The privatisation of adult social care is a 30-year process that has grown unchecked, made worse by austerity politics. Should the private sector lose interest and leave the market, the consequences will be grave. Bob Hudson writes that, whilst it is not feasible to eliminate a model that has become so deeply embedded, improvement is possible. He explains how this would include a combination of better funding and smarter commissioning.
The outsourcing of public services to private companies is a model in disarray. The impetus for challenge has been the collapse of the outsourcing giant Carillion but concerns have also been raised across a number of other public services including probation, the prison service, forensic science service, and the NHS. Much less interest has been paid to the longer-standing privatisation of adult social care, where the debate tends to be focused on levels of funding and the respective obligations of the state and citizen to contribute to individual care costs. This relative absence of policy interest in examining the ownership structure of adult social care may be due to three related factors – market penetration, market fragmentation and market fragility.
Market Penetration: The longer the period over which outsourcing has taken place and the greater the penetration of the market, the more difficult it is likely to be to reverse the situation. This is the situation with adult social care, where the process has been in train for over 30 years and the current structure is deeply embedded. In 1979, 64% of residential and nursing home beds were still provided by local authorities or the NHS; by 2012 it was 6%. In the case of domiciliary care, 95% was directly provided by local authorities as late as 1993; by 2012 it was just 11%.
Market Fragmentation: There is no compact adult social care service that can be easily repatriated into public sector ownership. Rather the sector is characterised by a multiplicity of fragmented, competing providers. The care home sector supports around 410,000 residents across 11,300 homes from 5500 different providers. The situation in home care is even more diverse with almost 900,000 people receiving help from over 10,000 regulated providers. Nor is it any longer the case that the state is even the dominant commissioner of these services – the privatisation of care alongside tighter access to local-authority-funded care has resulted in a large growth of self-funding ‘customers’.
Market Fragility: The third complicating feature of the adult social care market is its fragility and the politically toxic consequences of market failure. The first major casualty was Southern Cross in 2011 – a large national care home provider which had 9% of the market nationally but a much greater share in certain regional areas. Much of the Southern Cross provision was eventually taken over by another major provider, Four Seasons, which is itself now at high risk of going under. Either through financial collapse or strategic withdrawal the market model is at tipping point.
There is a growing view that the problems associated with the outsourcing of adult social care need to be addressed, but if no ‘big bang’ change is feasible, what are the alternative options? Better and fairer funding is a prerequisite but the local state (as the biggest commissioner of services) and national government (as policy-maker) can also act in other ways that could create better care quality and reshape the provider mix. Four dimensions can be identified: commission local and small; commission holistically; commission individually; and commission ethically.
Commission Local and Small
The trend, especially in the residential sector, is for small operators to be replaced by large provider chains with more than fifty care homes which in turn house up to a hundred residents each. A focus on smaller and more local commissioning is needed to counteract this trend. Small organisations hold vast expertise about the issues affecting people locally and can serve very specific communities of interest. Moreover, much of what they do focuses on bringing people together which ties in closely with the policy focus on loneliness, ideas around Asset-Based Community Development, and on supporting communities to rebuild their own social infrastructure by harnessing community businesses.
Complementary to this is the concept of Local Wealth Building, a growing movement in Europe and the USA based on the principle that ‘places’ hold significant financial, physical, and social assets of local institutions and people. The key here is local ‘anchor’ institutions (public, social, academic, commercial) and their procurement role in supporting the local supply chain. This will include opening markets to local small and medium enterprises rather than looking to national and international chains. Central government also has a role to play here, for example by minimising corporation tax rates for small local businesses.
It no longer makes sense to think of social care commissioning in isolation. Rather the focus is upon ‘holistic’ or ‘place-based’ commissioning. Most social care is commissioned separately from other place-based interventions. However, market-shaping is a much broader strategic task spanning several council departments and other partners – social care, transport, housing, economic development, health, community safety, training providers and more. Coordination on this scale would require significant investment in capacity, skills, and structures – in effect, the reinvention of robust local governance.
