London Councils

1
London Councils

• Analysis of the Social Care Market for Older
  Peoples Services in London
• DETAILED FINDINGS

January 2008v.1.1
2
Contents
System changes
Options
Current market
Introduction

• Ageing population
• Resources
• Policy
• Other
• Conclusions

• Overview
• Review framework
• Nursing care
• Residential care
• Home care
• Conclusions

• Collaboration
• Tools
• RSes preliminary assessment
• Recommended next steps

• Executive summary
• Introduction

3
Executive Summary

• The market is large
• It is worth 1.4bn
• There are several hundred providers
• There are opportunities to make efficiency gains.
  Boroughs are
• Not exploiting their collective buying power
• Increasing the costs of doing business for
  themselves and providers, and raising barriers to
  entry
• In order to accommodate changing demand the
  structure of the market will need to change, with
  new services and a continued shift from
  residential to home care
• Local government will need to actively manage the
  market to achieve this
• They should also focus on
• Improving the quality, consistency and
  availability of data
• Improving their ability to negotiate effectively
  with providers
• Reducing costs of doing business for authorities
  and providers

4
Introduction

• This report presents a summary of the findings
  from an analysis of the social care market for
  older people in London. It covers
• Full findings and supporting analysis are
  provided in a separate pack, Detailed Findings.
  In addition, there is a separate spreadsheet
  output showing which boroughs use which
  providers.

5
Introduction
Methodology
Project Management
Document and Data review
Local authority analysis
Provider analysis
Stakeholder workshops
Production of outputs
Interviews
Interviews
Validation workshops
Consolidate analysis
Document review
Data analysis
Survey of Directors of Adults Services
Finalise report
6
Introduction
Acknowledgements
RSe would like to thank the following for their
contributions

• Ray James, LB of Enfield
• Steve Cross, LB of Hillingdon
• Adi Cooper, LB of Sutton
• Gwen Ovshinsky, LB of Islington
• Jay Stickland, LB of Greenwich
• Irene Findlay, LB of Barnet
• James Reilly, LB of Hammersmith and Fulham
• Attendees of validation workshops from various
  London Boroughs and ADASS finance groups
• London Boroughs who completed the survey
• Andrew van Doorn, Housing Associations Charitable
  Trust (HACT)
• Phillip Mickelborough, Laing and Buisson
• Dr Julien Forder, London School of Economics
• Colin Hough, London Regional Director, CSCI
• Various providers who took part in interviews

7
Contents
System changes
Options
Current market
Introduction

• Ageing population
• Resources
• Policy
• Other
• Conclusions

• Overview
• Review framework
• Nursing care
• Residential care
• Home care
• Conclusions

• Collaboration
• Tools
• RSes preliminary assessment
• Recommended next steps

• Executive summary
• Introduction

8
Current market
Overview
RSe estimates that the London social care market
is worth 1.4bn
Share of supply
share of total market
m
9
Current market
Overview
It is increasingly a pan-London market with many
boroughs using the larger providers
Sources RSe Survey of London Boroughs
10
Current market
Overview
This is even more apparent when considering all
client groups, not just older people

• 5 out of the top 10 social care providers in
  London cater for older people
• Spend on these 5 providers (BUPA, Care UK,
  Anchor, Barchester, CMG) by London boroughs
  totalled 91.3million in 2005/06
• Note Total spend includes spend on all adult
  groups, not just older people

Source LCE data
11
Current market
Overview
Fees vary considerably
Nursing
Fee range /wk
Residential
PSSEx1, unit costs 2005/06
440
760
CCMN, July 07
532
973
Laing Buisson, CareSearch
392
1,400
PSSEx1, unit costs 2005/06
409
721
CCMN, July 07
399
520
Laing Buisson, CareSearch
267
1,325
400
500
600
700
800
900
300
1000
1100
1200
1300
1400
Sources Laing Buisson CareSearch database for
London providers, PSSEx1 2005-06 for London
boroughs, CCMN baseline fee survey for
London Notes 1. CCMN and Laing Buisson
present the baseline fees charged to local
authorities by providers. 2. PSSEx1 unit costs
present the average gross weekly expenditure per
person on supporting older people in residential
and nursing care (including full cost paying and
preserved rights residents). 3. Laing
Buissons database includes all care homes in
London, including beds not commissioned by
boroughs
12
Current market
Overview
The three market sub-segments each have distinct
characteristics
Sources RSe analysis, stakeholder interviews,
CSCI national data on meeting national minimum
standards
13
Current market
Review framework
We have used Porters 5 Forces framework to
review each sub-market

