Southwark's Market Sustainability Plan

Section 1: Revised assessment of the current sustainability of local care markets.

65+ Residential and Nursing Care

1. Southwark council commissions services from seven local homes for older people with a variety of needs for residential and nursing care through block and spot contracting arrangements as well as out of borough spot arrangements. The main cause of out of borough placements is due to the lack of provision within the borough to meet our current demands.  We have commissioning plans to address this lack of provision.
2. We have an oversupply of general residential care homes and undersupply of nursing care as well as residential care for people with complex/challenging needs.  We do not have reablement or discharge to assess beds in the borough.  We have been successful at supporting people to continue living in their own homes with homecare and the development of extra care schemes.  This means that there is reduced demand for residential care and a rising demand for nursing care.   
3. Our commissioning plan in Southwark, is to have sufficient local capacity of 65+ residential and nursing care home provision through contracts that are compliant with our Residential Care Charter.  The key objectives of the plan is to keep residents in the borough and close to their families as well as improve the employee experience so that recruitment and retention also improves for the benefit of the staff themselves and the people they support. We currently have three contracts in place (covering six homes). By June 2023, at least 5 of the 6 homes will be fully compliant with the Residential Care Charter.
4. Southwark is an inner London borough and this means that property costs are relatively significant in a care home’s cost model.  Given the barriers to entering the residential care market, the council has increased nursing provision in the borough by using land where we hold the freehold to be leased to providers who have a proven track record of providing care.  This strategy has led to the recent opening of a 96 bedded nursing home and the retendering of four residential care homes.
5. The level of spend for 2022/2023 for older people residential and nursing care is projected to be around £15m based on the trend over last three years. However it is expected that expenditure will increase significantly in future years due to the combined effect of change in needs of clients as result of the pandemic and the economic climate. It is expected that energy costs will especially affect the care home market as homes are reliant on electricity and gas to ensure the physical wellbeing of their residents.

Adults Domiciliary Care/Home care (Locally known as Care at Home)

6. Southwark council currently commissions ten 18+ domiciliary care providers and one provider for community-based reablement services. The number of contracts we currently have in place allows for sufficiency of supply in the provider market across the borough.
7. The home care market in Southwark has faced many challenges with ensuring sufficiency of capacity and sustainable quality provision. Southwark council created Southwark’s Ethical Care Charter (SECC) in 2016 and embedded it within all of our homecare contracts. The SECC ensures that service users receive high quality care by improving the recruitment and retention of the workforce.  This is achieved through improved pay, terms and conditions for frontline workers, i.e. paying the London Living Wage and travel time.  Over the last four years, the CQC have rated 90% of SECC compliant home care providers that we work with as Good or Outstanding.  In terms of all of our home care service users, 92% are supported by a provider that is CQC-rated Good or Outstanding.
8. Whilst there is a vibrant and wide ranging domiciliary care market in the borough with new entrants offering care, the council’s commissioning approach is to work with a relatively small number (10) providers in meeting those with care needs who are funded by the council. This approach enables the council to build supportive relationships with the providers of care.

What are the levels of diversity in the market (both in type of services as well as types/sizes of providers)?

9. The council contracts with organisations of varying sizes that provide a relatively wide range of services.  Whilst the council can successfully source placements for people with a wide range of needs, these are not always local placements when related to residential care and for domiciliary care this lack of capability to meet specialist needs either in relation to care or language needs will lead to spot purchasing. 
10. In line with the council’s Fairer Futures Procurement Framework, Southwark has a commitment to social value, Good Work Standard and monitoring pay gaps.

65+ Residential and Nursing Care

11. There are now seven care homes for people aged 65 and over in Southwark providing support to approximately 475 people.  In terms of residential care – the seven homes are all run by organisations with national operations – four homes are run by a national not-for-profit organisation; one is run by a faith-based organisation; and one family run business with a national presence.
12. Out of borough nursing placements are increasingly being made due to the lack of capacity in borough. Our trend analysis shows that our future requirements will be for an increasing number of nursing bed spaces locally over the next 10 years to support at least 80% of council-funded placements.