Policies on access to social care support have created two groups of ‘individual commissioners’: those who fund their own care and those whose care is funded via an individual budget. Both are in need of greater support. A market requires ‘customers’ who seek and digest information to inform their choice of product. From this perspective the care home market in particular has some characteristics of an inefficient market – entry is often unplanned, made in response to a personal crisis and with very low rates of switching to a different provider in the event of dissatisfaction. The Competition and Markets Authority raises the prospect of enforcing consumer law, but others will take the view that it is simply not possible to replicate a market with informed ‘consumers’ in the social care sector. However one option that can work for some people is that of personal budgets and more recently personal health budgets, though here too there are issues to be resolved around matters like making choices and decisions; receiving information and advice; budget management, monitoring and review; and risk management and contingency planning.
Pixabay (Public Domain)
Ethical commissioning could include the following dimensions.
Commission from ethical employers: Commissioners need to be able to distinguish between the workforce practices of different providers and prioritise those acting as ‘good employers’. This might have several components such as prioritising providers that comply with minimum standards around workforce terms and conditions, have effective training, staff development and supervision, and encourage staff to participate in collective bargaining.
Commission from transparent providers: A ‘transparency test’ could stipulate that, where a public body has a legal contract with a private provider, that contract must ensure full openness and transparency with no ‘commercial confidentiality’ outside of the procurement process. All providers of public services should – at a minimum – publish details of the funding they receive, performance against contractual obligations, the suppliers to whom they subcontract services, the value of these contracts and their performance, and user satisfaction levels.
Commission from tax compliant providers: The ownership of all companies providing public services under contract to the public sector, including those with offshore or trust ownership, should be available on the public record. At the same time, a taxation test could require private companies in receipt of public services contracts to demonstrate that they are domiciled in the UK and subject to UK taxation law.
Commission from not-for-profit providers: A fresh approach to adult social care offers the opportunity to rethink the role of other sectors. Whilst wholesale renationalisation seems unlikely there is every reason to encourage local authorities to begin to build up their own in-house provision and to support all organisations with a social purpose, whether in the public, private or voluntary sector. This could include encouragement for user-led organisations, social enterprises, mutuals and others to recruit and train service users in innovative ways.
The privatisation of adult social care in the UK has an unusual policy trajectory compared with other sectors. Devoid of any real debate or stated purpose, a 30-year process of outsourcing has grown unabated and unchecked. The scale of penetration and the dismantling of alternative providers have resulted in a situation that fails to meet ordinary market standards around choice and control. And now, as a result of austerity politics, there is every chance that the private sector will lose interest and leave the market with serious consequences for those in need of services and support. Whilst it is not feasible to simply eliminate a model that has become so deeply embedded, a combination of better funding and smarter commissioning can, over time, reshape ownership structures, increase provider stability, focus on ethics rather than cost, and enhance the quality of care.
Bob Hudson is Professor in the Centre for Health Services Studies at the University of Kent.
All articles posted on this blog give the views of the author(s), and not the position of LSE British Politics and Policy, nor of the London School of Economics and Political Science. Featured image credit: Pixabay (Public Domain).
A great read. Very interesting Bob.
I have completed some of my own analysis on the pricing of care homes regionally that might be of interest. Similarly I am currently working on a piece analysing the place of the ‘big 5’ within the market and how they operate.
@Ali here is the work I have completed on the cost of care by region if it would be of interest to you. https://www.carezee.co.uk/supportandinsights/how-much-does-a-nursing-home-in-england-cost
“In the case of domiciliary care, 95% was directly provided by local authorities as late as 1993; by 2012 it was just 11%.”
Can you tell us what they were at the time of the 2010 GE. It seems as if your figures are being slewed and used to portray that the 3 terms of Govt.under the Labour party none were privatised.
A thorough analysis of the current state, and conceivable development, of social care. I agree that there is potential for a solution to work in concord with proposals for the loneliness strategy, in particular, those focusing on society’s responsibilities. Both issues are everyone’s concern.
Social care must be taken care of. Private or not, will never change the fact of helping our elders with their needs. Focus on ethics rather than cost is a must and the will of taking a good care of them would make them feel loved.