• It is an established framework
• It provides a consistent way of evaluating
  markets how efficiently they are operating and
  how they are likely to evolve
• It can help identify potential issues and
  possible responses
• It comprises five elements
• What barriers to entry exist?
• How strong are the buyers?
• How strong are the suppliers?
• How easy is it to substitute the service for
  another (what is the opportunity for change)?
• How competitive is it?
• In the following slides we summarise the five
  forces giving a traffic light health indicator
  for each from the perspective of the London
  boroughs. We then provide some key data on each
  of the sub-markets

Barriers to entry
Buyer power
Supplier power
Competitive rivalry
Threat of substitution
14
Contents
System changes
Options
Current market
Introduction

• Ageing population
• Resources
• Policy
• Other
• Conclusions

• Overview
• Review framework
• Nursing care
• Residential care
• Home care
• Other care
• Conclusions

• Collaboration
• Tools
• RSes preliminary assessment
• Recommended next steps

• Executive summary
• Introduction

15
Current market
Nursing care
Existing suppliers exert significant control
Barriers to entry
High and rising (land prices, increasing
regulation, procurement processes). New entrants
have fallen to a negligible level in the last
five years (CSCI, 2007). Average home size is
39 places (Laing Buisson, 2003) and rising,
to provide economies of scale
Low Local authorities purchase the majority of
nursing care places (56) but separately, and the
NHS (23) and individuals (21) are significant
purchasers. Demand reasonably stable and
supply adequate.
Competitive rivalry Low due to market structure.
Some consolidation Between 1997 -2003 the total
numbers of homes declined by 32, and the average
number of places per home rose from 37-39 (Laing
Buisson, 2003).
Buyer power
Supplier power
Low / medium likely to remain a cost effective
way of providing care for high-dependency
clients, though there is a trend towards
providing complex and end-of-life care at home.
Average stay is reducing.
High As with residential, difficulty
transferring between suppliers and lack of
collaboration between local authorities and PCTs
gives suppliers power. Margins and occupancy
healthy.
Opportunities for change
16
Current market
Nursing care
Some consolidation, but market remains
fragmented, dominated by private sector. Wages
low and margins healthy.
Staffing
Market structure
5.54-7.43 average worker wage 19 turnover 2.6
vacancy rates
271-325 Homes in London
Top 30 of homes account for 49 of beds
Quality (national)
Private sector 77 meeting or exceeding CSCI
standards Voluntary sector 81
14,700-17,700 Beds in London
86 Private sector 14 Voluntary sector Less
than 1 LA
Maturity
Finances
12 Years in operation (average private and
voluntary sector) (Range 54-1)
Mature
600-695pw Average fees (not including LA)
27.5 Profit margins (EBITDAR)
Note A range is provided for the number of homes
and beds as different sources quote different
numbers
Sources Laing Buisson CareSearch database for
London providers and national reports, CSCI
national data on meeting national minimum
standards, Skills for care, NMDS and TOPSS
national workforce statistics, Laing Buisson
Care of Elderly People Market Survey 2003 for
EBITDAR
17
Current market
Nursing care
The nursing care market in London is worth 514m

• Private sector dominates provision, with 83 of
  beds
• Users are the single biggest funders of this area
  of care when client contributions are included,
  funding 38 of the market

Purchaser
Provider
Client contributions
18
Current market
Nursing care
Private sector nursing homes comprise 83 of the
market
Market structure
Staffing
239-275 Homes in London
5.54-5.73 average worker wage 19 turnover 2.6
vacancy rates
Top 30 of homes account for 49 of beds
Quality
13,000-15,000 Beds in London
77 meeting or exceeding CSCI standards
Supply levelled off, some consolidation, but
still fragmented
Finances
Maturity
600-695pw Average fees
27.5 Profit margins (EBITDAR)
11.4 Years in operation (average) (Range 54-1)
Mature
Note A range is provided for the number of homes
and beds as different sources quote different
numbers
Sources Laing Buisson CareSearch database for
London providers and national reports, CSCI
national data on meeting national minimum
standards, Skills for care, NMDS and TOPSS
national workforce statistics, Laing Buisson
Care of Elderly People Market Survey 2003 for
EBITDAR
19
Current market
Nursing care
Voluntary sector nursing homes comprise 17 of
the market
Market structure
Staffing
32-50 Homes in London
5.54-6.19 average worker wage 19 turnover 2.6
vacancy rates
Top 30 of homes account for 49 of beds
Quality
1,700-2,700 Beds in London
81 meeting or exceeding CSCI standards
Supply levelled off
Finances
Maturity
600-687pw Average fees
n/a Profit margins
12.7 Years in operation (average) (Range 26-4)
Mature
Note A range is provided for the number of homes
and beds as different sources quote different
numbers
Sources Laing Buisson CareSearch database for
London providers and national reports, CSCI
national data on meeting national minimum
standards, Skills for care, NMDS and TOPSS
national workforce statistics, Laing Buisson
Care of Elderly People Market Survey 2003 for
EBITDAR
20
Current market
Nursing care
LA nursing homes comprise less than 1 of the
market
Market structure
Staffing
2-3 Homes in London
7.43 average worker wage 19 turnover 2.6
vacancy rates

• Kingston upon Thames
• Kensington and Chelsea
• (Croydon?)

