Responding to Covid-19: the complexities of the social care provider market

Social care has rarely experienced such sustained prominence in the media or in government communications. Although this attention came late in the Covid-19 crisis and brought to stark reality the sector’s current struggles with PPE, testing and maintaining quarantine, it has highlighted the vital role that social care plays.

Each and every day it provides state-funded care and support to nearly 1.1 million people across the UK in care homes, supported living and in their own homes. Delivered by more than 1.2 million people, social care is literally a lifeline to many older and disabled adults.

But the sector is struggling. The social care system entered Covid-19 badly in need of long-promised reform. As concern mounts about the numbers of deaths in care homes and the as yet unmeasured impact of the crisis on home care, the complexity and fragility of the social care provider market has been thrown into sharp relief.

As we today complete our series of explainers on social care across the UK by focusing on the provider market, what is it about that market that has caused particular difficulties in the response to Covid-19, and what lessons can we learn to make sure the sector emerges stronger from this crisis?

Complex, fragile and poorly understood

1. Market structure

The care market is complex and diverse. In residential, nursing and domiciliary care alone, 37,000 registered organisations of differing shapes and sizes provide care across the UK in a variety of establishments and people’s own homes – and many other types of services are provided too.

Operating in the public, private or voluntary sectors, payment to these providers comes from councils or self-funding individuals, or a mix of the two. Because each local authority negotiates fees and agrees contracts with providers according to local circumstances, the shape of the market varies between areas.

Despite allowing for flexibility at the local level, the absence of a central NHS-like structure makes it difficult to get an accurate picture of the market across the UK, which has posed a particular challenge in coordinating a national response to the current crisis.

2. Financial fragility

The extra costs arising from Covid-19 are heaping pressure on an already fragile market, and extra funding has been deemed to be ‘too little too late’.

For a number of years, many providers have been reporting that the fees paid by local authorities have not kept pace with the costs of delivering care. Commissioning practices (particularly in home care) offer little long-term certainty for providers. Across the UK, local authorities are reporting care providers closing or handing back contracts, but there is limited understanding of how fee changes impact on the different types and size of organisation.

It’s emerging that poorer areas are being hit hardest by closures because there are fewer self-funders on whom many providers rely to subsidise the lower fees paid by local authorities. For instance, it is estimated that only 11% of care home residents in Northern Ireland self-fund, compared to an estimated 46% in England. 

3. The challenges of monitoring financial health

A complex sector under significant financial pressure means there are rapid changes in the market – with frequent entry, exit, mergers and acquisitions – making it difficult to maintain an overview of the financial health of the market.

In England, it is estimated that the Care Quality Commission has capacity to monitor the financial health of around 25% of the market – focusing only on those services that would be difficult for councils to replace. This leaves large swathes of the market unmonitored.

And while care services in the other UK countries operate under the auspices of different regulators – in Wales and Scotland there is a dedicated inspector for social care and social services – many of the challenges of pre-empting and preventing failure and coordinating responses in such times of national crisis persist in all four countries.

How can the market be supported to be more stable after Covid-19?

The current situation has shone a light on just how complex, fragile and poorly understood it is. Our analysis has also highlighted that the four countries of the UK share similar challenges, but have different abilities and structures in place to address them. The market across the UK entered the Covid-19 crisis in a crisis of its own and there is a danger that, when it emerges from it, it will be in an even more precarious state.

The need to reform the funding model for social care is indisputable. But the problems in the sector go beyond funding, and there is an urgent need to review how services are provided not just during the current crisis, but also in the long term.

Putting the provider market on a sustainable footing needs to be a key plank of any reform programme. It is vital that the market, in all its diversity and complexity, is better understood so that reform can support struggling organisations to deliver high-quality and continuous services.

While the focus is rightly on the here and now, it is also important to use the lessons emerging from this crisis to bring about long-term sustained change in the system. As part of a comprehensive package of reform, it is essential to create an environment where social care providers can thrive and innovate, so they can continue to provide a lifeline to the most vulnerable in our society.