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Information on the North Yorkshire Market Sustainability Plan: 2023-2024.
North Yorkshire is geographically the largest council in England and is responsible for delivering and commissioning social care across vast rural areas, market towns and villages. Because of this, our commissioned social care market is large and diverse, with 231 registered care homes, over 150 commissioned domiciliary care agencies, and a vibrant voluntary and community sector.
As is the case nationally, the social care sector in North Yorkshire is facing unprecedented challenges. The ongoing impact of the pandemic; spiralling costs of living; major workforce challenges; pressures from the NHS; increased demand for services and reduced spending power for social care budgets are all impacting adversely on market sustainability.
In North Yorkshire, these challenges are further exacerbated by the size and rurality of the county. Lower population density makes economies of scale difficult, resulting in higher per-unit costs for service delivery. Furthermore, a high proportion of people self-fund their care, which makes it difficult for the Council to shape and influence the market.
We are acutely aware of the difficult and complex landscape within which providers are operating, and consequently has assessed the sustainability of the adult social care market as one of its most significant strategic risks.
While this Market Sustainability Plan focusses on the sustainability of the 65-plus care home and 18-plus domiciliary care market, many of the issues described cut across all sectors of the market and types of provision.
In April 2022, we implemented our Actual Cost of Care (ACOC) exercise for residential and nursing placements for over 65s, and with agreement from DHSC, used this in place of the Fair Cost of Care exercise. The Actual Cost of Care rates for 2023/24 are:
Residential and nursing placements for over 65s | 22/23 Actual Cost of Care Rate | 23/24 Actual Cost of Care Rate | Direct care hours – care assistants | Direct care hours - nursing |
---|---|---|---|---|
Residential | £742 | £812 | 24 | |
Residential/Dementia | £784 | £854 | 27 | |
Nursing | £819 | £896 | 25 | 10 |
Nursing/Dementia | £826 | £903 | 29 | 8 |
Our 2021/22 weekly rates prior to the Actual Cost of Care exercise being undertaken were £599.34 for residential care homes, and £592.41 for care homes with nursing. This represented a 24-31% increase in 2021/22 residential rates and 38-39% in nursing rates. The implementation of this was assisted by the use of the Market Sustainability and Fair Cost of Care grant. The actual increase in costs in residential and nursing care between 2021/22 and 2022/23 is estimated to be £22.6m.
Alongside, but separate from the Actual Cost of Care, we undertook a comprehensive procurement of our Approved Provider Lists (APL) for Residential and Nursing Care. This process updated the specification for care services and supported sustainability by involving providers submitting their rates up to October 2027.
The new Approved Provider List was fully implemented from November 2022 and includes the majority of care homes that are contracted by us. We continue to work closely with homes that have either failed the evaluation or not yet applied to ensure that all care home placements can be commissioned from our Approved Provider List.
Providers that accept the Actual Cost of Care rate are prioritised for new placements. Those that have set their fees above the Actual Cost of Care due to market forces are placed on a secondary list, subject to a value for money assessment. This approach enables us to provide greater choice and ensures we can secure placement in areas with limited supply.
All new placements (or where there is a significant change in need) receive at least the relevant Actual Cost of Care rate. There is an agreement to increase existing/legacy rates to meet the Actual Cost of Care rate within a maximum of three years. Whilst Actual Cost of Care has uplifted a large proportion of weekly fees of care home providers, three-quarters of care home providers on the new Approved Provider List have set fees that are above the Actual Cost of Care rates.
Providers have voiced concerns that although there is a commitment to increase legacy rates within three years, these placements are unsustainable, even taking into account the increased rates being paid for new Approved Provider List placements. The Council is working with the Independent Care Group to negotiate a settlement for 2023/24 that helps to offset these pressures.
The Department of Health and Social Care-recommended Fair Cost of Care model produced a low response rate in North Yorkshire (28 fully completed responses with a 22% response rate), generating a very limited picture of the costs associated with the delivery of care in a diverse county.
However, alongside the completion of the cost of care exercise, we undertook the procurement of its Approved Provider Lists (APL) for domiciliary care. Applications were received by 98 domiciliary care providers which provided a much more reliable indicator of the cost of care that reflects the geographic variations in delivering care in North Yorkshire. The average rate submitted by providers as part of the Approved Provider Lists (APL) exercise was as below and are being used as the basis for 2023/24 inflationary uplifts. The 2022/23 APL rates represent between six and 10% increase on 2021/22 rates.