Interesting and sound article, but written from the perspective that the commissioning role is, and will be, with the local Adult Services Authority. Speaking as a Cabinet Councillor Member for Adult Services, I wish that were the case. But behind us, we have the dark fog of the emergence of “Accountable Care Organisations”. Over the years and more so in recent days we have been working closer and closer with our local NHS at both Foundation Trust and CCG level to provide a seamless bespoke service from the operation theatre to rehabilitation and return home and beyond. Indeed, the NAO have seen our area in the front rank of this process.
However, on both sides, there are concerns about the centrally driven ACO model – particularity some of the potential models that have been cascaded down from on high in NHS England..
Perhaps another article might be needed ?
Why no mention of how ‘procurement’ has overridden ‘commissioning’ because pennies matter (more than outcomes)? My experience was of a move towards councils attempting to procure the cheapest possible service rather than commissioning trusted, known providers to provide services they had a good history of doing. They even had bid lower than their competitors to be selected. Only large scale providers could actually run a service for less outlay. Perhaps if commissioners were moved internally less frequently service recipients might benefit from their expertise – but only if councils stop procuring for cost and restart commissioning for outcomes.
Interesting article Bob, and following up on some of the comments made – there is a huge disparity between the huge care providers with profit margins as a driving force compared to those who re-invest.
I hope the UK can find a solution to the rising cost of care, and not have to privatise the whole industry. I think it will ultimately impact the poorest first. It seems many decisions are dictated by cost first, with patient welfare 2nd. I can never see it being fully privatised to be honest.
Researching the cost of care, I found the cost of care across the country varies wildly (http://www.trustedcare.co.uk/care-map) and it would be interesting to see how that would play out without government intervention.
Somebody has to drive forward a serious national debate on these terms. There is also significant market failure from the privatised model. Local observation without research to back it up (anybody researching it?) is that there is a large and growing population out there not poor enough to receive adult social care provision and not rich enough to afford £750-£1000 a week private. Inflating home rates (+5% pa) and falling LA funds serve to grow this “unserved” pool. For those who can start private; residence terms are shortening too, With risk-free saving rates at 0.7%; home sales proceeds used to fund care shrink rapidly with private providers looking for 4-5% annual fee uplift to ensure margin. Then there is the geography of exclusion. Low house prices in national “cold spots” mean there is a significant and growing shortfall of overall home-sales returns available to persuade private providers to make a market. Those who sell to fund care face a short term of residency before the cash pot runs out.This is on top of the extra demand in poorer localities from those qualifying for public provision. Watch out. This is a crisis heading your way whoever you are.
Great blog, but I’d certainly encourage you to look a little more deeply at co-operative models, which have values and co-production as part of the model.
For example, you are ask for a Tax Test but overlook the Fair Tax Mark which already exists, pioneered by co-operatives and now being taken up by FTSE companies.
You praise small providers, many driven by values of care, but overlook the way that these can come together, as in Doncaster, through a co-operative consortium.
Let’s make these connections as we look to solutions for a broken care service.
For more on co-operative options around social care, see https://www.theguardian.com/social-care-network/2017/jun/23/co-operatives-social-care
Appreciate pointing out the value of small organisations working locally but please take into account all company structures.
For example Privately run, transparent, ethical, B corporations, who seek to make a small profit to re invest in the purpose, are organisations that need to be included in dialogue.
As it stands central government fails to support and worse still, is penalising customers who utilise local services provided by such organisations because HMRC continues to charge service users VAT on welfare services.
Fiscal equality needs upholding and diversity of service provision needs to be encouraged, especially when basic service provision is denied to so many.
Local organisations hold vast expertise about the issues affecting people in their communities. Local knowledge is paramount.
Everything we do focuses on bringing local people together which ties in closely with the policy focus on loneliness, ideas around Asset-Based Community Development, and on supporting communities to rebuild their own social infrastructure. Furthermore central to our mission is providing very much needed work opportunities for an ageing workforce.
Employing local people to provide local service makes provide local ‘anchors’ and it would be great if Central government would step up
One reason for the expansion of private nursing homes in the early 1980’s was the fact that the NHS wanted to reduce the number of long stay geriatric beds in hospitals. Social Services departments discovered that the cost of private residential care could be met by the Government where residents were in receipt of supplementary and other state benefits. I can provide a reference it that would help.