Quality
0-100 Beds in London
77 meeting or exceeding CSCI standards
Finances
Maturity
750pw Average fees
n/a Profit margins
13.0 Average years in operation (Range 13)
Mature
Note A range is provided for the number of homes
and beds as different sources quote different
numbers
Sources Laing Buisson CareSearch database for
London providers and national reports, CSCI
national data on meeting national minimum
standards, Skills for care, NMDS and TOPSS
national workforce statistics, Laing Buisson
Care of Elderly People Market Survey 2003 for
EBITDAR
21
Current market
Nursing care
New entrants have dropped off markedly in the
last 5 years
Source CSCI list of care homes in London data
22
Current market
Nursing care
New entrants have dropped off markedly in the
last 5 years

• Barriers to entry from the perspective of
  providers
• Cost of capital
• Laborious tendering and accreditation processes
• Managers time spent attending meetings
• Provision of complex monitoring information
• Complex invoicing and fee collection
• Slow to be paid
• Different authorities and PCTs having different
  requirements

Source Laing Buisson 2003
23
Current market
Nursing care
There is huge variation in the location of
nursing beds across London
Croydon Lots of supply even though only average
numbers of over 65s
Source London Councils provider database
24
Contents
System changes
Options
Current market
Introduction

• Ageing population
• Resources
• Policy
• Other
• Conclusions

• Overview
• Review framework
• Nursing care
• Residential care
• Home care
• Other care
• Conclusions

• Collaboration
• Tools
• RSes preliminary assessment
• Recommended next steps

• Executive summary
• Introduction

25
Current market
Residential care
Supplier power may be mitigated by declining
demand
Barriers to entry
Medium Anecdotal evidence on rising barriers as
with nursing care, is reinforced by a decline in
numbers of new entrants into this market since
the mid 1990s (CSCI, 2007).
Medium Local Authorities fund the overwhelming
majority of care home places (80, Who Cares Now)
but still by separately. Perception is that
there is adequate supply, with the exception of
dementia care.
Competitive rivalry Low due to market structure.
Demand is declining, there are few new entrants,
and some consolidation. Between 1997 -2003 the
total numbers of homes declined by 18, and the
average number of places per home rose from 20-24
(Laing Buisson, 2003).
Buyer power
Supplier power
High established downward substitution by
complex domiciliary, Extracare, and re-ablement
services. Supported by changing consumer
preferences and govt. policy.
Medium Local authorities find it difficult to
switch between suppliers in the short term.
Margins and occupancy rates remain reasonably
healthy.
Opportunities for change
26
Current market
Residential care
Market is fragmented. Mixed provision but
majority is private sector. Wages low and
margins healthy.
Staffing
Market structure
5.60-7.43 average worker wage 18.6
turnover 3.2 vacancy rates
397-465 Homes in London
Top 30 of homes account for 55 of beds
Quality (national)
Private sector 78 meeting or exceeding CSCI
standards Voluntary sector 85 Local authority 81
10,500-17,800 Beds in London
63 Private sector 27 Voluntary sector 10
Local authority
Maturity
Finances
16 Years in operation (average private and
voluntary sector) (Range 56-1)
Mature
450-505pw Average fees (not including LA)
27.5 Profit margins (EBITDAR)
Note A range is provided for the number of homes
and beds as different sources quote different
numbers
Sources Laing Buisson CareSearch database for
London providers and national reports, CSCI
national data on meeting national minimum
standards, Skills for care, NMDS and TOPSS
national workforce statistics, Laing Buisson
Care of Elderly People Market Survey 2003 for
EBITDAR
27
Current market
Residential care
The residential care market in London is worth
486m