Personal care (generic)
Personal care (enhanced)
We recognise that the Adult Social care market in North Yorkshire is experiencing extreme volatility and distress due to unprecedented inflationary pressures, significant challenges with workforce recruitment and retention and the additional pressures caused by the rural nature of our county.
This is at a time when demographic trends tell us demand for care will continue to rise exponentially, with increasing complexity of need.
We have built excellent relationships with our providers, and they are committed to working with us to develop an innovative, vibrant and diverse care market. However, many are struggling to survive and thinking of exiting the market. Others are considering redirecting resources from delivering local authority-funded support towards a more profitable private and NHS-funded customer base.
We have already taken significant steps to support market sustainability. We have invested in an integrated quality improvement team to proactively support providers with quality concerns with the aim of driving up quality and reducing the impact of provider failure. We have introduced a Sustainability and Hardship Scheme, enabling providers who meet the relevant criteria, to request financial support or an increase in fees.
We have also invested significant resources to support workforce recruitment and retention, by employing a dedicated HR business partner to support the Care Market and funding a major ‘Make Care Matter’ campaign.
Nevertheless, if robust action is not taken to manage demand for services, and support the market during these economically challenging times, there continue to be significant risks not only to the social care market but to our financial sustainability and our ability to meet our Care Act duties. Ultimately this will impact on the safety and wellbeing of vulnerable adults within the county.
For example:
The single biggest area of spending for us remains adult social care. The government has delayed its proposed reforms to the cost cap but it has helpfully provided the earmarked funding to deal with some of the fundamental issues impacting upon social care. However, even with this additional funding, we still face a £7m shortfall in our budget for social care.
We have therefore identified substantial funding as part of its corporate budget to support the implementation of care market support, including a support payment to assist with the rising cost of energy and insurance.
Should the government revisit the cap on care costs and other associated changes then this is likely to result in further significant costs for us, which in turn will reduce the resources available to support market sustainability.
The North Yorkshire Market Development Board oversees our Care Act duties of market shaping and oversight of the care market. The Board’s ambitions to transform the market over the next three years are set out in the Commissioning and Service Development Strategic Plan and the Market Position Statement.
Key priorities include:
Contractually we have a commitment to review fee levels on an annual basis. Annual inflation adjustments take into account market pressures and are subject to consultation with the North Yorkshire care market via the Independent Care Group.
For 2023/24, it has been proposed that the uplift will be based on a 45/55 percentage split of minimum wage and CPI. In addition, the Independent Care Group (ICG) has advocated that we link the domiciliary care uplift to the HCA cost model. In order to support provider sustainability, the Council will ensure the uplift will be greatest for providers that are being paid the lowest rates.
We continue to monitor and will keep under review whether there is a need for any local market supplement. We are not recommending this at this time but will evaluate the impact of the new Approved Provider Lists.
To support cash flow within the market, payments will continue to be made four weeks in advance with retrospective reconciliation. We are also moving towards automated payments for all types of care provision which will expedite the application of agreed inflationary uplifts.
In addition to the range of national funding schemes to support the market, the Council has implemented a Sustainability and Hardship funding scheme.
This allows Care Providers to request one-off financial support or fee increases in association with specified criteria. We are seeing an increasing number of applications and are reviewing the criteria to ensure support is targeted where it is most needed.
As stated above the implementation of Actual Cost of Care (ACOC) for residential and nursing care began on 1 April 2022 and this was supported by the use of the Market Sustainability and Fair Cost of Care grant. Of that £1.636m grant, we have allocated £851,000 to Residential and Nursing. However, sustainability support from this grant of £659,000 was also provided to support additional payments to Domiciliary Care and Supported Living providers. The remaining funds were used to fund staffing (£100,000) and payments to providers and the Integrated Care Group (£26k) to support the Fair Cost of Care exercise.
In 2022/23, we topped up the additional £4m Market Sustainability and Improvement Fund by another £1m and this will be used to support further implementation of Actual Cost of Care (with a review within six months to ascertain whether any providers still paid below Actual Cost of Care rates can be accelerated to the Actual Cost of Care rate in-year, subject to funds).
The grant will also be used to support the implementation of increased rates arising from the new Approved Provider Lists (APL). An inflation award of up to to 9.4% has been given and that is on top of revised APL rates. The inflation award also took into account the Fair Cost of Care exercise for Domiciliary Care as well as the Homecare Association’s recommended rate for 2023/24.