Domiciliary Care 

13. According to our data (Data Source:  Mosaic Reports Database as of August 2022), the council supports approximately 1900 people with eligible needs in their own homes to enable them to live independently with support. Homecare represent over 17% of total expenditure of Adult social care. The forecasted spend in 2022-23 is £24m. This area was especially affected by the pandemic and expenditure has increased by 29% in comparison to pre-pandemic levels. This was mainly driven by an increase in number of clients as well as the complexity of the needs.
14. The ten domiciliary providers that the council works with are all for-profit organisations. Three of the ten organisations are owned by the same umbrella company, given the number of service users supported by these three organisations, the contracts are on our risk register.  One domiciliary care provider is a franchise and the others are SMEs.
15. Southwark council can attract a diverse range of homecare providers to support the diverse needs of our population. Southwark is a borough with a population that speaks over 100 languages and this is a dominant reason for the council spot-purchasing domiciliary care outside of our care at home contracts.  Since the pandemic, the council has experienced an accelerated increase in need for 2:1 care, known as double-handed care. The need for 2:1 care reflects the increasing acuity of need of those that are discharged from hospital to home due to a focus on medical optimisation rather than being medically fit.

What is the quality of current services and are there concerns about quality in particular areas?

65+ Residential Care

16. Four residential homes are rated by CQC as Good and three are rated Requires Improvement. Four of our residential only care homes have been rated as Good. The local challenge has been recruitment and retention of home managers – this is being addressed through the commissioning of the My Home Life programme and a move towards relational contract management focused on improvement rather than compliance. Where homes are not rated Good or Outstanding, there has been good engagement by providers with the council to support implementation of robust improvement plans. 

Domiciliary Care 

17. All ten contracted providers are rated Good by the CQC. When there have been issues with quality and performance these have been actively managed by the council which has supported providers to improve performance.

What are the current fee rates paid, is there an underpayment and how services are currently commissioned?

Domiciliary Care

18. The council pay an average of £18.75 per hour for care at home (contracted home care services). The council recognises that paying a fair price for high quality care is important for the sustainability of the homecare sector (which continues to see organisations entering the market) and therefore procurement exercises, which are both transparent (i.e. advertised) and values-based (e.g. Southwark’s Ethical Care Charter), are the most objective way of securing/agreeing a fair price of care.  The council uses a price envelope to ensure that all elements of the Ethical Care Charter are reflected in the range of rates within the envelope.  In order to ensure that the contract prices paid to providers keep pace with the Living Wage Foundation decisions about the rates of the Living Wage and London Living Wage, the council awards uplifts to reflect the increase in the LLW and the associated on-costs, as per the ADASS formula.
19. It is noted that the fair cost of care exercise looks at weekly costs of domiciliary care when care/visits are commissioned in the units of minutes, not weeks and therefore any meaningful financial discussions are served by taking this approach.

65+ Residential and Nursing Care

20. The council has undertaken negotiated procedures to award block contracts with care home providers.  This means that there was a transparent and competitive process that relied on dialogue with the providers to set the price.  All other care home rates that are spot purchased rely on individual negotiations as placements are made.

Comparing the providers’ reported costs of care against our actual rate for 18+ domiciliary care (Home Care)

21. The average reported weekly rate based on the provider’s submissions is £327.52, whereas the actual weekly cost that paid by the council is £257.01, which signifies a 21.5% difference. (The council’s rate payable is part of a price envelope for paying the LLW and travel, established in 2017 and is uprated each year using the ADASS formula.)