• London Boroughs are the main source of finance,
  covering around 80 of procurement
• The Third Sector provides a significant
  proportion of beds, at around 1/3 of the market

n/a
n/a the NHS does not purchase residential care
Purchaser
Provider
Client contributions
28
Current market
Residential care
Private sector residential homes account for 49
of spend
Market structure
Staffing
247-297 Homes in London
5.60-5.73 average worker wage 18.6
turnover 3.2 vacancy rates
Top 30 of homes account for 55 of beds
Quality
5,000 9,000 Beds in London
78 meeting or exceeding CSCI standards
Reduction in supply, some consolidation but still
very fragmented
Finances
Maturity
450-490pw Average fees
27.5 Profit margins (EBITDAR)
12.4 Years in operation (average) (Range 48-1)
Mature
Note A range is provided for the number of homes
and beds as different sources quote different
numbers
Sources Laing Buisson CareSearch database for
London providers and national reports, CSCI
national data on meeting national minimum
standards, Skills for care, NMDS and TOPSS
national workforce statistics, Laing Buisson
Care of Elderly People Market Survey 2003 for
EBITDAR
29
Current market
Residential care
Voluntary sector residential homes account for
35 of spend
Market structure
Staffing
113-121 Homes in London
5.60-6.19 average worker wage 18.6
turnover 3.2 vacancy rates
Top 30 of homes account for 46 of beds
Quality
4,000-6,300 Beds in London
85 meeting or exceeding CSCI standards
Reduction in supply
Finances
Maturity of market
450-505pw Average fees
n/a Profit margins
19.9 Years in operation (average) (Range 56-1)
Mature
Note A range is provided for the number of homes
and beds as different sources quote different
numbers
Sources Laing Buisson CareSearch database for
London providers and national reports, CSCI
national data on meeting national minimum
standards, Skills for care, NMDS and TOPSS
national workforce statistics, Laing Buisson
Care of Elderly People Market Survey 2003 for
EBITDAR
30
Current market
Residential care
LA residential homes account for 16 of spend
Market structure
Staffing
37-47 Homes in London
7.43 average care worker wage 18.6
turnover 3.2 vacancy rates
Top 30 of homes account for 36 of beds
Quality
1,500-2,500 Beds in London
81 meeting or exceeding CSCI standards
Reduced as independent provision has increased
Finances
Maturity
450-493pw Average fees
n/a Profit margins
3.8 Years in operation (average) (Range 2-4)
Immature
Note A range is provided for the number of homes
and beds as different sources quote different
numbers
Sources Laing Buisson CareSearch database for
London providers and national reports, CSCI
national data on meeting national minimum
standards, Skills for care, NMDS and TOPSS
national workforce statistics, Laing Buisson
Care of Elderly People Market Survey 2003 for
EBITDAR
31
Current market
Residential care
Despite reduction in demand, providers continue
to enter the market, albeit not at previous rates
Two thirds of new registrations for residential
care in the last 5 years include provision for
dementia care, suggesting the market is beginning
to respond to this need
Source CSCI list of care homes in London data
32
Current market
Residential care
There is huge variation in the location of
residential beds across London
The huge number of residential beds provided by
the voluntary sector in Barnet is mainly down to
2 providers Jewish Care and the Fremantle Trust
Source London Councils provider database
33
Current market
Residential care
Variation in outsourcing of residential care
between boroughs is marked
Source PSSEx1, 2005/06 analysis
34
Current market
Care homes
Supply closely tracks demand in the care home
market
Source Laing Buisson, 2003
35
Current market
Care homes
Nursing care is more consolidated than
residential, but still has a long tail
Nursing care is consolidating at the top end,
with the top 5 providers supplying 45 of
Londons beds
Source LB database of providers
36
Current market
Care homes
It is increasingly a pan-London market with many
boroughs using the larger providers
Residential and nursing care, including
specialist dementia care, assisted living.
Residential and nursing care homes, with
specialist homes for private payers and mental
health care.
Residential and nursing care homes, also offering
dementia care, palliative care, intermediate and
short term respite care
Range of services from dementia day centres,
through home care, kosher meals at home to twelve
care homes in London and the South East
Sources RSe Survey of London Boroughs
Residential, nursing and respite care services
for the Jewish community
37
Current market
Care homes
Voluntary sector providers tend to outperform
other sectors, but there is geographical
variation and other factors at play
Quality is much more dependent on the local
management than sector or size LA interviews
LAs should do more business with those homes that
provide excellent care and dignity and get tough
with those that do not achieve excellence Ivan
Lewis, minister for social care
Nursing
Residential
meeting CSCI national minimum standards
Home care
Source CSCI 2005/06 State of Social Care report
38
Current market
Care homes
The structure of funding for care homes is
changing, but margins remain healthy

• Direct provision is reducing
• Many boroughs are not intending to increase fees
  for providers with inflation
• Individuals and local authorities are paying
  different fees for the same care (CSCI report
  2007)
• Local authority funding set to decrease, while
  self pay is growing and set to increase further
  (LB)
• Occupancy appears to be good ( over 90)
• Care homes are not generally specialised by
  client need. Only 2-3 of homes provide services
  primarily for specialist groups other than
  elderly people with dementia.
• Margins for care homes are healthy

39
Contents
System changes
Options
Current market
Introduction

• Ageing population
• Resources
• Policy
• Other
• Conclusions

• Overview
• Review framework
• Nursing care
• Residential care
• Home care
• Other care
• Conclusions

