One 95 year-old nursing home resident has seen her fees rise 129pc, with barely any explanation Dr Edmondson (pictured) calculates that his aunt Eunice will have spent £600,000 on her care home fees over 13 years…
The watchdog is concerned that homes may be breaking the law by charging large upfront fees when it’s not clear what services they relate to. The inquiry is also looking at cases where care homes continue to collect fees after the person in care has died. In some instances homes are filling beds still being paid for by other families, it is alleged.
Ray Hart of Valuing Care said the bigger issue was homes’ ability to raise charges by as much as they like. “There are cost pressure on them of course but basically these are open-ended contracts and each year they can raise the cost by as much as they like and they don’t give breakdowns explaining the increases.”
Continuing Healthcare (CHC) packages demand significant amounts from healthcare budgets. Care for patients with complex needs could cost thousands of pounds per week, for many years, so working out a better deal on the prices quoted could create much-needed, sustainable savings. Yet NHS re-organisation has left some areas of CHC to drift, creating an opportunity for providers to inflate their prices, particularly for specialist placements. Price squeezes from other purchasers, such as councils, means that providers are looking more and more towards the health sector as a major source of profit.
Further pressure comes from the struggle to define needs categories. This has created inconsistency, which providers have used to lift prices, often through additional services. Providers typically charge 10 to 15% more for long term placements made by CCGs than those made by local authorities, even where the inputs are similar.
Negotiating CHC fees can be one of the most effective ways to get the purchasing process into better shape. Yet in some CCGs teams can be apprehensive about how to apply them in practice, perhaps not knowing how to approach the process or to manage responses from providers.
The message for CCGs to communicate to their staff is that negotiating is not as difficult as it may seem. Encouraging commissioning teams to adopt money-saving techniques helps them to develop new skills and enables better management and control of future spending. Keep in mind that good negotiators can expect to save typically 10 to 15% against a quoted care package.
Get the timing right
Commissioners often find that the best discount is available in the early stages of the procurement process, when buying a new placement. However, it is possible to negotiate existing contracts. Providers are often more accepting of price negotiations within case reviews.
Know what you want
Trying to get a better deal is impossible unless commissioners actually know what they want. Encourage teams to determine the exact needs, and to communicate these to the provider. This way both the care provider and the commissioner know where to start from.
Commissioners should also be clear about the level and type of care, the location and the facilities required, as well as any additional services needed.
Focus on the patient
Do ensure that the services commissioned meet the patient’s needs rather than those offered by the provider. Like any other market, people may try to sell packages that fit their needs better than those of the patient; there isn’t a one price fits all.
Know the price range
Care packages can be complex; there are a range of different costs underlying the care needs of each individual, from the basic financing of the care home building and facilities, to any additional services that the patient requires. You need to understand what is a reasonable price range for the level of care required.
Organisations should develop an insight into the cost components that make up the price. For instance how many staff, and at what grade, are on shift, and what is the likely hourly rate for each staff type. CCGs that have robust models and banding levels for determining rates for services, which reflect the needs of the patients, will have an advantage here.
Some CCGs find it useful to create framework agreements to inform providers of the value for money price they would expect to pay for a service. There are also many tools and models you can use to create an activity-based cost for individual packages, enabling commissioners to compare quotes against national averages. If the rate is as too high, it is time to negotiate.
Pin down the right person
Talking to the wrong person is a waste of everyone’s time, so ensure that the relevant person in the buying team talks to the person at the care providers who is responsible for cost decisions. This might be the care home manager, or the owner of the care group, regional managers or commercial specialists at head office.
Be calm and friendly
Encourage teams to be calm, confident and focused on the level of care needed, and the budget they have to work with.
Understanding the provider/purchaser relationship is also important. Direct those responsible for buying to build rapport with the person they negotiate with, and remember it’s not a battle; both parties need to feel the outcome is acceptable.
Double check the small print
Remind your teams that it is not necessary to commit too early to a placement; make sure they have also considered the alternatives. It is much easier to negotiate with leverage, and the knowledge that another provider can be approached.
