Study finds home care fees still under pressure
0Most local authorities are continuing to try to drive down the fees paid to providers of home care, according to a new study from the King’s Fund and the University of York, despite what the report describes as a “fragile” market.
The study, “Home Care in England: Views from Commissioners and Providers” revealed that providers handed back home care contracts in more than one in three local authority areas last year, and that some of the largest providers have withdrawn from the publicly funded market altogether.
Recruitment is a persistent problem, with four in ten home care workers leaving their role each year and with more than half on zero hours contracts, according to the report.
“Recruiting and retaining home care staff remains a fundamental challenge for providers, but the extent of the challenge varies greatly depending on geographical location, with those in some rural and also in some prosperous areas particularly struggling.”
The study also reported widespread dissatisfaction with “time and task” commissioning ,where there is no measure of outcomes achieved.
The pressure on the providers of home care have been relentless.
In 2011, Southern Cross, the largest listed care home operator collapsed, becoming the first big casualty.
The company had taken on huge debts and struggled in a low-margin business when councils began to tighten their criteria for care home eligibility, as well as reducing the fees they paid in the wake of the 2008 financial crisis.
At the end of last month home care group Allied Healthcare was sold after the care regulator warned it was facing bankruptcy.
Allied’s management blamed its demise on a combination of an increase in the minimum wage, a rise in the costs of medical staff as a result of stricter immigration rules – and the squeeze on local authority budgets.
Outsourcing companies, which provide a range of services to local authorities, have struggled too, though the range of their problems is wider.
A common theme has been large debt piles and an aggressive chasing of contract wins.
This week Interserve confirmed that it is in talks to achieve a debt-for-equity swap that will see its creditors take control of the company.
Interserve has been laid low by its debt pile of nearly £650m and ill-conceived forays into energy-from-waste plants and probation services.
However, the outsourcers have also been victims of thin and under-pressure margins.
Seventy percent of Interserve’s turnover comes from the public sector, including from councils.
Its recent local authority contract wins have included a deal with North Lincolnshire, signed in August 2018 for £4.6m to refurbish a market in Scunthorpe, and the extension of a facilities management contract in June, with Southwark, worth £10m.
Carillion collapsed in January, while Kier, Capita and Mitie are all seeking to strengthen their balance sheets, with Kier launching a £264m rights issue in November.
G4S and Serco suffered earlier crises which hammered their share prices and led to wholesale management changes.