• Collaboration
• Tools
• RSes preliminary assessment
• Recommended next steps

• Executive summary
• Introduction

40
Current market
Home care
A more efficient market but potentially fragile
due to slim margins
Barriers to entry
Low lower than with care homes although still
not easy due to procurement and accreditation
processes, difficulties in recruiting staff, and
slim margins.
High Local authorities fund 74 of home care
(PSSEX1 PSSRU), with individuals funding 22.
Market is highly polarised between providers
serving local authorities and private
individuals.
Competitive rivalry Market structure more
amenable to competition. Demand is growing,
supply perceived to be adequate. Quite
fragmented with higher prevalence of smaller
sub-regional providers over major national
operations.
Buyer power
Supplier power
High market is growing through the
substitution of residential care and this is
likely to continue. Some threat of future
substitution from Telecare and individual budgets
leading to a growth in informal care arrangements.
Low-medium Barriers to switching supplier are
lower, there is little to stop a local authority
regularly re-tendering. Margins are slender.
Opportunities for change
41
Current market
Home care
Fragmented. Mixed provision but majority private
sector. LA provision expensive. Margins slim,
wages low, turnover vacancy rates high.
Sources Laing Buisson CareSearch database for
London providers and national reports, CSCI
national data on meeting national minimum
standards, Skills for care, NMDS and TOPSS
national workforce statistics, Laing Buisson
Care of Elderly People Market Survey 2003 for
EBITDAR
42
Current market
Home care
Total market size is 401m

• London Boroughs account for 74 of spend
• The third sector are more reliant on LA
  purchasing than the private sector

n/a
n/a
Purchaser
Provider
43
Current market
Home care
Private sector home care providers account for
51 of the spend
Market structure
Staffing
397 Providers in London
6.30 average worker wage 24.9 turnover 5.9
vacancy rates

• London Care
• Allied healthcare
• Supporta
• Care UK
• Plan Personnel
• Increased as LAs outsource home care

Quality
70 meeting or exceeding CSCI standards
Finances
12.20 Cost to LA p/h
5-10 Profit margins (EBITDAR)
Sources Laing Buisson CareSearch database for
London providers and national reports, CSCI
national data on meeting national minimum
standards, Skills for care, NMDS and TOPSS
national workforce statistics, Laing Buisson
Care of Elderly People Market Survey 2003 for
EBITDAR
44
Current market
Home care
Voluntary sector home care providers account for
23 of the spend
Market structure
Staffing
62 Providers in London
6.30 average worker wage 24.9 turnover 5.9
vacancy rates

• Jewish Care
• Crossroads
• Notting Hill Housing Trust
• Housing 21
• Long tail, fragmented, some consolidation

Quality
77 meeting or exceeding CSCI standards
Finances
12.20 Cost to LA p/h
n/a Profit margins
Sources Laing Buisson CareSearch database for
London providers and national reports, CSCI
national data on meeting national minimum
standards, Skills for care, NMDS and TOPSS
national workforce statistics, Laing Buisson
Care of Elderly People Market Survey 2003 for
EBITDAR
45
Current market
Home care
LA home care providers account for 27 of the
spend
Market structure
Staffing
47 Providers in London
7.38 average worker wage 24.9 turnover 5.9
vacancy rates
Declined as LAs outsource home care
Quality
72 meeting or exceeding CSCI standards
Finances
20.60 Cost to LA p/h
n/a Profit margins
Sources Laing Buisson CareSearch database for
London providers and national reports, CSCI
national data on meeting national minimum
standards, Skills for care, NMDS and TOPSS
national workforce statistics, Laing Buisson
Care of Elderly People Market Survey 2003 for
EBITDAR
46
Current market
Home care
Large variation in use of independent provision
between London boroughs
Source HH1 return, contact hours 2006
47
Current market
Home care
Some boroughs have made big changes over the last
year
Source HH1 return, contact hours 2006
48
Current market
Home care
Our calculation of home care costs indicates
margins are tight
49
Current market
Home care
Margins are tight for home care providers
Assuming margins of 10, this leaves 22
overheads, which will include capital,
equipment, advertising, VAT, legal, rent, travel
etc, which is reasonable.
Home care
9.25 Direct cost p/h
12.20 Av. Cost to LA p/h (private and vol)
32 Difference
Assumes home care worker average wage
50
Contents
System changes
Options
Current market
Introduction

• Ageing population
• Resources
• Policy
• Other
• Conclusions

• Overview
• Review framework
• Nursing care
• Residential care
• Home care
• Other care
• Conclusions

• Collaboration
• Tools
• RSes preliminary assessment
• Recommended next steps

• Executive summary
• Introduction

51
Current market
Other care
Respite care represents only a very small
proportion of the market
Respite care is Short term care, usually in a
care home