Keep options open
Some care homes may offer clear information on charges, others reserve details for the small print. The Competition and Markets Authority (CMA) is to launch an investigation into whether residents are being treated fairly. There are reports of unfair practices and contract terms, including hidden charges and unexpected fee increases. The investigation will focus on whether there are any breaches of consumer law, but the results will be important for health commissioners to consider.
To protect your organisation against unforeseen price hikes, ensure that purchasers specify all the requirements, including price, within the contract, and that there are set mechanisms for calculating inflation and future increases in need. Nobody wants any surprises, so ask teams to double check the small print.
Get help
There are training courses to help staff gain the practical skills required for assessing CHC placements and achieving value for money.
For teams that prefer to assign the task to a professional, care fees specialists are another option. The best offer a range of tools, both computer based and with human support, to guide commissioners through the costings, taking he worst aspects of the negotiation process away.
Yet NHS re-organisation has left some areas of CHC to drift, creating an opportunity for providers to inflate their prices, particularly for specialist placements. Price squeezes from other purchasers, such as councils, means that providers are looking more and more towards the health sector as a major source of profit.
Further pressure comes from the struggle to define needs categories. This has created inconsistency, which providers have used to lift prices, often through additional services. Providers typically charge 10 to 15% more for long term placements made by CCGs than those made by local authorities, even where the inputs are similar.
Negotiating CHC fees can be one of the most effective ways to get the purchasing process into better shape. Yet in some CCGs teams can be apprehensive about how to apply them in practice, perhaps not knowing how to approach the process or to manage responses from providers.
The message for CCGs to communicate to their staff is that negotiating is not as difficult as it may seem. Encouraging commissioning teams to adopt money-saving techniques helps them to develop new skills and enables better management and control of future spending. Keep in mind that good negotiators can expect to save typically 10 to 15% against a quoted care package.
Get the right timing
Commissioners often find that the best discount is available in the early stages of the procurement process, when buying a new placement. However, it is possible to negotiate existing contracts. Providers are often more accepting of price negotiations within case reviews.
Know what you want
Trying to get a better deal is impossible unless commissioners actually know what they want. Encourage teams to determine the exact needs, and to communicate these to the provider. This way both the care provider and the commissioner know where to start from.
Commissioners should also be clear about the level and type of care, the location and the facilities required, as well as any additional services needed.
Focus on the patient
Do ensure that the services commissioned meet the patient’s needs rather than those offered by the provider. Like any other market, people may try to sell packages that fit their needs better than those of the patient; there isn’t a one price fits all.
Know the price range
Care packages can be complex; there are a range of different costs underlying the care needs of each individual, from the basic financing of the care home building and facilities, to any additional services that the patient requires. You need to understand what is a reasonable price range for the level of care required.
Organisations should develop an insight into the cost components that make up the price. For instance how many staff, and at what grade, are on shift, and what is the likely hourly rate for each staff type. CCGs that have robust models and banding levels for determining rates for services, which reflect the needs of the patients, will have an advantage here.
Some CCGs find it useful to create framework agreements to inform providers of the value for money price they would expect to pay for a service. There are also many tools and models you can use to create an activity-based cost for individual packages, enabling commissioners to compare quotes against national averages. If the rate is as too high, it is time to negotiate.
Pin down the right person
Talking to the wrong person is a waste of everyone’s time, so ensure that the relevant person in the buying team talks to the person at the care providers who is responsible for cost decisions. This might be the care home manager, or the owner of the care group, regional managers or commercial specialists at head office.
Be calm and friendly
Encourage teams to be calm, confident and focused on the level of care needed, and the budget they have to work with.
Understanding the provider/purchaser relationship is also important. Direct those responsible for buying to build rapport with the person they negotiate with, and remember it’s not a battle; both parties need to feel the outcome is acceptable.
Keep options open
Remind your teams that it is not necessary to commit too early to a placement; make sure they have also considered the alternatives. It is much easier to negotiate with leverage, and the knowledge that another provider can be approached.
