Market Sustainability and Fair Cost of Care
Fair Cost of Care exercise
Critical to delivering upon this ambition is ensuring that we have a strong, vibrant and sustainable care market. The Market Sustainability and Fair Cost of Care exercise was the Government’s first step in the journey to achieve this.
In October 2022 all upper-tier local authorities were required to produce and submit a draft Market Sustainability Plan (MSP) and Fair Cost of Care (FCoC) statement to the Department of Health and Social Care (DHSC). These included:
- cost of care exercises for 65+ care homes and for 18+ domiciliary care, using a standard national methodology
- a provisional market sustainability plan, using the cost of care exercise as a key input to identify risks in the local market and which included details of how funding allocated for 2022 to 2023 is being spent in line with the fund’s purpose.
In the East Midlands, during this first phase of work, nine of the ten local authorities commissioned the services of Care Analytics, a specialist in the financial analysis of care markets and the cost of care, to support a wide-ranging engagement of the care market. This included a detailed survey to capture the necessary operational and contextual detail to draw out the inherent costs of delivering care in the local market.
Annex B publications February 2023
The DHSC asked all upper-tier local authorities to formally submit an Annex B documents in February 2023. The Annex B documents provide details of the methodology used for our care home and home care markets, and we have published them here:
- Cost of Care Report - Over 65 Care Homes Report [PDF]
- Cost of Care Report – Domiciliary Report [PDF]
Whilst these provide the content that we will be using to help our future approaches to care market sustainability and fees, it is very clear that the resulting figures for median costs (as was required by DHSC) are not in themselves an appropriate basis to inform a council’s commissioning fee rates. Whilst the median is less skewed by high outlier values (as opposed to mathematical averages), the median values themselves can be skewed if the dataset does not comprise an appropriate and representative sample of the existing make-up of providers in the local market. The exercise has however provided insight into the nature of local care provider costs and the different business models employed by those who returned surveys.
Market Sustainability Plan (MSP)
Councils are required to publish a Market Sustainability Plan which is also returned to the Department of Health and Social Care (DHSC). Reviewing these returns will support DHSC's understanding of the key issues facing 65+ residential and 18+ domiciliary care in different local authority areas. This helps DHSC to understand market sustainability and risk with regards to these services and will be used to help inform their policies moving forwards.
The Market Sustainability Plan requires us to identify the key risks to market sustainability for the 65+ care home market and the 18+ domiciliary care market and to establish plans to address any issues identified, including how market sustainability funding will be used over the next three years.
The plan is now complete and includes detail on how fees will be reviewed and inflated in 2023-24.