Local authority fees improve
Caring Times, July/August 2013
Laing & Buisson’s annual survey of UK local authority baseline fee rates 2013/14 found councils giving an average uplift of 1.8%, very close to the 2% that Laing & Buisson estimates is needed to keep pace with care home cost inflation.
This is a marked difference from the chasm between an 1.6% uplift in 2012/13 against the 2.5% rise needed to keep margins neutral.
The gap between the average uplift in care home fee rates for older people paid by UK local authorities for 2013/14 and care home cost inflation is narrowing, newly released research from healthcare intelligence provider Laing & Buisson has found.
The news marks an end to a three-year period which saw baseline fee rates fall significantly in real terms each successive year from 2010/11. Community Care Market news’s Annual Survey of UK Local Authority Baseline Fee Rates 2013/14 found councils giving an average uplift of 1.8%, very close to the 2% that Laing & Buisson estimates is needed to keep pace with care home cost inflation.
This is a marked difference from the chasm between an 1.6% uplift in 2012/13 against the 2.5% rise needed to keep margins neutral. The bridging of this gap is in part because providers have maintained tight discipline on pay rates, helped by price inflation generally subsidising for non-staff items.
This year’s baseline fee results are relatively positive for the care home sector, but there will be no collective sigh of relief from care home providers, since none of the ground lost in the previous three years has yet been regained and there remains no sign of any inflation busting increases in the years to come, with councils’ budgets are expected to remain under severe pressure.
Of the 133 councils providing figures for 2013/14, 62 councils gave below ‘standstill’ uplifts, including 31 which froze fees (though none reduced them). Fifty-six gave fee revisions in the ‘standstill’ band (2–2.9%) while just 15 increased baseline fees at a margin enhancing rate of 3% or above.
The remaining 74 councils either had not yet set their baseline fee levels at the time or did not respond. As a result, other things being equal, care home operators across the UK can expect average margins for council funded residents to remain more or less unchanged (-0.2%), following the 0.9 percentage point reduction in margins during financial year 2012/13, the 2.5 percentage point reduction calculated by the same method for the previous year and the 1.4 percentage point reduction in the year before that – a cumulative 5 percentage point drop for council funded residents over four years.
Prospects for the next year (2014/15) are probably standstill in real terms at best, as central government continues to keep a tight grip on grants to local authorities. Care home operators with high exposure to council funding can mitigate the margin squeeze through efficiency savings including staffing efficiencies, and the larger ones including Four Seasons Health Care and Bupa Care Services have succeeded in doing so, though the scope for continued savings in the future is limited.
They can also seek to bolster margins by re-positioning to a privately paying clientele, though again the options are in practice limited for most care homes. As predicted in last year’s report, there was at least no ‘double whammy’ from cuts in placement volumes last year, and the latest baseline fee survey results suggest that the volume of local authority care home placements will continue to be fairly stable over 2013/14, despite pressure on local authority budgets.
Half of responding councils indicated they expect no change in the number of older people supported by the end of the year. Around a third (32%) of the councils responding to the survey said that numbers would be lower by the end of the financial year than at the start, while the remaining 18% projected an increase in care home placements during 2013/14.
The number of councils which use quality criteria to pay higher fees to well performing care homes and lower fees to poorly performing ones continued to fall – which is hardly surprising given the lack of a nationally recognised ratings system since the dissolution of the Care Quality Commission (CQC) star ratings scheme.
About a third of council respondents specifically stated that they make additional quality related payments or, looked at another way, withdraw payments to homes which do not measure up, and the 32 Scottish councils made up the majority of these with their fairly minimal £1.50 to £3.00 per week quality premia under their national COSLA agreement.
This compares with three quarters of local authorities which claimed to offer quality premia three years ago in 2010. REGIONAL BREAKDOWN As in previous years, CCMn found variation in baseline fee uplifts offered by councils around the regions, with care homes in London experiencing the lowest uplift in baseline fee rates for the second year running (+0.6% on average for both Inner and Outer London) and the East Midlands faring the best (+3.8% on average). North East The North East region witnessed baseline fee revisions significantly below the UK average (+1%) with Durham the local authority with the highest uplift of 2% for both residential and nursing care.
Making an even colder climate for operators in the region, both Hartlepool and Redcar and Cleveland froze their rates for the year. Maximum weekly fees for nursing care of frail older people in 2013/14 ranged from £533.79 (Stockton on Tees) to £605.77 (Durham). Maximum weekly fees for residential care range from £424 (Stockton on Tees) to £482.32 (Redcar and Cleveland). North West Fee revisions in the North West region were also below the national average at 1.2%. Eight councils froze their fees at the 2012/13 level for 2013/14, while at the other end of the spectrum Bolton and Trafford offered all-round uplifts of 3% and 6% respectively.
