The Future of Residential Care for Older People in Scotland - Full Report

Part 3: Supporting Sustainable, Quality Care Services

Regardless of the setting in which someone is receiving their care package, getting the Commissioning, Funding and Regulating mechanisms right is crucial to ensuring the experience is as smooth as possible and ultimately provides high quality care and value for money.

Unfortunately another element that has become increasingly important is the need for robust contingency planning, something which is essential to ensure the continuity of care for service users and residents. Ideally the swift and strong response by the Care Inspectorate and local authorities to recent cases where standards have fallen short will have sent out a strong message that sub-standard care is not acceptable, but also, the creation of joint-strategic commissioning strategies and the review of the care standards will mean that all parties are clearer on what is expected of them in the delivery of care.

But inspections and funding streams needn't be the only source of threat to the continuity of care, and we need to acknowledge that there are events (e.g. flood, fire etc.) that simply can't be predicted.

Commissioning

Background

Since the development of the National Care Home Contract in 2006, standardised contracts and more transparent and consistent approaches to funding care have been established. This has largely overcome the variation and complexity in the contractual relationship between the individual, the provider and the council - something the Office of Fair Trading was particularly critical of prior to the establishment of the National Care Home Contract. Considerable progress has therefore been made on the procurement of care in care homes over the last decade, resulting in a more stable and efficient purchaser-provider relationship through a national model contract and fee structure that all councils have used.

However, the current mix of services within the care home market is not producing optimum outcomes. There has been limited innovation in the sector. For example, the development of intermediate care facilities at scale has not happened (which would build up the confidence and abilities of older people who are ready to be discharged from hospital but not yet fit enough to live independently in their own home). In addition, generic long-term care provision has been variable, with a significant minority of operators continuing to provide care at undesirable quality levels.

Within this context, it has not been possible for local partners (NHS Boards, local authorities, third and independent sector) to fully shape market behaviour and as such there have been growing levels of interest in moving towards a commissioning model.

Why do we not commission care homes at the moment?

Historically, the focus in Scotland has been limited to a process of improving the purchaser-provider relationship that exists with the care home sector. While this has delivered the gains identified above, the development of a more managerial or commissioning based relationship has not been sought, which would move beyond the purchaser-provider paradigm. This was in part due to confidence among commissioners that the private sector (which is the predominant sector), based on an appropriate return on capital investment, would make sound business decisions in localities with serviceable demand. In turn, consumer choice was held to drive market behaviour (in the sense that any market functions by responding to customers' preferences). As such, there was deemed to be less need for the purchaser (the local authority) to define what services were required since the end-user would be in a position to identify service requirements by exercising choice within the market place. In other words, the accepted paradigm was that care home operators would do the 'commissioning thinking' based on consumer preference and local authorities would simply buy the product.

However, as the business models of providers became more elaborate, coupled with a downturn in the economy and a shift in policy direction, we have witnessed a gradual erosion of occupancy rates and a previously unknown financial fragility within the sector. What is more, consumer choice has not delivered the innovation and market responsiveness that we would have expected. In a rational world, service users would avoid poorer quality homes, which would then be forced to exit the market; but in practice, the variability of information, fluctuating standards, the wish of service users to be placed close to their family or community, and the financial power of large national providers who can protect poorly performing homes, all distort the operation of choice. And even in those circumstances where business failure does happen, there are significant political and professional reasons to disallow this form of market correction (there is significant evidence that sudden and unplanned closures impacts on the health and life expectancy of care home residents).

For all of these reasons, a commissioning model never developed. But precisely because of the deficits outlined above, now is the time to develop this thinking.

Why is commissioning important?

In taking forward the Reshaping Care for Older People Programme, partnerships are required to establish, through their strategic joint commissioning plans, how the balance of care will shift over time, as they seek to move away from reliance on institutional care facilities such as hospitals or care homes.

The commissioning process involves: assessing and forecasting population need; planning the range, type and quality of services and support mechanisms that need to be put in place to meet those population needs; putting in place arrangements to deliver or procure these services and support mechanisms; and reviewing the process by establishing whether objectives have been met. Health and Social Care Partnerships will develop a commissioning plan across the spectrum of early intervention and prevention, through diagnosis, treatment, rehabilitation and better management of long term conditions to long term care.

This commissioning agenda is fundamental to the future integration of health and social care services - and is now the accepted process for dealing with 'whole system' service redesign. For example, unless we invest in anticipatory care and appropriate care at home capacity, unscheduled care may become more challenging to manage.

Under the proposals for health and social care integration, the new Health and Social Care Partnerships will be responsible for developing commissioning plans, in partnership with the third and independent sectors. These plans may also provide for the tools of re-commissioning and decommissioning, described in more detail later in the discussion.

Commissioning for the Care Home Sector

As part of the strategic commissioning process, the Public Bodies (Joint Working) Bill will require integration authorities to:

• Embed patients/clients and their carers in the decision-making process;
• Treat the third and independent sectors as key partners; and
• Involve GPs, nurses, other clinicians and social care professionals in all stages of the planning work, from the initial stages to the final draft.

Good strategic plans should:

• Identify the total resources available across health and social care for each client group and relate this information to the needs of local populations;
• Agree desired outcomes and link investment to them;
• Assure sound clinical and care governance is embedded;
• Use a coherent approach to selecting and prioritising investment and disinvestment decisions; and
• Reflect closely the needs and plans articulated at locality level.

The group agreed that taking a commissioning approach should, over time, shape and manage the care home sector.

National perspective

It has been acknowledged that local partnerships need significant support to take this work forward. This was highlighted by Audit Scotland which was critical of commissioning skills in Scotland in its report Commissioning Social Care^[18] (2012), and recommended that local authorities, along with Health Boards and other relevant partners, should develop commissioning strategies, a recommendation that was accepted.

A national steering group has been established to take forward joint strategic commissioning, which in addition to producing a common definition of commissioning, has overseen the production, and ensuing launch, of a Learning Development Framework in order to assist those responsible for improving joint commissioning skills and capacity across local partnerships.

In particular it explores the skills needed to deliver effective joint strategic commissioning of older people's services. However, it is intended that the material is useful for other groups of patients and service users as well - the joint commissioning skills involved are relevant to all populations, service users and patients. It is of particular use to:

• Senior Partnership leaders, executives and commissioning managers;
• Officers with responsibility for training, organisation development and HR; and
• Individuals wanting to develop their own joint commissioning skills.

The Framework was developed, in consultation with a wide group of stakeholders, by the Institute of Public Care (IPC), part of Oxford Brookes University and published in November 2012. It helped shape partnerships' first iterations of their local JSC Plans, which were prepared for February 2013.

Following completion of the Learning Development Framework, the Joint Improvement Team (JIT) was tasked to lead on the development of a National Improvement Support Programme (NISP). This involved scoping the various initiatives that are planned and underway by national partners to support this agenda and details what support partnerships can expect to receive directly from the JIT. Over time the NISP will provide a medium for introducing greater coherence and co-ordination across the commissioning improvement landscape.

We will, in particular, work with partnerships to build up expertise analysis of joint data, including details on dependency levels within the current cohort of care home residents, reasons for admission, lengths of stay etc. This combined with analysis of future trends will be important in undertaking a Joint Strategic Needs Assessment.

Joint Strategic Needs Assessment

Joint Strategic Needs Assessments (JSNAs) analyse the needs of local populations to inform and guide the commissioning of health, wellbeing and social care services within each partnership area. The main goal of a JSNA is to accurately assess the care needs of a local population in order to improve the physical and mental health and wellbeing of individuals and communities.

Market Facilitation

Market facilitation can be broadly defined as follows:

"Based on a good understanding of need and demand, market facilitation is the process by which strategic commissioners ensure there is sufficient appropriate provision available at the right price to meet needs and deliver effective outcomes both now and in the future."

As we move to a position where more people are funding their own care it could be argued that there is less need for the state intervening in the relationship between the provider and the consumer. However, if we leave the care home sector to be entirely driven by market forces then we would have to acknowledge that some businesses will fail and that will mean vulnerable people being rendered homeless. Should this happen on a large scale then we would be faced with another Southern Cross crisis. Also, in a pure market the tendency is to gravitate towards larger suppliers who can offer greater economies of scale. Whilst in some aspects of public care this may be desirable there may also be a good case to protect small local organisations who supply a different kind of service. In addition, the majority of care purchases are still funded by the state. The duty of care and the duty to ensure best value remains with the local authority.

Some sort of market facilitation therefore will be vital but should move away from a paternalistic approach of 'the state always knows best' and into a world where strategic commissioning fully involves providers and service users to ensure the right levels and variety of supply of quality care are available.

Market Facilitation Statement

In order to help facilitate the market, partnerships should develop a Market Position Statement, a brief analytical document that presents a picture of demand and supply now and in the future. It should indicate the necessary changes, characteristics and innovation to service design and delivery identified as needed to meet the needs and preferences of the population using those services. It should be developed in terms of improving outcomes for service users and driving up quality.