• In England, 2.2 of carers access respite care
  (Carers UK)
• There are 191,000 people providing more than 20
  hours care in London (Census 2001)
• Assume 70 are providing care to older people
  (Wanless)
• Assume London Boroughs give 2.2 of carers 21
  days of respite care per year
• This suggests 62,000 respite care days / year
  (out of approx 12m 0.5 of the care home market)

BUT not all respite care is delivered through
care homes
52
Current market
Other care
Hospices are a small part of care in London
Users do not pay for beds. Hospices are funded
approximately 2/3 through charitable donations
and 1/3 by NHS contracts 385 hospice beds in
London, 78 of which are provided by the Third
Sector and 22 in specialist hospital wards 41
hospices providing some kind of home care /
hospices at home 14 of these have beds available
as well 29 of the boroughs have a hospice in them
(all types of services) Bereavement services are
the most common type of service offered by
hospices, closely followed by home care Note
These numbers cover all users not only older
people
Source Hospice Information Directory
53
Current market
Other care
London has a higher proportion of friends, family
and neighbours providing unpaid care in the UK

• 70 of care recipients are aged over 65 (Securing
  Good Care for Older People, Wanless, 2006)
• Proportion of over 65s to whom people are
  providing care is higher in London (48 of over
  65s in London receive at least 1 hour of care pw
  cf 44 nationally)
• Informal carers less likely to spend time on
  personal care and administering medication than
  formal carers, but more time on practical care
  e.g. shopping and laundry
• The provision of respite and support to carers is
  very variable but the cost of replacing informal
  care is estimated at 24bn (Laing Buisson)
• Informal care therefore has a key role in
  prevention

Source Census 2001, Provision of unpaid care
54
Current market
Other care
Inner London Boroughs tend to have fewer unpaid
carers than outer London Boroughs
Inner London borough
Outer London borough
Source Census 2001, Provision of unpaid care
55
Contents
System changes
Options
Current market
Introduction

• Ageing population
• Resources
• Policy
• Other
• Conclusions

• Overview
• Review framework
• Nursing care
• Residential care
• Home care
• Other care
• Conclusions

• Collaboration
• Tools
• RSes preliminary assessment
• Recommended next steps

• Executive summary
• Introduction

56
Current market
Priorities
The priority with nursing care is to increase
buyer power and encourage new entrants
Nursing

• Suppliers enjoy strong bargaining power -
  increase buyer power by sharing data, acting as a
  purchasing block
• There are negligible numbers of new entrants into
  this market, reducing competition - encourage new
  entrants by reducing barriers to entry, and by
  directly intervening in the market to sponsor new
  entrants (for example jointly commissioning
  expensive specialist services on a regional or
  sub-regional basis, using long-term funding
  mechanisms)
• Investigate capital financing of nursing care -
  The influx of private equity raises the question
  are capital assets being created unreasonably
  quickly at local authorities expense?

57
Current market
Priorities
The priority with residential care is to support
substitution by other models of care, and manage
the consolidation that will result
Residential

• Market dynamics are similar to nursing care
  suggesting the same responses act as a
  purchasing block to increase buying power,
  intervene in the market to jointly commission
  specialist services, for example for older people
  with mental health difficulties, and investigate
  capital financing
• Key difference between residential and nursing is
  declining demand due to substitution by other
  types of care (although underlying demographics
  means absolute demand may start to grow, even if
  proportionate demand declines)
• Therefore support continued substitution by home
  care, Extracare housing etc.
• Consolidation is likely as demand reduces, the
  potential impact of this on quality and increased
  supplier power will need to be managed

58
Current market
Priorities
The priority with home care is to increase the
capacity and resilience of the market, to allow
continued substitution of residential care

• Evidence on the home care market, there is a
  shortage of evidence on
• the scale of current substitution of residential
  care by home care
• the value-for-money of substituting services,
  complex home care can be very expensive and the
  business case is not completely clear

59
Current market
Conclusions 1/2
The market could operate more effectively

• There is little clarity around price and limited
  (though improving) understanding of differences
  in prices achieved by boroughs. Clarity would
  benefit users, commissioners and providers when
  negotiating prices
• All three markets are fragmented with many small
  providers
• The home care market appears to be best able to
  respond to changing needs but capacity growth may
  be constrained by low margins
• Local authorities could help build longer term
  market capacity and encourage innovation in
  nursing and residential care, which would
  otherwise be slow due to structural issues (high
  barriers to entry and high supplier power) e.g.
  residential care has been slow to respond to
  increasing demand for dementia care