Maximum weekly fees for nursing care of frail older people in 2013/14 range from £474.79 (Wigan) to £631 (Tameside). Maximum weekly fees for residential care range from £362.60 (Cheshire W and Chester) to £462 (Tameside). Yorkshire and the Humber Fee revisions in the Yorkshire and Humber region were up by 1.1%.
Sheffield was the only council in the region to freeze its rates, while Rotherham increased its rates by an average of 1.7%, the highest in the area. Maximum weekly fees for nursing care of frail older people in 2013/14 range from £506.79 (Sheffield) to £588.79 (Leeds). Maximum weekly fees for residential care range from £386.19 (Calderdale) to £446 (Leeds).
East Midlands East Midlands region once again experienced the highest average fee uplift in England at 3.8% for residential care and 5% for dementia care. No local authority froze their fees and Nottinghamshire’s average uplift was a very generous 11.8%. Maximum weekly fees for nursing care of frail older people in 2012/13 range from £521.24 (Northamptonshire) to £682.79 (Nottinghamshire).
Maximum weekly fees for residential care range from £ 367.70 (Northamptonshire) to £520 (Nottinghamshire). West Midlands In the West Midlands region, fee increases were well above the UK average at 2.7%. No council froze their rates and Worcestershire increased its fees by an average of 5%. Maximum weekly fees for nursing care of frail older people in 2013/14 range from £481.08 (Wolverhampton) to £541.13 (Warwickshire).
There was not such wide disparity between weekly fees for residential care, ranging from £379.53 (Wolverhampton) to £401 (Worcestershire). East of England Fee revisions in the East of England region were below the UK average at 0.9%. Here there was a mixed picture with Cambridgeshire, Essex and Peterborough all freezing their rates while Suffolk increased its fees by an average of 3%. Maximum weekly fees for nursing care of frail older people in 2013/14 range from £521.56 (Peterborough) to £1,259.79 (Essex).
Maximum weekly fees for residential care range from £366 (Cambridgeshire) to £960 (Essex). Inner London Inner London, alongside Outer London, offered the lowest fee uplifts of any region, at an average of 0.6%, though this might not represent the true picture as many placements are done out-of-borough where different fee rates are likely to apply.
Five councils froze their rates and it was only in Tower Hamlets that uplifts got near to the margin neutral rate at 1.6%. Maximum weekly fees for nursing care of frail older people in 2013/14 range from £600 (Camden) to £759.79 (Hackney). City of London reported a still higher maximum of £790.54, but the number of older people placed by that authority is negligible.
Maximum weekly fees for residential care range from £454.50 (Greenwich) to £1,015.54 (Hackney). Outer London Outer London shared the distinction with its neighbours in the capital of offering the lowest fee uplifts of any region, at an average of 0.6%. Of the 20 boroughs, nine froze their rates, while Bromley increase its nursing care rates by 5.1%. Maximum nursing fees ranged from £585.46 (Merton) to £720 (Bromley).
Maximum weekly fees for residential care range from £421 (Sutton) to £623 (Enfield). As in Inner London, the picture in Outer London is complicated due to different rates for in-borough and out-of-borough placements. South East Fee uplifts in the affluent South East region dropped from 2% last year to 1.8%.
Only Milton Keynes, West Berkshire and Wokingham froze their rates while Portsmouth and Hampshire offered an well above inflation all-round increase of 5% and 5.7% respectively. Maximum weekly fees for nursing care of frail older people in 2013/14 range from £570.55 (Milton Keynes) to £900 (Wokingham). Maximum weekly fees for residential care range from £351.40 (Kent) to £685 (Wokingham).
South West The South West saw the second largest uplifts after the East Midlands at 2.5% with no council freezing its rate. Swindon offered the highest uplift ranging from 7.5% for nursing care and 7.9% for residential care. Maximum weekly fees for nursing care of frail older people in 2013/14 range from £555.70 (Torbay and Southern Devon Health and Care Trust) to £704.79 (Isles of Scilly).
Maximum weekly fees for residential care range from £390 (Devon) to £530 (Wiltshire). Wales Care homes in Wales enjoyed an uplift of 2.3%, with Neath Port Talbot reporting an 4% hike and no fee freezes. Maximum weekly fees for nursing care of frail older people in 2013/14 range from £581.55 (Neath Port Talbot) to £628 (Gwynedd). Maximum weekly fees for residential care range from £414.40 (Blaneau Gwent) to £508 (Conwy).
Scotland With minor local variations the outcome reported by respondents to the baseline fee survey was an average 2.5% fee increase, in line with the national COSLA agreement. The funding agreement results in headline weekly rates for 2013/14 of £583.11 (Nursing) and £501.88 (Residential), subject to variation in the form of ‘Quality Payments’ of £1.50 to £3 per week.
Northern Ireland On 1 April 2009 the Health and Social Care Board (HSCB) replaced the existing four Health and Social Services Boards. The HSCB reports having increased fee rates by 3% across the board for nursing and residential care homes for 2013/14 with maximum fees equating to £567 (Nursing) and £450 (Residential).