A good Market Position Statement should include:

• The overall direction strategic commissioners wish the market to take;
• Predictions of future demand across the whole market, identifying key pressure points and the rationale behind assumptions made;
• A picture of the current state of supply covering strengths and weaknesses within the market;
• The areas where a partnership would wish to see services develop and those areas where it will discourage additional service provision;
• An integrated workforce development plan to ensure there is the skilled staff to deliver the services needed; and
• The support that can be offered towards innovation and development.

Commissioning for the care home sector should not be problematic where the provision level is adequate or where new provision is sought in areas of under capacity. Dealing with excess capacity or diversifying the current scope of provision will require partnerships to decommission or re-commission.

Decommissioning

Decommissioning can be a response to a planned change to meet changing needs and expectations of local populations, or to national and local policy drivers including shifting patterns of expenditure, or sometimes it is a response to an unforeseen event, such as the failure of a service in terms of its quality or viability. Clearly we would prefer this to be developed as a planned process rather than a reactive process. Whatever the trigger the characteristics of an effective decommissioning process are straightforward:

• Careful preparation;
• Clarity about what is to be achieved and why;
• Transparency and good communication; and
• Keeping the service user as the focus of the activity.

Decommissioning is the process of planning and managing changes in service, usually either a reduction or a termination, in line with commissioning objectives. It is not necessarily as clear cut as stopping an entire service completely. It may be that a new service will replace what has been taken away, or the existing service will be changed in some way.

Re-commissioning

Where we are looking to make changes to these services, we might refer to the process as re-commissioning. This would commonly be called reconfiguration or service redesign, and is a part of the commissioning process that might follow on from decommissioning and disinvestment decisions. Some new developments may arise through diversification by existing providers. For example a care home may diversify into offering a wider range of outreach services into the community, or may offer more specialist or short-term alternatives such as step-up or step-down care. We would seek to encourage moves to diversify into areas such as intermediate care and should consider if there is a need to incentivise such diversification or whether providers in particular areas will naturally diversify given the planned shape of the sector and/or based on demand.

Role of providers

Commissioning is not simply about procurement of services from external providers. It is about a mature relationship between different partners from across the public, private and voluntary sectors in a way which will help to achieve the best services for the population. Providers themselves will bring knowledge and experience of their services and the outcomes they are delivering. Every partner has a role to play in joint commissioning, and that is why it is important that local arrangements promote mature relationships and constructive dialogue. Those involved in the joint commissioning process need to develop their skills in working with a range of partners including the private and third sector, along with service users and their carers to build and implement commissioning priorities. Clinicians and care professionals in locality groups also play a key role in ensuring that local needs are understood, and that they inform the overall priorities.

Role of others

Health and care support for older people is not only funded through public sources or always managed directly by public agencies. Many people buy some of their care, make use of family, informal voluntary and community services, or use self-directed support. It is increasingly important that the statutory bodies look to understand the contribution that these services make, ensure that they are taken into account when planning new developments, and that they are helped to make the best possible contribution to achieving good outcomes for older people - even if they are not funded directly.

These development areas for joint commissioning will be influential in the design, development and delivery of the whole care system. They will help to ensure that the balance of services are what older people want and need, and that they will be best able to meet the needs of the population into the future.

It is clear that the banks also have a key role, not least in supporting home owners in times of difficulties. Partnerships (and Government) will need to work with the banks to encourage such support be available but also to ensure banks are aware of local joint strategic commissioning plans, in particular the Market Position Statement. This should help influence funding decisions in the future so that inappropriate ventures are not supported against the wishes and needs of the local commissioning partners.

Discussion

It is worth acknowledging that no initiative will change the shape of the current market overnight. Indeed this wouldn't be desirable, given the impact it would have on providers and the likely unintended consequences that would arise. Any new measure(s) will need a 3-5 year period to shape a market which reflects population need and policy direction. In areas of under capacity it will take time to attract new entrants of the right calibre to the market. In terms of over-capacity, this will likely require the market itself to naturally shrink by homes either voluntarily closing or adapting their business model to address the reshaping care agenda and public expectations. There may be opportunities through the commissioning plan to 're-commission' or redesign some facilities or places as intermediate or specialist care.

In setting out the ideal level of care home provision for the future, it will be even more important for the statutory bodies to support third and independent sector care homes to drive up quality. This will be particularly important in terms of earlier intervention around poor performing homes in order to put support in place to prevent deterioration and ensure improvements.

The Scottish Care Home Census provides data on care homes from 2000 to 2012. This shows that the number of care homes for older people has reduced from 1,059 to 916 over that period. However, the closure of several smaller homes and the introduction of larger, purpose built homes has meant the number of places (beds) has remained relatively constant, reducing from 39,178 to 38,465. This 1.8% decrease compares with a reduction of 36% over the same period in learning disability beds where there is a clearly articulated policy to shift the balance of care from bed based models to housing and community based models. Older people's care home provision in the statutory sector has reduced by 25% while the independent sector has increased by 7.7% (table 2).

The census also shows (table 14) a reduction in the rate of registered places per 1,000 population over 65, from 49 in 2000 to 43 in 2012, with a variation between local authorities from a low of 27 to a high of 53.

The average weekly charge for self-funders in care homes for older people was £698 per week (table 7). This varies from highs of £839 in Argyll & Bute, £829 in Aberdeen and £812 in Edinburgh to lows of £600 in East Ayrshire and North Lanarkshire.

The occupancy level across Scotland for older people's homes was running at 87% in 2012 (table 3), a level that has remained fairly consistent over the years. However, the occupancy levels show great variation between local authority areas with a high of 96% in Orkney (which has the lowest rate of places), 93% in Edinburgh and Highland (which are currently finding quality issues reducing even further the number of places available), and 92% in Midlothian (the 'Edinburgh effect'). The lowest occupancy levels are recorded in East Dunbartonshire (also with a very low rate of places) at 67% and Clackmannanshire at 72%.

It should be recognised that in some areas, the local authority is the default provider of residential care, as the independent sector may not be willing to engage. It is important that taking a strategic commissioning approach to the sector is not just about care purchased from the independent sector but includes that provided by the statutory bodies. Indeed, to take such an approach is not to treat the sector in isolation but to see it within the whole spectrum of care.

The Group discussed several possible ways of more directly managing the market.

Tendering

Since the inception of a care market in the early 1990s, local authorities have typically avoided using tender based solutions to procure care from the care home sector. This is partly because of the predominance of the free market paradigm, which is underpinned by statutory regulations (the Choice Directions) which outline the rights of individuals to select care homes of their choosing within the market place.

However, it is possible to envisage a role for tender based commissioning. Under this model, the commissioning partnership maps its future population need and - within a whole system context - specifies the local requirements for care home provision over the next 5 years and beyond in terms of quality, quantity, interface and pathways. The commissioning partnership enacts these preferences by selecting 'preferred providers' through a tender process. While the non-successful providers will remain registered and hence a viable care destination, social workers would advise new service users of those care homes that meet the council's specified requirements in terms of quality etc. The likelihood is that most service users would be content to work within this arrangement; but for the minority who are not, they would be entitled to choose a care home out-with the preferred providers list, so long as the other choice directions are met.

This would mean that commissioners would be able to shape the market in line with local circumstances and population demand. It would, under the right circumstances, develop a stronger partnership between commissioners and preferred providers, drive up quality and would potentially strengthen financial viability as occupancy levels of preferred providers improve.

We recognise that two important populations would not be covered by these arrangements: people already living in care homes (the presumption would be that they continue to reside where they are) and self-funders. Where self-funders exhaust their capital, they will be entitled to public funding - but may not reside in the care home of a preferred provider.

There are a number of variables that therefore have to be worked through. However, if there is interest from individual partnerships to run with this model, we may be able to use 2014/15 as an opportunity to learn from individual pilots. Glasgow City and Aberdeenshire are interested in taking forward this approach.

Licensing

An alternative possibility would be to explore the licensing of care homes/care home beds, which would give the local authority the power to define local capacity. We understand that this is the preferred approach in France, Canada and some other countries and some states in America. No new licenses have been issued in France in the last two years. Each bed is licensed so you can close a home and transfer the license to a new build or, alternatively, invest heavily in refurbishing an existing home with the confidence that new competition will not appear.

While this would help control the number of care home beds in each local authority area, consideration would need to be given to cross boundary flow and incentives for developers in areas of high property/land values. Introducing such a scheme may create a conflict of interest where local authorities are a provider as well as the licensing authority, although it could be argued that this conflict already exists in the current commissioner/provider roles the Council plays. Account would also need to be taken of EU directives.

Establishing a licensing scheme would be relatively easy, by amending the Civic Government (Scotland) Act 1982. A similar approach was taken in 1991 with the licensing of Houses in Multiple Occupation (HMOs). However, local authorities appear to have reservations about such an approach. Anecdotally, it has been suggested that local licensing authorities are reluctant to take on more categories. There tends to be a presumption against being unduly restrictive in granting a license, in other words licenses are granted unless there is a particularly strong reason not to. Any refusal would be open to challenge via the Courts.