60
Current market
Conclusions 2/2
The market could operate more effectively

• 5. In the short-term there is potential to reduce
  costs, for example by
• Increasing buyer power in the nursing and
  residential care markets through improved sharing
  of price data
• Improving commissioning capacity and skills
  through joint training
• Reducing the costs of doing business for
  authorities and providers and lowering the
  barriers to entry
• 6. In the medium and longer-term existing
  practice is unlikely to deliver sufficient
  savings to cope with demand, and action to change
  the market structure and build capacity will be
  necessary, for example by
• Supporting the continued substitution of
  residential care by home care, Extracare housing
  etc.
• Intervening directly in the market to jointly
  commission new services
• see Options section for full recommendations

61
Contents
Options
Current market
System changes
Introduction

• Ageing population
• Resources
• Policy
• Other
• Conclusions

• Overview
• Review framework
• Nursing care
• Residential care
• Home care
• Conclusions

• Collaboration
• Tools
• RSes preliminary assessment
• Recommended next steps

• Executive summary
• Introduction

62
System changes
Overview
There is a strong case for change

• The following slides outline the upcoming changes
  in
• Demographics with increasing numbers of
  vulnerable older people
• Funding resources under sustained pressure
• Policy - with the emphasis on care provided at
  home and individual choice and control
• They make a strong case for changes to the market
  in terms of increasing capacity and changing the
  nature of provision
• In addition to this, boroughs will need to factor
  in their local circumstances, especially around
  funding and demand

63
System changes
Ageing population
The population is ageing, increasing demand for
services
Sources RSe Continuing Care work, Wanless
report, Securing Good Care for Older People, 2003
64
System changes
Ageing population
The number of older people is rising especially
vulnerable older people who require the most
intensive care
London
England

• In addition, older people from black and minority
  ethnic groups form a higher proportion of the
  population in London than in the country as a
  whole (9.8 in Outer London, 12 in Inner London,
  compared with 2.9 in England).

12 of older people who are other than white
3 of older people who are other than white
Source RSe analysis of Continuing Care costs,
PAF 2005-6
65
System changes
Ageing population
London faces some particular challenges providing
social care for older people
Source Business of Caring, Kings Fund, 2005
66
System changes
Ageing population
Source Business of Caring, Trends in the London
Care Market, Kings Fund, 2005,
67
Contents
Options
Current market
System changes
Introduction

• Ageing population
• Resources
• Policy
• Other
• Conclusions

• Overview
• Review framework
• Nursing care
• Residential care
• Home care
• Other care
• Conclusions

• Collaboration
• Tools
• RSes preliminary assessment
• Recommended next steps

• Executive summary
• Introduction

68
System changes
Resources
There is considerable pressure on resources
Sources RSe Continuing Care work
69
System changes
Resources
Unit costs of care are projected to increase

• Home care unit costs are projected to rise by 8
  p.a. due to increasing intensity of care
  (previously in other care settings)
• Residential care unit costs are projected to
  increase by up to 6.5 per year.

Source RSe analysis of Continuing Care costs
70
System changes
Resources
Increasing numbers of older people and an
increase in unit costs drives up the projected
costs of care
Source RSe analysis of Continuing Care costs
71
Contents
Options
Current market
System changes
Introduction

• Ageing population
• Resources
• Policy
• Other
• Conclusions

• Overview
• Review framework
• Nursing care
• Residential care
• Home care
• Other care
• Conclusions

• Collaboration
• Tools
• RSes preliminary assessment
• Recommended next steps

• Executive summary
• Introduction

72
System changes
Policy
A shift to home care is changing the structure of
the market
73
System changes
Policy
Individual budgets may also change the structure
of the market, but their impact is not yet clear
74
System changes
Policy
Prevention, choice and quality have been key
themes in recent policy
2005 Green Paper, Independence, Well-being and
Choice Our vision for the future of social care
for adults in England
1998 White Paper, Modernising Social Services
Promoting independence, improving protection,
raising standards.
2003 The Community Care (Delayed Discharges
etc) Act
1996 The Community Care (Direct Payments) Act
1990 NHS and Community Care Act
2004 The Carers (Equal Opportunities) Act
2006 White Paper, Our Health, Our Care, Our
Say A new direction for community services
1995 The Carers (Recognition and Services) Act
1999 The Health Act, noted for Section 31
2000 The Care Standards Act established a
National Care Standards Commission and a General
Social Care Council
Source Securing Good Care for Older People,
Wanless, 2006
75
System changes
Policy
Source Securing Good Care for Older People,
Wanless, 2006
76
System changes
Policy
Source Securing Good Care for Older People,
Wanless, 2006
77
Contents
Options
Current market
System changes
Introduction

• Ageing population
• Resources
• Policy
• Other
• Conclusions

• Overview
• Review framework
• Nursing care
• Residential care
• Home care
• Other care
• Conclusions

