The recent Report by the National Audit Office on personalisation and social care provides lots of useful information, and also a thoughtful critical review of the issues in the developing social care sector. Its main focus is whether local and national oversight is sufficient to ensure that needs are met and personal budgets are not misused. It comes to the conclusion that the government doesn’t have much in the way of levers to manage situations that go wrong, and there are insufficient resources to move in and take over if a major supplier goes bust. It was also hard to find care providers who could deal with very complex needs and getting advice and support for care users in setting up and managing their care was also difficult.
This bit includes a brief study of the collapse of the main national private provider of care homes, Southern Cross, recently. It confirms what we already knew, that this was mainly because its private equity owners sold its property and leased it back a few years ago. This is a typical manoeuvre by private equity companies, whose job is to squeeze the assets of the companies they own to get as much money out of them as possible. It has led to the downfall of a lot of retailers because they have too much debt to cope when market conditions get tough. The report makes the point that care homes and the care sector generally are not good candidates for this, because they have high fixed costs anyway, and if there are fewer people using them (because local authorities and other funders won’t pay or they come up with other options, which they will because this is policy), there will be more competition with other providers, fees will go down, and losses start to accumulate. Will we see less private equity involvement in the care sector? Don’t bet on it if there is money to be made: this should be restricted in the cause of quality care.
Another feature of the social care system that makes a market system a poor way of providing is a comment made on p 28:
From a consumer perspective, the care homes market has some characteristics of an inefficient market:
Entry into a care home is often unplanned and can be made in response to a specific event (such as a hospital admission or the death of a spouse).
By definition, switching rates (choosing to switch care home) are very low, and consumer research commissioned by the Office of Fair Trading suggests that it is considered to be a last resort by most residents (it can often adversely affect residents’ health).
As is the case with most care services, buying a care home place is inevitably an ‘experience good’, meaning that the consumer cannot really tell their satisfaction until it has been experienced.
There are also difficulties in getting new entrants to the care market, for three reasons:
Providers struggling to recruit staff to cover isolated and sparsely-populated rural areas.
High rent costs in some urban areas.
The challenging nature of care work, often unsocial hours, and relatively low levels of pay. (p 31)
To deal with this they recommend:
Subsidising adviser posts in voluntary sector advice and support providers.
Helping new small providers and social enterprises to enter the market by making local authority tendering and contracting processes more flexible and less burdensome for small providers.
Providing advice and in some cases limited financial support to help new small-scale care businesses enter the market.
Of course, they could come to experienced high-quality care providers like hospices, and get them to enter the social care market; this is happening in some areas.
Interestingly, an ADASS report on how things were developing suggests that most of the development is not in direct payments (the government’s and enthusiasts’ preference for the future of user control) but managed budgets (you get allocated a budget, but the local authority or some friend of the local authority – their tame voluntary organisation – manages it for you. This may be realistic, but it may signal the end of the shift to giving people government cash for care. Or it may mean there is going to be a hiatus while people get the confidence to move on again.
One of the things to ask is why the government is so keen on giving away its money in cash – generally treasuries don’t like allowing real people to get their hands on government cash; it means things can get out of control. The answer is two-fold: the politicians like it because people like the flexibility and control, so there is positive feedback in social care, an area that often gives problems rather than positives to government, local or national. The other answer is that the present political elite would like to have a functioning system of vouchers or something like to show that it can work. In most other areas where it is politically important to right-wingers to displace publicly funded services (health and education) vouchers have been shown not to work. So here the treasury (local and national) view may accord with the political view: by developing managed budgets, they can hang on to control while offering the semblance of giving user control. I’m a bit doubtful whether, in the long-term and covering every service user across the country, managed budgets will give real user control. The advisers and managers of the budgets will not have the incentives in the local government system (where not giving out money for any purposes if at all possible is totally ingrained) to be creative in getting imaginative ideas from service users and implementing them. They’ll fall back on standardised responses. So much more convenient and manageable.
The Report doesn’t get stuck on whether user choice is desirable and is actually enhanced; in general it follows government policy in thinking that it is. However, there are different views in different sectors of the population who might use personalised social care. Older people are less enamoured, although in general a majority of all sorts of service users thought that their mental well-being was improved and they achieved support that met their needs.
The Report at: http://www.nao.org.uk/publications/1012/oversight_of_care_market.aspx?dm_i=4O5,JGIK,UF1K0,1L8WB,1
National Audit Office (2011) Oversight of user choice and provider competition in care markets: Report by the Comptroller and Auditor General (HC 1458). London: TSO.