An alternative route might be for the Care Inspectorate to become a national licensing body. While this would strengthen the regulatory role of the Inspectorate it would be more difficult for local partnerships to influence local capacity. Whatever route might be taken would need to address the links between licensing and registration.

The role of Planning

Members of the sub-group have explored the potential use of physical planning regulations and policies to define the conditions under which a new care home development would be supported. In particular, we have been discussing whether there is scope for the Scottish Planning Policy (SPP) to give more weight to the economic sustainability of such proposals, which could in turn create a hook for policies to be developed within Local Development Plans.

Informal discussions have taken place with Scottish Government planners to discuss this issue. The planners have indicated that there may be scope to amend SPP wording and have asked for some draft wording for further discussion.

Heads of Planning (HOPS) and the Society of Local Authority Chief Executives (SOLACE), however, are keen to stress that economic viability is not a planning issue and that other avenues should also be sought.

The following wording has been taken to Scottish Government planners for consideration:

Specialist Housing Requirements

100. As part of the Housing Demand Needs Assessment, authorities should consider whether there are any new build requirements for particular needs including housing for older people, sheltered housing, care homes and other accommodation for residents requiring care. Where a need is identified, planning authorities should prepare policies to support the delivery of appropriate housing and consider allocating specific sites. The local development plan should also address any need for houses in multiple occupation (HMO). More information is provided in Circular 2/2012 Houses in Multiple Occupation.

Preferred providers

A local authority is entitled to operate a preferred provider list, detailing those companies/organisations with which it prefers to contract. This would most likely be on grounds of quality and cost. However, where a system of preferred providers is in place, it ought to remain open to an individual to opt for a home that is not on the preferred provider list and, as long as the conditions of the Directions on Choice are met, the local authority would be obliged to arrange such a placement.

The Choice Directions do not prevent an authority using a system of preferred providers, in particular in the small number of cases where people have no particular preference about a care home. Where people do have a preference the authority can still recommend the homes that it prefers to deal with. So if an authority operates a system of approved providers it will need to make clear that that such a list is merely the providers it recommends and contracts with because these care homes meet the council's specification, but is not an exhaustive list of the choices that may be available.

Revise the Directions on Choice

Irrespective of the innovation that can be delivered via practice based reform, the commissioning sub-group queried whether the commissioning approach will in the long term conflict with the regulations and that therefore it is appropriate to ask whether the regulations need to be updated to deliver a better fit with commissioning-based practice. In particular, it was felt that the Choice of Accommodation Directions could be amended to ensure that commissioning practices are allowed to flourish and that the choice individuals make is situated within a higher quality market.

The Directions currently require authorities to give effect to the choice of accommodation of the individual so long as:

• the accommodation is suitable to the person's needs as assessed by the Local Authority;
• it will not cost the authority more than it would usually expect to pay;
• the accommodation will be available within a reasonable period; and
• the person in charge of the accommodation is willing to provide the accommodation subject to the authority's usual terms and conditions.

Current guidance is being revised to clarify what these Directions mean in practice, for situations where people are choosing a care home place following hospitalisation (most placements are following an episode of in-patient care).

It could be argued that these directions already shape the choices that people can make. For example most authorities will not offer poorly graded care homes as they would not be deemed 'suitable to the person's needs'. Likewise, unless a publicly funded resident was willing to pay a top-up then homes would need to be available at the National Care Home Contract rate. However, others have argued that the Choice Directions still effectively debar partnerships from exercising a commissioning function over the care home sector - since they have no obvious levers to control market entry or exit. As such, should taking a commissioning approach not have the desired influence over the market, it might be necessary to revise the Choice Directions themselves to ensure that they fit within the context of Health and Social Care Integration. Once the Public Bodies (Joint Working) Bill is enacted, and partnerships have a statutory duty to produce a strategic plan, a further qualification could be added to say:

• the accommodation and model of care has been approved by the integration authority as meeting the requirements of its strategic plan.

The effect of this addition - or something similar - is that the exercise of individual choice would be framed in terms of the care homes that the Health and Social Care Partnership has endorsed in terms of quality, model of care and location.

Revised choice directions would lead to the rationalisation of care home provision, and it may mean some care homes leave the market. It could be argued that this will happen anyway as the reshaping care programme is delivered, only that instead of it being on a medium-term and planned basis, it would happen short term as a result of either financial instability or poor quality care, with a significantly greater impact on residents. However, by strengthening the commissioning approach to make clear statements about future levels and range of provision this should evolve without the need for more stringent controls such as licensing or revising the Choice Directions.

The role of Self-Directed Support

In addition to the reforms outlined above, consideration also needs to be given to the impact of Self-Directed Support on the care home sector, and in particular, to the possibility of a Direct Payment being used to arrange care. Regulations on this matter are currently being drafted by the Scottish Government and the Task Force welcomes the news that a pilot of Direct Payments in Care Homes is planned.

If the status quo is changed to allow for the use of Direct Payments, it would potentially weaken the impact of reformed Choice Directions, inasmuch as the commissioning partnership would be less able to shape the market in line with its commission plan (since people using a Direct Payment would have the right to choose any care home, irrespective of quality and strategic fit).

On the other hand, a Direct Payments arrangement could open up choices within care home settings, to split off hotel costs from care and support elements and potentially bring the individual's preferred provider into a care home run by another operator. One question to explore here is whether the use of a Direct Payment requires the care home to be able to disaggregate or stratify its costs into constituent elements (e.g. rent, board, care etc.). This links to the broader debate about funding being advanced by the Task Force, and certainly it would seem that the recommendation to stratify costs would provide favourable conditions were Direct Payments to be rolled out nationally.

Jointly commissioned, locally delivered Intermediate Care

Intermediate care is an 'umbrella' term describing an approach involving a collection of professional disciplines working to common, shared objectives and principles. It provides a set of 'bridges' at key points of transition in a person's life, in particular from hospital to home (and from home to hospital); from illness or injury to recovery and independence; helping a person achieve their personal outcomes. 'Maximising Recovery, Promoting Independence: An Intermediate Care Framework for Scotland'^[19] describes a continuum of integrated services to prevent unnecessary admission to acute hospital or long-term residential care, promote faster recovery from illness, support timely discharge from hospital and optimise return to independent living.

By its nature in acting as a bridge between locations, sectors and personal circumstances, intermediate care must operate within mainstream pathways of care - crossing acute and community based services.

Intermediate Care should be accessed at times of "crisis" to complement existing care (where this is in place), providing a therapeutic, outcomes focused care plan. It can also form part of a range of planned interventions, this is particularly important for those with long term conditions. Wherever possible this will be provided in the person's own home, but a range of locations may be appropriate, including care homes and community hospitals. Good practice would suggest that part of the suite of services provided in local areas should be available out of hours, with a fast, easy, single point of access to assessment.

The Reshaping Care for Older People programme^[20] aims to support more older people to live well at home through scaling up delivery of anticipatory and coordinated care and support in the community. When people with complex multiple long term conditions with a combination of physical, cognitive and functional impairments experience a flare-up of their conditions they require urgent access to comprehensive multi-professional and multi-agency assessment. They are often admitted to hospital as an emergency, where they may be susceptible to healthcare associated infection, delirium and challenged to maintain adequate nutrition and tissue viability. These individuals statistically have longer stays, higher mortality, higher rates of readmission and increased risk of institutionalisation.

Intermediate care services can be provided in:

• Individuals' own homes, sheltered and very sheltered housing complexes;
• Designated beds in local authority or independent provider care homes;
• Designated beds in community hospitals.

Partnerships with comprehensive intermediate care services are showing accelerated reductions in rates of emergency bed days and delayed discharge compared to those which have been slower to implement hospital at home and other models of community based intermediate care.

The principles that underpin Intermediate Care are:

• Delivered at home, if safe and appropriate, or as locally as possible;
• Accessible, flexible and responsive through a single point of access that operates 7 days a week, and ideally 24 hours a day;
• Focused on rehabilitation, reablement and recovery;
• Targeted at those at risk of emergency admission, or re-admission, to hospital, or to avoid premature permanent admission to a care home;
• Based on holistic assessment to maximise independence, confidence and personal outcomes sought by the individual;
• Linked with and complementing local community and specialist services;
• Co-ordinated on site or in-reach support from multi-professional and multi-agency team with the required expertise to meet complex needs;
• Time limited, with anticipatory care and multiagency discharge planning from day one;
• Jointly commissioned by the partnership;
• Managed for improvement, gathering information on experience and outcomes and using this to inform service improvement.

