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Working with care providers to understand costs

A guide for adult social care commissioners

The Care Act (2014) introduced new duties for local authorities in England to facilitate and shape a diverse, sustainable market for quality care and support in their local area.1 This practical guide is intended for adult social care commissioners who wish to develop their understanding of the costs involved in providing care to help them meet these duties. The aim is to enable and equip commissioners with the knowledge and skills to support informed dialogue with providers in the interest of working toward agreed fee rates which are affordable, good value for money and support market sustainability.

CIPFA was commissioned by the Department of Health, the Local Government Association (LGA) and the Association of Directors of Adult Social Services (ADASS) to co-ordinate production of this guide in agreement and consultation with the Care Provider Alliance (CPA), as part of a joint programme to support implementation of the Care Act.

Commissioners are increasingly skilled at striking the delicate balance between making the most of limited resources and meeting the statutory requirements to shape sustainable care markets for their local populations. This growing wealth of experience provided the foundations for this guide, which was produced with extensive input from local authority commissioners, and also social care providers through a series of workshops and through consultations with individuals – all aimed at to identifying and bringing together good practice. This process uncovered a variety of examples of collaborative and innovative approaches to costing, and identified means of generating efficiency savings in commissioning care. These findings inform every section within the pages that follow.

After this brief introduction, there is a short section outlining the challenge (chapter 2), followed by an overview of the independent sector environment within which care providers operate (chapter 3). Chapter 4 is perhaps the most important: it provides a detailed account of the costs associated with providing care, with worked examples and checklists specifically designed to illustrate the issues that need to be discussed with providers. The guide concludes with an overview of different ways commissioners can use costing techniques to work with providers to agree prices, and sets this within the context of commissioning good practice.
We recognise that there are many ways to meet people’s care and support needs – e.g. making use of universal services and enabling and supporting people to employ personal assistants – but for simplicity the guide concentrates on the costs of providing residential care (‘care homes’ and ‘nursing homes’) and domiciliary care (‘home care’). Many of the principles will be more widely applicable.

The guide has been written with a local authority audience in mind, and with an appreciation that a wide range of people in councils – both officers and elected members – play a role in commissioning adult social care. Inevitably, readers will have a range of professional backgrounds, different levels of experience, and varying levels of familiarity with accountancy, finance, business and economics terminology. Therefore, to make the guide as accessible as possible, while remaining relevant and useful to those who are more familiar with the concepts used, boxes highlighted in blue give introductory overviews of some basic economics and business concepts, and a glossary of terms has been included at the back (appendix A).