall social services budget for 2013/2014, there was an increase of 2% to allow for uplifting care home fees to account for inflation. Given the number of placements involved, the fee levels have a considerable impact upon the budget of the Social Services Directorate. Any 1% increase in the fee level increases community care spending by approximately £55,000 per year. The additional payment of 1% in the current financial year will be backdated to the beginning of 2013/2014. This increase will be funded from the social services budget in the current year.
21. For the Council as a whole, there will be a reduction in cash terms of the financial resources available to fund services. The proposals in relation to care home fees for the period 2014 to 2017 are above the planned level of inflation for the coming years and the increases will have to be met from within the revenue budget for social services. This will exempt the independent care home sector from having to make the level of savings required in other areas of social services provision.
22. Not all the residents in these homes are the responsibility of the Vale Council and some of them pay their own fees. All people placed in residential care by the Council are financially assessed with regard to contributing to the cost of the care provided. These charges are calculated in accordance with the Charging for Residential Accommodation Guidelines produced by the Welsh Government. The care home is paid net of the resultant assessed charge and the home must collect the balance.
Sustainability and Climate Change Implications
23. Setting care home fees for the next three years is intended to provide additional security for the independent sector and enable businesses to plan on the basis of settled financial information. Should changes occur which will have a major impact on the costs incurred by the sector, it is proposed that these will assessed and a revised proposal brought to Cabinet, if appropriate.
Legal Implications (to Include Human Rights Implications)
24. The legislative context within which the Council sets fees for residential and nursing care placements requires that it must aim to ensure stability and sustainability in the provision of placements so that obligations under community care legislation can be met.
25. The National Assistance Act 1948 (Choice of Accommodation) Directions 1992 (as amended) places local authorities under an obligation to make arrangements for placing a person assessed as "in need" in their preferred choice accommodation, subject to certain conditions.
26. Relevant regulations include "The Care Homes (Wales) Regulations 2002" and subsequent amendments. These regulations state that "the registered provider shall carry on the care home in such a manner as it likely to ensure that the care home will be financially viable for the purpose of achieving the aims and objectives set out in the statement of purpose".
27. Adopting the methodology to determine care home fees helps to ensure that the Council meets legal requirements set out in Section 7 guidance from the Welsh Assembly Government and statutory obligations under the NHS and Community Care Act 1990.
28. 'The Commissioning Framework Guidance and Good Practice' was issued under section 7(1) of the Local Authority Social Services Act 1970. Section 10 of the guidance indicates the factors which a Council should take into account when considering this issue.
· Commissioners will have to take into account the full range of demands on them and their strategic priorities, as well as the resources they have at their disposal in developing their commissioning strategies.
· Fee setting must take into account the legitimate and future costs faced by providers as well as the factors that affect those costs and the potential for improved performance and more cost effective ways of operating.
Equal Opportunities Implications (to include Welsh Language Issues)
29. The agreement of a standard fee is intended to ensure that service users can gain access to homes in the independent sector providing good quality care at a reasonable cost.
30. Section 149 of the Equalities Act 2010 has replaced and incorporated the Race Relations Act 1976, the Sex Discrimination Act 1975 and the Disability Discrimination Act 1995 Public Sector Duties. Section 149 states:
"A public authority must in the exercise of its functions give due regard to the need to:
a) eliminate discrimination, harassment, victimisation and any other conduct that is prohibited by or under this Act;
b) advance equality of opportunity between persons who share a relevant protected characteristic and persons who do not share it;
c) foster good relations between persons who share a relevant protected characteristic and persons who do not share it.
A person who is not a public authority but who exercises public functions must, in the exercise of those functions, have due regard to the matters mentioned in subsection (1).
Having due regard to the need to advance equality of opportunity between persons who share a relevant protected characteristic and persons who do not share it involves having due regard, in particular, to the need to:
a) remove or minimise disadvantages suffered by persons who share a relevant protected characteristic that are connected to that characteristic;
b) take steps to meet the needs of persons who share a relevant protected characteristic that are different from the needs of persons who do not share it;
c) encourage persons who share a relevant protected characteristic to participate in public life or in any other activity in which participation by such persons is disproportionately low.
The steps involved in meeting the needs of disabled persons that are different from the needs of persons who are not disabled include, in particular, steps to take account of disabled persons' disabilities.
Having due regard to the need to foster good relations between persons who share a relevant protected characteristic and persons who do not share it involves having due regard, in particular, to the need to:
a) tackle prejudice, and
b) promote understanding.
Compliance with the duties in this section may involve treating some persons more favourably than others but this is not to be taken as permitting conduct that would otherwise be prohibited by or under this Act. The relevant protected characteristics are - age; disability; gender reassignment; pregnancy and maternity; rate; religion or belief; sex, sexual orientation."
31. Any changes to social care services should demonstrate compliance with the Act and Equalities Impact Assessments are undertaken where appropriate.
32. Key outcome of the Council addressed by this report are:
· Citizens of the Vale of Glamorgan are healthy and have equality of outcomes and, through appropriate support and safeguards, the most vulnerable members of our community maximise their life opportunities.
· Citizens of the Vale of Glamorgan can easily access efficiently managed services that are focused around their needs, have confidence in how decisions are made and are proud to live in the Vale.
Policy Framework and Budget
33. This is a matter for Executive decision.
Consultation (including Ward Member Consultation)
34. Care home owners and managers were consulted about the methodology used to determine a fair price for residential care, collectively via the Vale of Glamorgan Care Homes Association and also individually when it was agreed in 2008.
35. Meetings have taken place with representatives of the care home sector regarding proposed fees for 2013/2014 and beyond. The meetings have resulted in changes to the proposed fee levels.
36. The Council has received further representations from the Vale of Glamorgan Care Home Association regarding to the proposed fees. These are attached at Appendix 1. The issues raised by them have been addressed comprehensively in this report and in the meetings with representatives from the sector.
Relevant Scrutiny Committee
37. Social Care and Health
Cabinet 16th November 2011: Report of the Cabinet Member for Social and Care Services - the Social Services Commissioning Framework 2011 and the Social Services Commissioning Strategy for Older People's Services 2011 to 2018.
Cabinet 29th November, 2011: Report of the Cabinet Member for Social and Care Services - Setting a Standard Contracting Rate for Places in Independent Residential Care Homes for Older People in 2011/2012
Social Care and Health Scrutiny Committee 16th July 2012: Report of the Director of Social Services - Setting a Standard Contracting Rate for Places in Independent Residential Care Homes for Older People 2012/2013
Cabinet 17th December 2012: Report of the Cabinet Member for Adult Services - Setting a Standard Contracting Rate for Places in Independent Residential Care Homes for Older People 2012/2013
Cabinet 18th March 2013: Report of the Cabinet Member for Adult Services - Setting a Standard Contracting Fee for Places in the Independent Residential Care Homes for Older People
Carys Lord, Head of Business Management and Innovation
Corporate Management Team
Director of Social Services