Level of actue need
Individual becomes unwell. Primary care; District Nurse; Social Work; Home Care; NHS24; Ambulance practitioner; A&E attendance. Contact Single Point of Access Assessment Intervention as required: Nursing Therapy Support Worker Timely diagnosis by GP Specialist input by: Geriatrician Community diagnostics Rapid Response Team	If too unwell to be cared for at home, step up to community facility. History / Examination / Diagnostics. GP, Nurse practitioner or Consultant review within 24 hours. MDT input with principle of care delivery at home when appropriate (as it may be in a care home).	If too unwell to be cared for in a community facility, admit to acute hospital for comprehensive assessment. Transfer to community facility or home when medically stable and fit for transfer.
Level of need during recovery
Timely comprehensive multidisciplinary and multi-agency assessment : Rehabilitative need identified. Referral to Intermediate Care Single Point of Access. Individual is medically stable and fit for transfer. Individual transferred to the appropriate setting: Own home Community based facility (such as a care home or community hospital)	If the individual requires more care than can be delivered at home, step down from acute hospital to community facility. Regular MDT and GP / Nurse / Consultant review with principle of care at home to continue rehabilitation when appropriate	Majority of users of Intermediate Care to receive their episode of care at home. MDT driven re-ablement to optimise recovery and promote independence.

A Home First default position promotes intermediate care at home where safe and appropriate. However some people, particularly those who live alone or require alternative housing arrangements or adaptations, may be unable to return directly home from hospital. Intermediate care can provide critical time and the right environment to recover confidence and independence, and avoid making premature life changing decisions. Each partnership has a cohort of housing / care home / community hospital beds that could be commissioned to provide Intermediate Care. The appropriate number of beds and provider(s), their location and the required support will evolve through Joint Strategic Commissioning. The critical path for bed based intermediate care would involve:

• Care staff promote a reablement approach;
• GP support for General Medical Services;
• In-reach by aligned specialist practitioners to support rapid assessment and diagnostics for 'step-up' and rehabilitation;
• In-reach by aligned community nursing, pharmacy and home care team to ensure effective communication, discharge management, anticipatory care planning and medicines reconciliation;
  Single Point of Access - for step-up (e.g. emergency referral centre) and step-down (e.g. discharge coordinator / discharge Hub);
• 'Pull' system to enable people who require continued inpatient rehabilitation or are unlikely to be able to return home within two weeks of being clinically ready for discharge to move to a community bed.

The Joint Improvement Team (JIT) has established an Intermediate Care Group (ICG) to scale up the adoption of intermediate care across Scotland. The ICG has asked that principles be agreed for local step-up/step-down intermediate care to involve housing, independent sector care homes and community hospitals.

A survey of local partnerships, 'Intermediate Care: Readiness to Scale'^[21] was conducted by the Joint Improvement Team in April 2013. Intermediate care was provided in care homes by 21 partnerships - 13 in council owned homes and 11 in independent homes, with 3 of these providing it in both.

The Delayed Discharge Expert Group report^[22] (October 2011) stated that "care home providers have indicated a willingness through their involvement in the reshaping care programme to redesign their services to take shorter term residents. This could be providing more intermediate care services, step-up and step-down care."

It went on to say: "COSLA is currently undertaking a review of the National Care Home Contract. It is clear that the current contract does not deliver the flexibility of responses that local authorities and Health Boards will increasingly need from voluntary and private sector care providers into the future. We are therefore working towards a future contract and service specification that provides a stronger sense of the outcomes we want to drive, and the pathways we want to exist at the interface of health and social care.

"Part of that work will involve the development of service specifications to prevent hospital admission and facilitate hospital discharge. Our aspiration is to encourage specialisation within the residential sector so that care homes can accommodate emergency admissions (as an alternative to A&E) and rapid discharges (where a return home is not possible in the short term). In respect of the latter, our work will look at a number of issues, including how to incentivise care homes to provide a rehabilitation service, such that the care home does not become a final destination but a stop-off point on a care journey which leads back home."

It recommended "where a local partnership has identified a local need for residential step-down care, dedicated care home places could be identified and developed to provide specialised rehabilitative care. This will be developed within the context of a revised National Care Home Contract. COSLA and care home providers will advance this work with a range of partners including ADSW, Scottish Government, and NHS Scotland." COSLA issued a resource pack on developing intermediate care in care homes in November 2012.

The choice guidelines apply only to permanent placements and are not applicable to intermediate care or respite care.

Strategic Plans

Partnerships will have a legal duty from 2015 to develop a Joint Strategic Commissioning Plan (JSC).

The Joint Strategic Commissioning Plan will specify the nature, scale and locality of provision a partnership intends to establish locally based on a strategic needs assessment. This will include plans for intermediate care, specialist dementia, end of life, respite and long-term care provision for older people.

This on its own will not define the market. However, independent sector providers and their investors will be expected to take account of the JSC Plans. Where there is an expressed need for provision in areas of undercapacity it should attract new investment and new builds because of the clearly articulated need. This will not immediately sort out the problem of over provision as it will be difficult to disinvest or decommission under current guidelines. However, it should deter any speculative new entry to the market as banks will be unlikely to lend in an area where the JSC Plan makes clear it is looking to reduce or stabilise the number of places. While this might deter specific lending, banks are looking to increase exposure to the care home sector as it is seen as a low risk profile. They are more likely to be willing to lend for larger older people's homes. Another problem is the increasing use of 'Opco/ Propco' deals, where a company splits in to a property company (propco) and an operating company (opco). The Propco would own the real estate, have much more collateral and thus support more debt. In this situation the bank would take security of the property, reducing the risk to itself. However, this leaves the Opco as the registered provider being hopelessly exposed to a downturn in profitability.

The JSC process will involve providers at every stage. It should therefore seek to engage providers in dialogue to shape and develop services to meet changing patterns of service demands.

Further details about how commissioning for the care home sector could work in practice are provided at Annex B.

If we consider what has become a standard expression of the commissioning cycle, it is evident that the 'analysis' and 'planning' stages are immediately affected by the choice directions. That is to say, in giving due regard to the legislation, partnerships' desire to shape local markets will be subordinate to the individual's right to choose a home. These constraints impact most significantly in the 'delivery' phase, where the primacy of choice will dictate the nature and capacity of provision (as opposed to a strategic needs assessment of local population need driving that process).

Recommendations

The Group agreed the following commissioning vision:

We want to move to an arrangement where local health and social care partnerships form the bedrock of the commissioning agenda and that these include the third and independent sectors. We want to ensure that the care home sector responds to local population need/demand and make sure that local partnerships have the powers and levers to commission the desired type, volume and quality of care home provision in their area. The commissioner would have a more prominent role in establishing the conditions of market entry and exit. In other words, there would be a subtle but important shift away from free market principles towards a planned economy of care.

It further recommended:

• Partnerships should be helped to develop the necessary skills to develop a commissioning approach to the care home sector.
• Providers themselves should be an integral part of the commissioning process, fully involved in the planning of future provision.
• Strategic commissioning plans should be based on a Joint Strategic Needs Assessment in order to plan future capacity for its ageing population, including hospitals, care homes and housing with care.
• Partnerships should produce Market Position Statements to direct future care home supply.
• If the Task Force is in agreement with the proposals outlined to take a commissioning approach to the care home sector, to involve active market facilitation and the production of a Market Position Statement then we can build that in to the guidance for the statutory requirement for partnerships to produce a strategic commissioning plan, clearly stating the number of, and the type of facilities required.
• Alternative types of provision are explored and promoted within care homes. This should include intermediate care (the use of step-up/step-down beds), increased respite provision, Elderly and Mentally Infirm (EMI) beds and use for end of life care. This will raise issues of flexibility around registration and charging.
• Commissioners will need to have clear information on the dependency levels of the current care home population. Tools, such as the Indicator of Relative Need (IoRN), should be promoted in order to obtain a better understanding of the needs of current care home residents to inform the alternative uses described above.
• Partnerships should also liaise to include in their JSC Plans requirements for more specialist provision by client groups, on a regional basis if required.
• Concurrently, we should test a tendering approach that is based on quality.

Funding

Background summary - Why is funding such a problem?

The independent care home sector in Scotland currently provides care and accommodation to approximately 33,000 vulnerable adults and represents 88 per cent of the total provision of residential care.^[23]

It currently employs 47,000 staff directly and is a major purchaser of local goods and services. Local government currently spends a total of £637 million buying care for older people through (a) the National Care Home contract for publicly funded residents, and (b) paying out £111 million on Free Personal and Nursing Care (FPNC) payments for self-funders^[24].

Over time, and especially over the past 2/3 years, there have been significant and growing financial pressures on the sector from rising fuel, food and staffing costs - this strain has been experienced by local authority providers as well as the independent sector. The property boom and subsequent collapse in the property market has left many care home providers with onerous debt obligations which are set to worsen if interest rates rise in the near future. Funders continue to support care homes due to a perception of future guaranteed income, as a result of an ageing population, but meeting these obligations will require high occupancy rates.

A further source of cost pressure on care providers has been increasing expectations of users and scrutiny bodies, translated through regulation into higher specification for physical environments and rising staff training costs.

At the same time, Local Authorities have been trying to manage their budgets in a period of fiscal pressure. Some local authorities have even been pushed into only placing new residents when funding has become available, which is placing pressure on health boards as a result of delayed discharges from hospitals. This trend, along with the strategic shift to allowing older people to stay in their own homes for longer, has caused downward pressure on occupancy rates in some areas of the country, and south of the border has caused major instability in the sector, as shown by the collapse of the Southern Cross Care Group in 2011.