• Collaboration
• Tools
• RSes preliminary assessment
• Recommended next steps

• Executive summary
• Introduction

78
System changes
Other
Other trends are also likely to have an impact on
the market
Sources Guardian, 2007
79
System changes
Other
CSCI is responsible for ensuring services meet
national standards
CSCI
GSCC
Commission for Social Care Inspectorate Role
responsible for registering local care services
that are required to meet national
standards Future changes merger in 2008 of the
CSCI with the Health Care Commission to create a
single new inspectorate across health and
social care. From 2008, will grade care homes
with a quality score. The worst will get zero
stars and the best three.
General Social Care Council Role responsible
for registering social workers in England,
ensuring registrants must have completed
appropriate training, abide by the GSCC Code of
Practice, and be physically and mentally fit to
do their jobs. Future changes The register will
be opened to other groups of social care workers
namely domiciliary and residential care workers
Source Securing Good Care for Older People,
Wanless, 2006
80
Contents
Options
Current market
System changes
Introduction

• Ageing population
• Resources
• Policy
• Other
• Conclusions

• Overview
• Review framework
• Nursing care
• Residential care
• Home care
• Other care
• Conclusions

• Collaboration
• Tools
• RSes preliminary assessment
• Recommended next steps

• Executive summary
• Introduction

81
System changes
Conclusions
The market will need help to develop the new
capacity required

• Increased demand, new government policy and
  pressures on resources will place considerable
  pressure on the market
• To continue to provide a quality service to users
  at an affordable price the market will need to
• Develop substantial additional capacity
• Shift the type of capacity offered, in
  particularly, more care at home
• Boroughs will have to actively support the market
  to achieve this, given the structural issues
  identified earlier and scale of shift required
• Boroughs will need to collaborate to be effective
  given the interconnectedness of the market

82
Contents
System changes
Current market
Options
Introduction

• Ageing population
• Resources
• Policy
• Other
• Conclusions

• Overview
• Review framework
• Nursing care
• Residential care
• Home care
• Conclusions

• Collaboration
• Tools
• RSes preliminary assessment
• Recommended next steps

• Executive summary
• Introduction

83
Options
Priorities
In our view there are four main priorities for
the London boroughs

• Data - Improving the quality, consistency and
  availability of data about services, providers
  and costs
• Negotiation - Improving boroughs ability to
  negotiate effectively with providers
• Improved commercial skills
• Aggregated buying power, particularly with the
  major providers
• Costs - Reducing the costs of doing business for
  themselves and providers, particularly in
  residential and nursing care
• Market development - Providing leadership to the
  market and supporting the development of
  additional capacity, particularly
• Shift to home care
• Development of specialist services
• Emergence of new models of provision, e.g.
  re-ablement

84
Options
Collaboration
These priorities will require collaborative action
Sharing information
Common processes
Sharing resources
Joint commissioning
Direct market intervention
Can increase buying power (e.g. by improving
price transparency)
Can reduce barriers to entry and supplier costs
Can reduce barriers to entry and supplier costs
as well as reducing LAs own costs
Can increase buyer power, encourage new entrants,
and potentially accelerate substitution
Can increase market capacity and buyer power,
encourage new entrants and substitution
85
Options
Collaboration
Sharing information
86
Options
Collaboration
Common processes
87
Options
Collaboration
Sharing resources
88
Options
Collaboration
Joint commissioning
89
Options
Collaboration
Direct market intervention
90
Options
Individual boroughs
Individual boroughs can also take action to
develop the market

• Develop the market through investigating and
  promoting alternative service provision, in
  particular where it substitutes demand for more
  expensive provision such as residential care.
  For example, complex homecare, Extracare housing,
  Re-ablement services and Telecare
• Preventative work. There is anecdotal evidence
  that preventative services may be most effective
  in reducing future demand when targeted on mental
  health (especially depression), and housing
  conditions (Julien Forder, LSE, HACT)
• Invest in supporting carers. Carers have a
  preventative role but provision of respite and
  support varies widely. The cost of replacing
  informal care is estimated at 24bn nationally
  (Laing Buisson)
• Investigate partnership contracts with
  providers which can help create efficiencies,
  secure supply develop new services. For
  example, outcome-based contracts, cost
  contracts, and conditional contract extensions.
  Currently more prevalent in services such as
  highways and waste collection, may have
  application to social care

91
Contact details

• Guy Mallison
• Guy.Mallison_at_rseconsulting.co.uk
• 020 7808 1123
• Rob Abercrombie
• Rob.Abercrombie_at_rseconsulting.co.uk
• 020 7808 1129
• Alexandra Harvey
• Alexandra.Harvey_at_rseconsulting.co.uk
• 020 7808 1155