Double check the small print
Some care homes may offer clear information on charges, others reserve details for the small print. The Competition and Markets Authority (CMA) is to launch an investigation into whether residents are being treated fairly. There are reports of unfair practices and contract terms, including hidden charges and unexpected fee increases. The investigation will focus on whether there are any breaches of consumer law, but the results will be important for health commissioners to consider.
To protect your organisation against unforeseen price hikes, ensure that purchasers specify all the requirements, including price, within the contract, and that there are set mechanisms for calculating inflation and future increases in need. Nobody wants any surprises, so ask teams to double check the small print.
Get help
There are training courses to help staff gain the practical skills required for assessing CHC placements and achieving value for money.
For teams that prefer to assign the task to a professional, care fees specialists are another option. The best offer a range of tools, both computer based and with human support, to guide commissioners through the costings, taking he worst aspects of the negotiation process away.
Ray Hart is interviewed by Radio 4 You and Yours.
Press play to listen.
This means that previous calculations of the “self-funder tax” – the difference between fees paid by private residents and fees paid by councils – have been hugely underestimated.
Ray Hart, a director from Valuing Care Ltd, said: “Everyone points to councils’ underfunding of care home places, but the reality is different. The profit motive of these businesses is working its way into the system as well.”
The cultural change of using technology to purchase CHC placements: are we ready?
Ray Hart, director at Valuing Care, discusses the cultural change of using technology to improve the purchasing process for CHC placements. He discusses the benefits, and explains why training is essential to its success. In most industries, for people in the workforce whose roles have purchasing responsibilities, there are processes in place, and access to data, to help decision making. This information is largely technology-based and helps the purchaser get the best price whilst still ensuring sustainable supply.
In Continuing Healthcare (CHC), this isn’t always the case. Nurses and assessors for instance, commonly purchase CHC packages over the telephone or via face-to-face meetings without any pricing information to back those transactions. They are responsible for purchasing thousands of pounds worth of care, and yet often this task is completed without challenge to the prices providers quote, and without question on the breakdown of those costs.
Gven the need for greater scrutiny of costs in healthcare, together with the urgency to reduce expenditure and achieve value for money, new technology is bringing much needed improvement. It is enabling assessors to delve deeper into the costs of care packages on a real-time basis, and challenge the rates quoted; bringing the purchasing process in line with other industries. There are some CCGs and CSUs leading the way here, adopting innovative technology to improve practices, yet overall progress across the board has been slow.
In reality, this is not a complex issue to tackle, it achievable for any department. So what is holding back progress?
Whilst technology that enables a much smoother CHC purchasing process brings clear benefits for healthcare in terms of improving financial and operational efficiencies, it also creates challenges for these teams. Changing old working practices and habits, for many is a difficult hurdle to overcome, and the key here is training and engagement.
It is a huge cultural change for frontline workers; having to use technology for an element of their role which in the past has always been manual. Therefore it’s essential to engage the workforce in the developments and encourage commitment. Part of this is to communicate and train people on how using technology to complete this process will improve day-to-day working practices, and their own skill set, as well as highlighting the benefits it brings to healthcare as a whole.
Adding a new area around the detailed components of cost is not easy but, rest assured, the providers selling packages of care know the underlying cost of their care and work this way. Without being similarly armed with that knowledge the advantage will always be on the supplier’s side.
However, implementation of this type of technology makes teams more price aware, and provides real-time information on costs. For people with purchasing duties, having a better understanding of costs and the price they should be paying for care, is fundamental. It facilitates better decision making and enables commissioners to secure value for money with providers. It also encourages people to think about other techniques, such as negotiating, to reduce costs; which in an ever financially challenged healthcare, is invaluable.
A further advantage of having a more effective purchasing processes in place is that it allows staff to reallocate their time to frontline duties, rather than being tangled up in admin-related work. This is a welcome step forward for most healthcare professionals.
As the number of CHC placements in the NHS continues to rise, with 62,000 people eligible for CHC funding in 2015/16, the potential for innovative technology in this area is enormous, it’s a significant breakthrough and is imperative to future sustainability.