In Scotland, the national care home contract fee rate is negotiated annually between COSLA and Scottish Care. Over the past few years these negotiations have run into significant difficulty, largely associated with local government funding pressures, and a split in the negotiating stance of local authorities.

Care home providers accepted a freeze on payment rates in 2011-12 on condition that, in subsequent years, the sector would diversify and joint commissioning with NHS Boards would bring more resource into the overall funding envelope. This has not happened yet, and the providers have intimated that lack of investment impedes their capability to train staff and upgrade facilities.

Providers argue that at least 4 to 5 per cent increase in fees is required to stand still and make improvements in quality. COSLA have asked Scottish Ministers to intervene in this impasse. Since the collapse of Southern Cross negative media coverage infers that standards of care are falling and that the focus of private providers is profit, not care. The implications of failing to provide adequate funding might include: (i) heightened risk of care home providers going into administration; (ii) still higher care fees for self-funders; (iii) a decrease in the level of quality of provision and services; (iv) an increased level of delayed discharges from hospitals; and (v) increasing difficulties in the recruitment and retention of care home staff at all grades.

Any reduction in investment in the sector as a result of fee increases not keeping up with inflationary pressures will also have an impact on the Care Inspectorate working to an agenda of care improvement. When improvement notices are served, and moratoria on new admissions to a home are applied, care home providers may simply not have the funds to finance required improvements. Many large scale providers are now making a strategic decision to focus on the self-funding market exclusively, with new builds in an attempt to increase the proportion of self-funders in their care home portfolios to mitigate their financial risk and attract investors. This will limit the choice for local authority funded new residents.

The recently introduced Public Bodies (Joint Working) (Scotland) Bill aims to establish person-centred planning and delivery of services by focusing on improving outcomes for people. The Bill makes provision for Integration Authorities who will be accountable for delivering new Health and wellbeing outcomes. NHS Boards and local authorities will put in place integrated budgets to ensure better, more effective use of their total resources. Whilst this development may ultimately ensure a more effective use of local resources, and ultimately provide a greater funding envelope for the care home sector, this is yet to be seen, and may not happen quickly enough to mitigate the most immediate funding issues for the care home sector.

As we begin a new year, nobody seems particularly content or comfortable with the way residential care is funded. The following sections take a deeper look at the issues from the viewpoint of (1) Service users and their families; (2) Providers of residential care; (3) Public bodies who have a duty of care to ensure the health and welfare of their citizens.

Care Home Residents and Their Families

Current framework

Under the Social Work (Scotland) Act 1968, Scottish local authorities have a duty to provide community care services within their area. Eligibility for such services arises from physical presence in the local authority area and from the individual being assessed as having a need that calls for the provision of a service.

If assessed as needing residential care the local authority will carry out a financial assessment to determine the appropriate level of local authority funding. The National Assistance (Assessment of Resources) Regulations 1992^[25] and associated Charging for Residential Accommodation Guidance (CRAG)^[26], provide the framework for local authorities to charge for the residential care that they provide or arrange. The CRAG is due for review in 2014/15 following welfare reforms and the UK Care Bill reforms.

Since the Scottish Government introduced free personal and nursing care (FPNC) for people aged over 65 in July 2002, the local authority will pay a contribution towards these elements of the care for all those assessed as needing them, regardless of their assets. Under the financial assessment anyone with capital, including property worth £25,250 or more, must meet his or her accommodation costs (over and above any assessed entitlement to free personal and nursing care) in full. Where capital falls between £25,250 and £15,500 a resident will be expected to contribute a proportion of his or her assets towards the cost of care. Capital of £15,500 or less is not taken into account in assessing a contribution, although the individual will contribute to the accommodation cost from any income e.g. pensions and benefits, with the local authority funding the balance.

However, as all councils are expected to ensure that the resources available to them are used in the most effective way to meet individual care needs, this therefore means that the care package that a council is willing to provide may differ to that preferred by an individual. For example, a growing number of providers will no longer accept local authority placements.

The local authority will contract direct with the care home for the free personal and or nursing care elements of the residential fees for those with sufficient capital to pay for the accommodations costs, and will contract for the full cost of the placement where the individual's capital assets fall below the capital limit.

This current overarching framework has been in place since the National Assistance Act 1948, updated by UK regulations, the National Assistance (Assessment of Resources) Regulations 1992. Whilst both these are Acts of the UK Parliament, the Scottish Regulations mirror those in place through the introduction of the CRAG.

The current framework (as outlined in Table 1, Annex B) is perceived as unfair by those with capital and assets greater than the upper limit because:

• It requires families to sell homes to pay for care - and those who have not saved for old age and retirement get all their fees paid by the state;
• The upper capital limit catches more older people, many of whom had exercised their right to buy their council homes - so, even families of modest means are surprised to find themselves liable for care home fees;
• Individuals have to negotiate their weekly fee rates directly with providers and do not have the benefit of bulk purchase negotiation - so invariably pay a higher (often significantly higher) fee rate;
• While the right to choice is enshrined in regulation, often families are restricted in their choice of care home;
• The current system of charging is complex and difficult to follow, and families are often unaware of all the options to fund their care;
• Once in a care home, a resident has few rights of tenancy and can be moved from one room to another or into a different care home. When providers go into administration, residents have to be moved from their homes with few options or choices.

Provider perspective

From the perspective of providers of care, funding issues are a complex mix of rising demands and costs along with increasing uncertainty about occupancy. Depending on the nature of a care home business (family run one or two care homes) up to large corporate bodies, pressures and issues around funding are different. The following attempts to capture some of the common issues.

Breaking even is currently difficult as:

• Current contract rate for publicly funded residents does not cover running costs for small and medium sized care homes;
• Without higher income from self-funders, many care homes would not be viable. Self-funders are cross-subsidising publicly funded residents with no discernible difference in the quality of service;
• Over time, new residents entering long term care tend to be frailer or have more challenging behaviours than previously, and those with higher needs are making up a greater proportion of the population in care homes, these higher needs have higher care costs;
• Variable occupancy rates have an impact on viability, and the current contracting framework does not guarantee any level of occupancy;
• The national contract framework currently does not differentiate between different client group needs - such as those with dementia, or requiring palliative care;
• Operating costs have increased, in addition to rising staffing costs, there have been sharp increases to utilities and food bills;
• With increased scrutiny and rising expectations for care home standards of care and environment, greater investment in training and buildings have had an upward pressure on running costs;
• The costs of capital and property have also changed with a rise in the number of care homes who "rent" their property from a landlord; and
• The property boom and subsequent downturn has left many property owning companies with negative equity and significant debt to service. The continuing operation of the care homes they own and associated income stream is essential to stave off the demands of their creditors and many are forced into increasingly complex financial restructuring to avoid realising the massive loss in property values. Pressure in this area would increase significantly should the interest rates go up as planned in two years' time.

Changes requested from providers include:

• Over the past few years, providers have argued for increases of between 2-5% in the headline NCHC rate to cover increased running costs;
• Greater recognition of the needs of different specialist groups in the fee rates; and
• Greater certainty over occupancy levels - or some recognition of fixed running costs that need to be covered when there is a high turnover of placements.

From Local Government Perspective

There is a strong sense that introduction, and development of the National Care Home Contract from 2007 has provided stability in the market for care, as well as significant benefits in advancing the quality agenda for the care home sector. In addition, there has been an added benefit of greater partnership working with the sector through Scottish Care and the Coalition of Care and Support Providers in Scotland. Some in Local Government perceive that over the last few years, that commitment to partnership, alongside the fact that there are 32 councils with different local markets, has meant that in relative terms, care homes have received more generous uplifts compared with other social care providers, especially in care at home (many of whom have not had an uplift for several years). Indeed, care home providers have typically received a higher settlement than the Scottish Government has passed to local government:

	Local Govt. Settlement	NCHC Settlement
2011/12	-2.6%	0%
2012/13	0%	2.75%

However, even with this investment, most local authorities recognise that the last couple of years have been very difficult for the care home sector, with more than one high profile closure. Most notably, the collapse of Southern Cross - a corporate care provider with almost 100 services in Scotland - led to widespread condemnation of the way in which that organisation was run and generated a push to tighten financial regulation within the sector.

Given the pressures on local authority budgets, it is now more important than ever that those contracting with providers properly understand the investment needs of the care home sector in Scotland: invest too little and the quality of care will suffer and greater market instability could ensue; invest too much and our tax-pounds will stretch less far in terms of the volumes of care we can procure - an important consideration in an era of demographic change and increasing levels of need among the 85+ age group.