Comparing the providers costs of care results against our actual rate for 65+ Residential Care Home and Nursing Care

22. The average Nursing Care weekly rate paid by the council is approximately £830 per week per client, whereas the reported Nursing care weekly cost from providers is £1,218.27 per week per client. This indicates approximately £349.90 difference in cost reported by providers per week per client, relative to the price paid by the council. This equates to approximately a 32% difference. However, for all the reasons set out in our annex B submission, we believe that the business models and values/commitments such as payment of the London Living Wage vary across a small number of providers and therefore reliance on an average cost of care is not mathematically or financially sensible.  Given the procurement approach for block contracts, described in paragraph 20, it is expected that providers agreed a price that reflected full cost recovery.
23. It should be noted that cost of care results have indicated that the cost of providing care with nursing is lower than without nursing. This not what is the expectation as providing care for higher need should attract higher costs therefore this discrepancy raises questions of the validity of the results.
24. The average Residential Care weekly rate paid is approximately £690, whereas the reported Residential care weekly cost for the provider is £1,221.02 per week per client; which is a £387.56 difference per week per client and equates to approximately a 43% difference. The council’s actual figures are skewed by terms and conditions related to the block contract that was in effect at the time of drafting this submission.  As indicated in our submission of annex B, the council a small residential care home market that is dominated by four care homes where the council has been fully funding the repairs and maintenance of the buildings and funding relatively high levels of voids.

Southwark’s care market generally – cost of care versus a fair price for care

25. Due to the characteristics of the local market and the sample size being less than 10 in each sector, there are noteworthy variances within the reported care costs within submissions from providers. Given the size of samples, it is mathematically and practically less reliable for meaningful business/financial decisions to be taken in relation to median figures, moreover any meaningful average relies on a statistically meaningful sample size. A median value has no bearing on the shape of data distribution and it is an approach that is better suited to larger data sets as it would disregard the spread of results.
26. The council recognises that paying a fair price for care is important for the sustainability of the care home sector (which continues to see organisations entering the market) and therefore procurement exercises, which are both transparent (i.e. advertised) and values-based (e.g. residential care charter), are the most objective way of securing/agreeing a fair price of care.

Does the current market conditions support development of the workforce?

27. The majority (82%) of the workforce in Southwark are female and the average age was 45.8 years old. Workers aged 24 and under made up 5% of the workforce and workers aged over 55 represented 26%. Given this age profile approximately 1,300 people will be reaching retirement age in the next 10 years.
28. An estimated 77% of the workforce in Southwark identified as British, 7% identified as of an EU nationality and 16% a non-EU nationality. Therefore there was a higher reliance on non-EU than EU workers. In terms of the ethnicity, Southwark adult social care workforce has a high percentage of people from Black, Asian and Minority Ethnic (groups - making up 74% of the workforce.
29. There are the demographic and economic considerations in relation to the available local workforce – these are linked and relate to the cost of housing and the impact of the pandemic. Each year, due to increased cost of living, high housing and travel costs, more people move out of Southwark to other parts of the UK than move into it from other parts of the UK. The age groups moving out in the greatest numbers are those aged 29-43 and 0-4, in other words typical family units likely to be in need of more affordable housing. The age group that bucks the trend is 18-28 year olds, who move into the borough in larger numbers than they leave, most likely to start university or a new job which is unlikely to be in the care sector.
30. Southwark faces similar challenges like any other inner London local authority regarding recruitment into semi-skilled work.  Like elsewhere Southwark’s workforce challenge has been compounded by the impact of the pandemic, the narrative in relation to mandating Covid 19 vaccinations, the image of the sector in relation to its purpose and value (hospital discharge delays and ‘just a carer’) as well as competition (for nursing in particular) with two foundation trusts that have national recognition.
31. The council’s commitment to the purpose and value of adult social care sector is articulated in the Ethical Care Charter and Residential Care Charter.  The market conditions are such that the pay reward for working in the care sector is more attractive than elsewhere.

Are there recruitment challenges such as high level of staff vacancies or staff turnover rates?

32. As stated in paragraphs 7 and 30, there are challenges in relation to the frontline homecare workforce and recruitment and retention of care home managers.
33. The council recognises the need to support providers in recruitment and retention of the workforce. As such, have adopted an Ethical Care Charter for Home Care provision and the Residential Care Charter across Residential care provision. This includes a fund known as the Southwark Supplement which will provide funds to directly fund the LLW, occupational sick pay and enhancements. Additionally the council is investing in the My Home Life programme and taking a more supportive approach to contract management in the interests of continuous improvement and sustainable good quality.

Page last updated: 27 March 2023