Technology helps overcome the limitations of the current approach to purchasing CHC placements, and with greater visibility and control over costs, commissioners will manage and purchase better, more cost-effective CHC placements.
Ray Hart, director at Valuing Care, discusses the cultural change of using technology to improve the purchasing process for CHC placements. He discusses the benefits, and explains why training is essential to its success. In most industries, for people in the workforce whose roles have purchasing responsibilities, there are processes in place, and access to data, to help decision making. This information is largely technology-based and helps the purchaser get the best price whilst still ensuring sustainable supply.
In Continuing Healthcare (CHC), this isn’t always the case. Nurses and assessors for instance, commonly purchase CHC packages over the telephone or via face-to-face meetings without any pricing information to back those transactions. They are responsible for purchasing thousands of pounds worth of care, and yet often this task is completed without challenge to the prices providers quote, and without question on the breakdown of those costs.
Given the need for greater scrutiny of costs in healthcare, together with the urgency to reduce expenditure and achieve value for money, new technology is bringing much needed improvement. It is enabling assessors to delve deeper into the costs of care packages on a real-time basis, and challenge the rates quoted; bringing the purchasing process in line with other industries. There are some CCGs and CSUs leading the way here, adopting innovative technology to improve practices, yet overall progress across the board has been slow.
In reality, this is not a complex issue to tackle, it achievable for any department. So what is holding back progress? Whilst technology that enables a much smoother CHC purchasing process brings clear benefits for healthcare in terms of improving financial and operational efficiencies, it also creates challenges for these teams. Changing old working practices and habits, for many is a difficult hurdle to overcome, and the key here is training and engagement.
It is a huge cultural change for frontline workers; having to use technology for an element of their role which in the past has always been manual. Therefore it’s essential to engage the workforce in the developments and encourage commitment. Part of this is to communicate and train people on how using technology to complete this process will improve day-to-day working practices, and their own skill set, as well as highlighting the benefits it brings to healthcare as a whole.
In reality, this is not a complex issue to tackle, it achievable for any department. So what is holding back progress? Whilst technology that enables a much smoother CHC purchasing process brings clear benefits for healthcare in terms of improving financial and operational efficiencies, it also creates challenges for these teams. Changing old working practices and habits, for many is a difficult hurdle to overcome, and the key here is training and engagement.
It is a huge cultural change for frontline workers; having to use technology for an element of their role which in the past has always been manual. Therefore it’s essential to engage the workforce in the developments and encourage commitment. Part of this is to communicate and train people on how using technology to complete this process will improve day-to-day working practices, and their own skill set, as well as highlighting the benefits it brings to healthcare as a whole.
Adding a new area around the detailed components of cost is not easy but, rest assured, the providers selling packages of care know the underlying cost of their care and work this way. Without being similarly armed with that knowledge the advantage will always be on the supplier’s side.
However, implementation of this type of technology makes teams more price aware, and provides real-time information on costs. For people with purchasing duties, having a better understanding of costs and the price they should be paying for care, is fundamental. It facilitates better decision making and enables commissioners to secure value for money with providers. It also encourages people to think about other techniques, such as negotiating, to reduce costs; which in an ever financially challenged healthcare, is invaluable.
A further advantage of having a more effective purchasing processes in place is that it allows staff to reallocate their time to frontline duties, rather than being tangled up in admin-related work. This is a welcome step forward for most healthcare professionals.
As the number of CHC placements in the NHS continues to rise, with 62,000 people eligible for CHC funding in 2015/16, the potential for innovative technology in this area is enormous, it’s a significant breakthrough and is imperative to future sustainability. Technology helps overcome the limitations of the current approach to purchasing CHC placements, and with greater visibility and control over costs, commissioners will manage and purchase better, more cost-effective CHC placements.
Ray Hart talks to Peter White about the need to review contracts for hidden clauses about payments to be made when rooms become vacant due to resident deaths.
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Care home fees for people funding themselves could rise by between six and ten percent by the time the new national living wage comes into force in April, according to industry watchers. We hear from…
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