The main concerns of Local purchasers and commissioners are:

• Most care in care homes is procured through a nationally agreed contract with standard fees, used locally to spot-purchase care. There is little scope to negotiate differential fees if local market conditions could accept a lower fee. In some areas, particularly where there are labour market problems, and the NCHC level is perceived to be too low, partnerships could increase fee levels to help solve some of these issues;
• Placements are made in response to levels of need and the commissioning role of the authority is limited to purchasing care from a local 'market' - the tools to fully commission care and shape the local market are weak and underdeveloped;
• Providers are often granted planning permission for new developments without regard to the market conditions for residential care in a geographic region - often leading to over-supply in areas where development land is more available and less expensive; and a lack of capacity in remote areas or where land is expensive;
• Little flexibility to develop personalised packages within the rigid framework of the NCHC;
• Recognition of the public policy question for national and local government around the extent to which we are prepared to preside over a drift between the rates paid by publicly-funded and self-funding residents;
• Lack of transparency over the financing arrangements of care homes. The split between property ownership and the provision of care has at times led to complex financial arrangements that make it difficult to determine where risk lies in business continuity terms. This in turn can fuel suspicion that paying higher rates to independent providers will only increase shareholders' profits, not increase the quality of care;
• A general concern that demand for residential care - and community care more broadly - cannot be accommodated within projected budgets.

Wider Societal issues

People in Scotland are living longer - if current trends continue we expect that by 2033 the number of people who are over 60 will increase by 50%^[27]; this is a good thing and reflects improved standards of living, public health activity and the success of health improvement initiatives; (though even with this change, life expectancy in Scotland will still be lower than in many European countries); growth in the elderly population is not steady over time and is driven by health gain and birth rates (which reduce after the late 1960s, suggesting perhaps fewer elderly people after 2033).

The age balance of the population is changing across the UK, with there being an increasing proportion of the population who are elderly (the rise in Scotland is from 19.7% of the population to 24.1% by 2033^[28]; similarly there is a fall in the proportion who are under 16 from 17.7% to 16.2%; these changes are more pronounced in Scotland, Wales and NI than in England). In Scotland the change is significantly most pronounced for the most rural areas with a number of rural local authorities having around a third of their population being over 65.^[29]

The changing demographic brings a range of public policy and finance challenges related to:

• the reducing ratio of working age people to non-working age people (the dependency ratio moves from 60 per 100 to 68 per 100;^[30]); at a local partnership level there is a wide range of dependency ratio; and
• the simple increase in people living to an age where they are more likely to access health and social care services (the 50% increase in elderly people by 2033) due to frailty, cognitive disorders or other long term conditions.

The key challenges are as follows:

• Money In vs. Money Out. A reducing tax base (UK Gov issue) relative to expenditure on pensions^[31] (UK Gov issue) and expenditure on health and social care services for the elderly (SG and CPP level issue - the level of revenue generated by a LA reduces as older people receive discounted council tax, and are eligible for free services). Changes to the state pension age are intended in part to address this issue. At UK level expenditure on services and pensions for the elderly are expected to each increase by 2% of GDP over the period to 2057;
• Workforce challenges.^[32] There are likely to be fewer people of working age relative to those who we would (currently) expect to be retired (though see below); we would also potentially see an increase in the proportion of the workforce engaged in providing publicly funded health and care services (an economic 'drag' factor that potentially reduces productivity growth over time);
• Social change.^[33] Social structural changes related to the family (more people living alone), geography (people living far away from relatives) and solidarity (people not actively engaged in mutual support) reduce the overall capacity for informal care.

There is a perception coming from responses to the first set of public engagement events and surveys on Reshaping Care in 2009-11 that around a third of all respondents thought that all care should be paid for by the state (Local Government) and around a half thought that a mixture of individual contribution and state contribution was fair. There is a need to undertake more public consultation on the views of people about what it is fair to ask care home residents to contribute towards their costs.

The UK Government has recently accepted some of the reform framework as set out in Andrew Dilnot's independent report in 2011. In summary, the UK Government will:

• introduce a cap on the costs which defines the level people should have to pay to meet their eligible needs (from April 2016):
  • a cap set at £72,000 in April 2016 for people of state pension age and over;
  • people who develop eligible needs before state pension age will benefit from a cap lower than this amount;
  • people who turn 18 with eligible needs will receive free care and support to meet those needs;
  • people receiving residential care will remain responsible for a contribution to daily living costs. This contribution will be set at around £12,000 in April 2016, where they can afford to pay;
  • the total cost of meeting the person's eligible needs will count rather than their financial contribution.
• target additional financial support to those people with modest wealth to help them with care costs of meeting their eligible needs by extending access to financial support:
  • the financial limit used in the financial assessments for people in residential care increases from £23,250 to £118,000 when the value of their home is considered as part of their capital (from April 2016);
  • combination of the increase in the financial limit and the state contribution towards costs of care counting towards the cap means many people will not have to contribute the full cap amount;
• give people the right to defer paying care home fees, so they are not forced to sell their home in their lifetime to pay for their residential care costs (from April 2015).
• Everyone will have this reassurance, not just the 16 per cent of older people needing care currently facing care costs of £72,000 or more. This will empower people to take responsibility for their care in line with what they can afford. Everyone will be protected against unlimited care costs. And state support will be targeted for the people who need it most.
• In advance of this, from April 2015, people needing residential care will have access to deferred payment agreements in every local authority in England. This means people will no longer face the added stress of having to rush into selling their home to pay for care home fees and will have the flexibility to avoid selling their home within their lifetime.
• Protecting families from selling their homes;
  • For the first 12 weeks in residential care, no-one will be expected to use the value of their home to pay their fees.
  • For the first time (in England) all local authorities will offer people the option of a deferred payment.

Conclusions

There is general acceptance that there is insufficient funding for investment in the care home sector. National Care Home Contract funded residents are being cross-subsidised by self-funders and many providers are relying on expensive and more complex debt packages to stay viable. New Build properties are being targeted exclusively at self-funders, and this is another example of how providers are managing their financial risks. None of these developments are in the interests of the majority of current and future residents.

The general lack of investment is also causing a variety of problems such as a lowering of public confidence in the sector^[34] as evidenced by the media attention on a number of high profile closures and failures of care, and growing sense that care homes are struggling to recruit and retain qualified staff.

The National Care Home Contract has served and achieved a range of positive outcomes for residents, providers and local authorities over the years since its introduction in 2007. However, its flaws are starting to become more evident. From the provider and commissioner perspective one contract does not adequately reflect the current range of services provided in care homes such as step-up/ step-down care; respite care, specialist dementia care; palliative care. Nor does the current rate structure reflect the range in costs of providing care which are dependent on labour market conditions; property costs; or the size and age of the current estate of care homes.

However, despite the flaws outlined above, both care providers and commissioners want to see some form of standardised contract and fees grading to avoid every new resident's care package being individually priced and purchased.

There is a general acceptance that it would help to separate out care costs into accommodation, hotel, and care costs. However the methodology for doing this should be as simple and easy to administer as possible. The main arguments for taking this route are to help merge some of the boundaries between housing and residential care; making it easier to personalise care packages; help identify the personal contribution that individuals have to make for accommodation and living expenses. Work carried out by Laing and Buisson has split care home costs into their component parts (see table below) for a care home meeting all the latest physical and other standards. This is detailed in Annex B.

There is general consensus that the "care" element of residential care fees should be fully funded by the state; and that the Free Personal and Nursing Care contributions should be reviewed to more accurately reflect the costs of personal and nursing care in a residential setting.

There are significant issues about the recruitment and retention of care assistants given the pay differentials between private and public sector, and between care home employment and the retail and catering sectors. It would therefore be helpful to look at how much additional funding would be required to bring care workers' pay up to the "living wage" standard.

Not everyone will be able to afford to make their personal contribution, and those currently just outside the eligibility for means-tested help are not adequately protected. To address this, means-tested support should continue for those of lower means, and the asset threshold for those in residential care beyond which no means-tested help is given should increase from £23,250 to £100,000. When the Dilnot recommendations were published, Scottish Ministers were clear that whilst the report was aimed at reforming the English system of paying for care, there may be aspects which would fit with the aspirations of the people of Scotland. The relevant recommendations that a future work may wish to consider focus on the upper capital limits, and the current regressive effect of the existing capital limits. Given more time, there should have been more analysis undertaken on the differing costs and benefits of housing with care and support and its impact on individuals, and the spread of costs between state and individual.

Recommendations

• Review and re-prioritise funding for the residential care sector overall.
• Develop an objective assessment of needs which is capable of categorising care needs into 4 or 5 broad categories of care package grouping. The IoRN may be a useful starting point.
• Undertake further work to incentivise more specialised case contracts to better reflect different services that care homes currently provide, and look to more accurately cost the care and support element of these specialised care packages.
• Separation of costs - look to explore robust and economically feasible ways to separate out the accommodation, hotel and care costs - with a view to ensuring that "care" is free to the individual, but all other costs are means tested.
• Undertake modelling work to the current capital limits to ascertain the cost effect of raising capital limits in Scotland, both in terms of public funds, and the possible regressive effect on households of the current limits and potential changes. This work could effectively be remitted to the CRAG Review Group.
• The Free Personal and Nursing Care contributions should be reviewed to more accurately reflect the costs of personal and nursing care in a residential setting.
• Further work should be undertaken to examine how much additional funding would be required to bring care workers' pay up to the "living wage" standard.
• Consideration needs to be given on how (and who carries out) monitoring of providers' financial issues and risks is carried out in such a way as it does not jeopardise the service or the provider's sustainability.
• Further analysis of the distribution of costs in the provision of housing with extra care needs to be undertaken to better understand the comparative costs between residential care and housing with support.

