1.1 This document provides an update on progress in our market study into care homes and invites views on our findings so far, our future focus and possible recommendations. We welcome written responses to the update paper by 5 July 2017. Section 10 sets out some specific questions for response and details of how to respond.
1.2 Our evidence collection and analysis process is still underway. There are significant differences in the sectors, policies, regulation and issues between and within the nations of the UK. But several key findings are emerging on how the market is working for residents and their families and the public purse:
(a) For this market to work well, prospective care home residents and their families need to be able to make informed choices. The initial results from the Competition and Markets Authority’s (CMA) consumer research suggest that many people find it challenging to make decisions about care under the stressful and time pressured circumstances which generally apply. Even when good information is available people rarely seek it or engage with it. Many people do not seek more information and in many cases they are confused by the social care system and funding arrangements, and do not know how to find and choose between homes.
(b) Where a resident is dissatisfied with their care home, it is generally not realistic to expect them to move to another one. Once settled, the upheaval of moving from a familiar environment can be extremely disturbing, and can adversely impact on the resident’s health. It is therefore essential that effective mechanisms are in place for residents to express their views and, where necessary, have them acted upon. Our findings, however, indicate that complaints and redress systems often do not work well, as residents often find it very challenging to make complaints.
(c) While many care homes offer a good service, we have identified concerns that some might not be treating residents fairly and that certain business practices and contract terms might break consumer law. Many of these consumer protection concerns relate to how some care homes treat self-funded residents, including for example issues around the lack of indicative pricing information on websites, the charging of large upfront fees and deposits, care homes having a wide discretion to ask residents to leave, and requirements to pay fees for an extended period after a resident’s death.
(d) There is evidence of competition between care homes to provide care home placements to local authorities. However, some providers have told us of instances where they have found local authority and NHS (Health and Social Care (HSC) in Northern Ireland) procurement processes are complex, inflexible, and insufficiently person-centred. Some providers have also argued there is inadequate provision to encourage and reward quality.
(e) Whilst the possibility for families and friends to make top-up payments1 can give residents greater choice of accommodation, some providers have told us that top-ups are not always encouraged or facilitated. In addition it appears that in some areas, making a top-up payment may be the only way a prospective local authority-funded resident will have a choice of care homes to go to.
(f) Demand for care home services is expected to increase very substantially in the coming years. The number of people aged 85 and over is projected to more than double by mid-2039, and the level of care needed for people moving into a home is increasing over time because, having spent longer in their own homes, people are more frail when they do move into a care home.
(g) Building additional care home capacity takes time, and investment therefore needs to take place in good time for places to be available when they are needed. Our initial analysis of recent financial performance suggests that returns to the sector overall are sufficient to cover current operating costs. But they are insufficient overall to attract adequate investment in new care homes. There is likely to be a lot of variability; investment will be attractive in some local areas and particularly where there are expected to be substantial further numbers of self-funding customers.
(h) In contrast, short-term funding pressures, in the forms of current fee rates, the number of placements local authorities make in care homes (rather than meeting needs through other means such as domiciliary care) and uncertainty over future funding, mean that there are at present weak signals and incentives for the sector to undertake future investment necessary to grow capacity primarily intended to serve state-funded residents. Our initial results suggest homes primarily serving local authority-funded residents have lower margins than those with higher proportions of self-funded residents. It seems likely that the incentives to attract investors to build new capacity will be lowest where it is aimed at primarily serving state-funded residents. Our analysis is ongoing.
(i) We have, however, heard from some local authorities who have adopted long-term perspectives to shape the market, provide improved clarity both to investors and prospective residents, and encourage appropriate investment focused on the areas of greatest need (eg dementia and nursing care). Local authorities are well placed to understand the market, predict needs, assist operators and shape outcomes. They are also well placed to assist and guide prospective residents, and so they have the opportunity to greatly improve outcomes. We are keen to explore ways of increasing long-term planning in the sector as a whole.
1.3 We are considering possible recommendations in relation to these and other issues. Our intention is to develop a package of recommendations that will make a long-lasting improvement to tackle the issues we identify and to deliver better outcomes for residents and their families. For example, the kind of areas we are exploring are:
(a) Making choices easier through better information and support. We are considering how greater support can be provided to prospective residents and their families and representatives to help them to make good choices and to access comprehensive and comparable information. We are also considering whether people’s awareness and consideration of social care options could be raised earlier.
(b) Improving complaint and redress systems. We will be looking at recommendations which make it easier for care home residents and their families or representatives to raise and escalate complaints, and to support providers to improve their complaints and redress systems.
(c) Improving consumer protection. We have opened a consumer protection case to investigate concerns that some care homes may be breaking consumer law – this is focused on concerns about certain care homes charging families for extended periods after a resident has died, and homes charging large upfront fees. We are also considering how other issues we have found can best be addressed using our range of tools (for instance, as appropriate, through consumer enforcement action, guidance on consumer law, codes of practice and/or recommendations to government, regulators or the industry). More generally, we are looking at sector regulations) are sufficient to ensure good outcomes for residents and their families.
(d) Public sector procurement. We are considering opportunities for the sharing and monitoring of good practice, eg on procurement by local authorities of care home services and on how top-ups are explained to care home residents and their families and used by them.
(e) Investing for the future. We wish to address how the sector will develop in the long term to address the changing levels and types of needs. We are considering how potential barriers to investment can be addressed and how the sector can be incentivised to respond to demand. In doing so, we will look at measures which could provide a framework that incentivises future investment. So, for example, we will consider fee rates and whether guidance on appropriate fees would be beneficial, and whether there may be a role for an independent body in planning and facilitating the development of appropriate capacity..