Regulation

The Care Inspectorate is Scotland's independent scrutiny and improvement body, and is responsible for providing assurance and protection for people who use social care services, their families and carers and the wider public. It also plays a key part in improving services for adults and children across Scotland, acting as a catalyst for change and innovation and promoting good practice. It currently regulates over 14,000 care services, including care homes, care at home, housing support, daycare of children, adoption and fostering, secure care, school accommodation, nurse agencies, offender accommodation and child-minders.

It registers all new care services to ensure that they meet legal requirements, evidence their ability to provide good quality care and take into account the National Care Standards. It can also make variations to any conditions of registration at the request of the provider or through taking enforcement action. When a service cancels its registration or is faced with a sudden closure through the financial collapse of the provider, the subsequent registration cancellation aims to safeguard the people who are using the service by working with the provider, local authority and others to ensure changes are planned and uncertainty is minimised.

As we move towards greater integration of health and social care, the Care Inspectorate is developing a joint inspection programme covering health and social care services, with a focus on older people, in partnership with Health Improvement Scotland (HIS). This is a positive move for care homes and housing support providers whose clients often also require complex health care.

In terms of the scope of this report, the currently regulated key service types under discussion, which we believe require either review or greater flexibility are:

• Care home service
• Housing support service
• Support service
• Adult placement service

In terms of the flexibility for providers to innovate and provide different options in terms of service design or delivery, for example more community outreach services, conditions of registration can be applied for each new registration. Variations (from the standard service template) that are reasonable, specific and justified, are also possible. For example, conditions about numbers of service users, for specific service types, and conditions unique to the service at the point of registration are agreed with the service provider. Some of the issues raised by providers in the course of the task force discussions have been about the rigidity of the registration regime. However, the Care Inspectorate maintains that conditions and variations should allow services to be innovative, whilst ensuring that the process of registration remains a protective measure.

Under section 60(2) of the Public Services Reform (Scotland) Act 2010 the Care Inspectorate can grant the registration of a care service subject to such conditions as it thinks fit, and have signalled their willingness to adapt in their approach to registration and the process of agreeing conditions to registered services, to facilitate greater innovation in older people's care services.

The quality of provision, in the main, continues to be at a good or high standard. The Care Inspectorate reports in its 2012-13 annual report that almost 75% of care homes received a grade of 4 or 5 out of 6 in the Quality of Care and Support. At the same time, there is a consistent proportion of providers - around 5% of the market - operating at grades 1 or 2, which is higher than for other service areas, as evidenced by the following table:^[35]

	1	2	3	4	5	6
Adoption	0.0%	0.0%	5.1%	38.5%	53.8%	2.6%
Adult Placement	0.0%	0.0%	5.6%	30.6%	58.3%	5.6%
Care Home	0.8%	4.4%	14.7%	34.9%	40.0%	5.2%
Childcare Agency	0.0%	0.0%	10.0%	33.3%	40.0%	16.7%
Childminding	0.1%	0.6%	4.3%	24.8%	59.4%	11.0%
Daycare of Children	0.2%	1.2%	5.4%	27.2%	57.6%	8.5%
Fostering	0.0%	1.7%	1.7%	35.0%	58.3%	3.3%
Housing Support	0.2%	1.8%	5.2%	31.3%	52.3%	9.2%
Nurse Agency	2.9%	2.9%	5.7%	28.6%	54.3%	5.7%
Offender Accommodation	0.0%	0.0%	0.0%	22.2%	66.7%	11.1%
School Care Accommodation	0.0%	3.1%	3.1%	33.8%	41.5%	18.5%
Secure Accommodation	0.0%	0.0%	0.0%	40.0%	40.0%	20.0%
Support	0.2%	2.0%	5.2%	31.7%	50.9%	10.1%
Grand total	0.2%	1.4%	5.9%	27.9%	55.1%	9.4%

Review of the National care Standards in 2014

With 23 sets of care standards currently in use and being used for registration and inspection of regulated care services, there is a significant opportunity to support improvement in care at the same time as reviewing and updating the existing standards and regulations. At the time of writing, it is recognised that there is a real chance to take a more innovative approach to describing what really matters to people about their care and to reduce the complexity that surrounds setting up and providing world class care in Scotland. In the context of the review of care with accommodation, this could make it much easier to narrow the difference between housing and care homes.

The current 23 service related standards have served us well. However, the current standards do not reflect the changing landscape in care, nor the commissioning of more flexible, integrated care services. The Care Inspectorate use the standards as an entry point for providers wishing to deliver a care service and they form a good gate keeping role in this regard. They do not however, readily lend themselves to describing, in a more progressive way, an aspirational standard to the quality of care. They do not fully address those areas which, when added together, form the totality of people's experiences of their care or the care of their family and friends.

The care standards and their relevant regulations are also now becoming out of date with regard to the flexibility needed to provide more innovative and creative approaches to developing care that enables people to live as independently as possible. The task force are supportive of a human rights-based approach to developing standards, guidance and regulations which will enable safeguarding whilst allowing for alternative types of service provision and individualised care pathways. There is strong support for this direction of travel across many of the recommendations in this report. It will therefore be important to feature the development of the rights-based standards in the next stages of developing a strategy for residential care in Scotland.

Greater Flexibility in service design

Housing Support is defined as providing a service to people with assessed needs living in their own homes (all tenures). SSI 2002/444^[36] prescribes housing support services (i.e. definition of the 21 tasks). However, the definition of housing support services in the Public Services Reform (Scotland) Act 2010 is at a much higher level. As the 2010 Act does not link back to SSI 2002/444, the need to keep SSI 2002/444 has been questioned. As part of the on-going work of this group, this anomaly should be addressed, starting with a discussion on a new definition for housing support services.

Community Asset approach

Potentially a care home that is performing well could branch out and provide a range of other services to the community. However there would need to be some way to safeguard the standards of care for those receiving the service as well as the residents who represent the core business. For example, there is no reason why a care home could not add to their functions to incorporate the following services:

• Day care / respite
• Laundry
• Meals
• Activities
• Garden - allotments etc

By increasing services to the local community, a number of factors would need to be considered eg how to keep a degree of privacy for the residents while welcoming members of the community. However, in actual fact many of the residents would benefit from the attendance of others into the service. These types of additional services would require a variation of registration only.

Care Home Governance

There is good practice to be learned from the way that social landlords engage with both their tenants and the wider community that could be transferred to the care home sector through the development of Care Home Boards/Resident and Community Interest Boards. The purpose of such groups would be both to provide support to the care home management in the daily running of a care home in representing the interests of resident, in helping to raise funds and arrange activities that include wider community groups, and being a sounding board for service improvements, operating in a similar way to school parent councils. By opening up care homes to wider influence from within communities, care homes have a greater chance of being identified and used as community assets.

Volunteers

A related issue to governance is the use, recruitment and training of volunteers. It is recognised that volunteers are a significant untapped resource that should be explored further by care providers. There is often an assumption that volunteers and informal carers are prevented from 'working' in a service by the Care Inspectorate. However, as long as this is done sensitively and with appropriate safeguards in place, the opening up of a care setting to other people from the community should also increase transparency and help improve standards of care. It may help to develop protocols and toolkit materials at a later stage in this work.

Tenancy-based model

The suggestion that care homes may move towards a tenancy based residency, and such a move may enable more couples to decide to move into a home together, with different monetary rates being applied, depending on need. For people with dementia this may alleviate separation anxiety and subsequent agitation that often follows a move into a formal care setting. Rooms however would need to be larger with the option of a sitting room. It is at this point where the lines between residential care and very supported housing become blurred and discussion needs to be had to determine the role and function of supported housing.

A rights based model may provide more flexibility and protection for people receiving care, but questions as to how this type of service would be effectively regulated would have to be factored into service and contractual arrangements. For example, would accommodation need to be licensed separately as suitable for care provision? How would the regulator enforce improvements without any extra cost being directed by the landlord to the tenant? Would it increase our bureaucratic workload dealing with different providers for the same service?

On the flip side, where we have a failing provider, a license to provide a care service attached to a property might increase the maintenance of a continuity of care and the chance of the property changing hands at an increased price.

Recommendations

The current regulation and scrutiny of all care services is going through significant change at this time and in moving towards a rights based approach to the new care standards will support many of the measures being recommended as part of this report. The specific actions that should be taken forward in this regard are:

• The strategy being developed for future care with accommodation services must be linked to the review of the National Care Standards to ensure that the reforms being recommended here are supported in the new standards.
• Providers should be encouraged to begin greater dialogue with the Care Inspectorate and Health Improvement Scotland about the innovations they want to take forward within their care homes or housing with support service.
• The Care Inspectorate and Care Providers should enter into pro-active discussions about developing care homes as community assets, but which continue to safeguard the safety and privacy of care home residents.
• The idea of care home governance / support boards should be developed in the next stage of this work, as should a protocol around the recruitment and training of volunteers.
• The definition of housing support as set out in SSI 2002/444 should be reviewed.
• Further work on developing a tenancy-based model might benefit from a pilot with a willing provider.

Contingency Planning

Context

The stability of the care home sector is of vital importance to the effective delivery of care and support to many older people in Scotland. Sadly, over the last five years, contingency planning has had to play a more prominent role in the management of the sector than we would have wanted. There are a variety of reasons that a care home may close, including: in response to unforeseen environmental factors, such as flooding or fire; as a result of enforcement action taken by the Care Inspectorate; or as a result of an organisation or business ceasing to operate. Our recent experience in Scotland has been of the latter example: a number of care home providers and/or owners have fallen into administration and have announced closure plans, sometimes at very short notice.

Inasmuch as the avoidance of a care home closure is not always possible or desirable, it is important that satisfactory arrangements are in place for the closure of an individual care setting and to ensure the safety and the continuity of care for the residents affected. In planning for the closure of a care home, the interests and the welfare of the residents affected are paramount.

A high-profile example of the importance of good contingency planning relates to the collapse of Southern Cross Healthcare in 2011. This episode illustrated the dependency that we have on non-statutory providers to deliver care and of the importance of all parties - providers, lenders, Local Authorities, Health Boards, the Scottish Government and the Care Inspectorate - collaborating in the management of contingencies. Southern Cross operated 96 care homes in Scotland, across 28 local authorities. While the subsequent transition from Southern Cross to HC1 and other providers was managed effectively, it underlined the importance of having effective contingency planning arrangements in place nationally and locally.

Yet there is also a tension in the execution of contingency planning, specifically in the steps that often lead up to a care home closing. It is feasible that once an intervention takes place (and indeed even after a moratorium on new placements has been lifted) that the damage done to the care home's local reputation places it in a very precarious position. This is particularly true in respect to self-funders in urban areas, who may have the luxury of choice and will make their decision based on local media coverage. Subsequent placements and funding decisions on the part of Local Authorities could then bring about further instability to the business and threaten the continuity of care for those resident within it. Establishing a mechanism of intervention that doesn't then escalate the problem is therefore an important issue to address.

Work Underway

In response to the Southern Cross collapse, the Scottish Government and COSLA established a National Contingency Planning Group for Adult Care Services. The Group was set up to look at the overall preparedness of statutory agencies in addressing unforeseen circumstances that could lead to the disruption of adult care provision in Scotland. This includes any service disruption or cessation that arises from a business closure, an emergency situation or a public health matter. The Group draws its membership from statutory bodies, including the Scottish Government, Local Authorities and the Care Inspectorate and is jointly accountable to COSLA's Health and Well-being Spokesperson and to the Cabinet Secretary for Health and Wellbeing in providing up to date information and quality assurance. The group continues to function as a standing committee, and it meets on a bi-annual basis, or whenever circumstances require it. It has a particularly important role where care home providers or owners operate across a number of local authority areas.

Allied to this, local partnerships have developed strong and robust planning arrangements to deal with contingencies. There are many excellent examples over the last few years of local partners coordinating remedial action between themselves, working with providers and lenders/administrators, supporting residents and families, and offering support to failing care homes to provide stability and rehabilitation. Local authorities (or Health Boards with delegated responsibility) have a duty of care for all residents in care homes in Scotland, including those whose care package is not funded by the local authority.

Ideally, the movement of older people from care homes as a result of closure should be planned over a period of time. The evidence currently suggests that the movement of older adults from care homes can be undertaken without adversely affecting their well-being if this is part of a planned and considered process over, say, a six month period.^[37] COSLA has produced guidance^[38] which provides an outline of the type of issues that should be considered as part of that process. Short-term movement - and especially repeated movement - can be more dangerous for the health and well-being of an older person in a care home.

Future Action and Recommendations

It is appropriate that the Task Force should take a view about how to deliver stability for the care home sector into the future, especially as the make-up and funding of the sector is likely to change. In particular, it is important that accurate information is shared across commissioning partners in relation to a number of key factors which the evidence tells us makes the difference between success and failure.

It is recommended that in Scotland we work towards a comprehensive risk register, to provide an early warning system for care providers experiencing operational or financial challenges - and an associated ladder of intervention for public authorities to co-produce solutions for exit or redesign of struggling services.

A number of factors will need to be considered as part of that work, and the table below sets out what we feel the core indicators of risk should be. Some of these are well-established (such as continuity of management support within a care home) while others have a less well developed evidence base (for example, the split between care home operators and owners). We are recommending that the latter is recorded in view of our experience of the last few years, where business failures operating under this model have been complex and more difficult to foresee.

Standard Risk Register

Indicator	Impact	Exposure to Risk
Stability of care home management	It is widely regarded that in the absence of an effective and established care home manager being in place, there can be a deleterious impact on staff culture and quality of care.	Manager in post for over 3 months	Manager in post for less than 3 months	Manager not in post
Use of agency staff	The absence of a settled staff group, operating within an established culture, can be an indicator of concern. That is not to say there is no role for agency staff, or that agency staff are inferior in any way. This is a commentary on how settled and established teams are.	<1% of weekly care hours delivered by agency staff	1-5% of weekly care hours delivered by agency staff	> 5% of weekly care hours delivered by agency staff
Occupancy	Industry and lenders have a sense of what levels of occupancy will be required in order to make a care home financially viable. While this will vary by geography and provider, occupancy levels below 85% are generally a cause for concern.	>90%	85%-90%	<85%
Profitability of care home	Partly a derivative of occupancy levels, EBITDAR (profit before rent) is also a signal of the financial health of a particular care home.	EBITDAR per bed of £8k	EBITDAR per bed of £6k-£8k	EBITDAR per bed of <£6k
Care Inspectorate Grades	Care Inspectorate grades offer an evaluation of the quality of the care home and are important in analysing risk.	Consistently achieve grades of 3+	Temporarily dropped below grades of 3+	Consistently achieve grades of <3

Additional Risk Factors

Indicator	Impact
Op-co/prop-co split	Where the property owner is different to the operating company, it doubles the number of parties who can choose, or who may be forced, to exit the market. It can also introduce complex contractual arrangements.
Location	Where the property is in a location that is inconsistent with the commissioning plan of the Health and Social Care Partnership.
Service-user feedback	Where there is soft intelligence about dissatisfaction in a care home, this should also be factored into the risk assessment process.

Ladder of Support and Intervention

It is important to point out that this register should not function simply to support punitive measures. Rather, it is intended to operate as a system of early intervention and prevention. It provides a ladder of support, to ensure that a standard monitoring of risk can be used to target support where care homes find themselves in difficulty, which in turn should lead the local authority or Health Board to work with the provider (and where appropriate the lender) to coproduce a solution that remedies the business failure. In the event that recovery is not possible, contingency planning and direct intervention may then be required.

It is also important that local partners give thought to the impact of risk assessment on the viability of a care home business, especially where the focus is on recovery. The use of tools to embargo admission can be helpful to ensure that prospective residents are not placed at risk and to provide an incentive for care providers to improve performance. However, they can also expedite business failure because of lower occupancy levels and therefore it is important that their use is carefully considered. It is important that the local authority (or Health Board), Care Inspectorate and provider communicate effectively where embargoes are used and that the same parties work constructively together when there are opportunities to lift these.

In terms of the other steps that can be taken to intervene, we have explored various contractual options such as compulsory step-in arrangements over the last few years. However, it is now recognised that neither local authorities nor providers feel that compulsory step-in arrangements would be effective in practice. The reality is that local authorities would rather avoid having to take control of a failing care home - and providers would prefer to see support and partnership rather than enforcement. That is not to say that step-in arrangements do not have their place. Indeed, voluntary step-in arrangements have been very successful where these are coproduced and work to the advantage of all parties.

Conclusion

A market based care home sector, developed through a process of strategic commissioning, retains a level of insecurity. Market forces can force providers out of business. For this reason, it is important that we develop a robust system of support and contingency planning based on an ability to monitor risk within the sector.

Recommendations

• It is recommended that in Scotland we work towards a comprehensive risk register, to provide an early warning system for care providers experiencing operational or financial challenges - and an associated ladder of intervention for public authorities to co-produce solutions for exit or redesign of struggling services.
• It is recommended that the Scottish Government, COSLA, Scottish Care and CCPS operationalise this risk register by asking all local authorities to register information for their area and for this to be collated centrally through COSLA. Scottish Care and CCPS should work with their members to ensure that every care home in Scotland is recorded on the register and provides information on a quarterly basis.
• It is recommended that COSLA, ADSW, Scottish Care, CCPS, the Scottish Government and the Care Inspectorate more fully work up national guidance which articulates a ladder of support and intervention, the principles of which are outlined above.