Elderly couple
I first became interested in the home care market when I was a mentor for a young woman who launched a care business whose clients were mainly funded by the local authority. Her main problem was cash flow – she didn’t have enough cash to pay her growing number of carers while waiting for social services to pay her either on time or even a few months late. To help her chase payments, I ‘broke the rules’ a few times, by stating I was calling on behalf of the Prince’s Trust. Well, I am a Prince’s Trust mentor, but people reacted as if I was calling on behalf of Prince Charles, resulting, amazingly, in prompt payment!
But our luck finally ran out. My mentee had to take on freelance work just to pay her carers, and in the end, she gave up and returned to full time employment.
I am exploring the home care market once again because it is rapidly growing, with increasing demand and insufficient supply. I believe that it can offer opportunities for people who want to be self-employed, and those who want to start a small business or community enterprise. There are huge problems in this sector, however there are signs that many of these problems can be overcome by adopting innovative approaches as described below.
WHAT IS HOME CARE?
Domiciliary or home care is a social care which is provided to people in their own homes. It can include help with washing, dressing and preparing meals for older people and people with disabilities or other health conditions. Short term care, or reablement, is often provided to those returning home from hospital, while long term care supports those with ongoing care needs.
As home care is means-tested, some people are eligible to have their care paid for by the local authority, either by a direct payment or personal budget while some must pay for care themselves in part or in full.
Eligibility for local authority funded care is also dependent on a needs-assessment, and tightening eligibility has meant that home care is increasingly restricted to those with more complex needs.[1]
In 2015, more than 350,000 older people in England were estimated to use home care services. The local authority paid for 257,000 (almost 75%) of them. A further 76,300 younger people with learning disabilities, physical disabilities or mental health problems were also estimated to be using publicly funded home care[2].
Most home care, whether paid for privately or by the local authority, is provided by the independent sector, and home care providers who deliver personal care are regulated by the Care Quality Commission (CQC). Outside of this, many people rely on family or friends for some or all of this support.
Local authority-funded home care is usually commissioned via a competitive tendering exercise for the tasks which need to be completed and the time that will be required to complete them. Providers are paid on a rate-per-hour basis, commonly referred to as ‘time-and-task' commissioning.
The main advantage of home care is that it is carried out in a person’s own home, eliminating the need for them to spend large amounts of time in hospital and enabling them to stay in their own home indefinitely, or at least for a longer period of time than would normally have been possible before domiciliary care was an option[3].
THE PROBLEM
According to Age UK, 1.4 million older people aren’t getting the care and support they need. This is an increase of almost 20% in just two years[4].
Of the 1.4 million older people affected, more than 300,000 need help with three or more essential everyday tasks, like getting out of bed, going to the toilet or getting dressed. More than half of these people get no help at all from paid carers, family members or friends. Meanwhile, Age UK’s analysis also found that delayed discharges from hospital due to a lack of social care are now costing the NHS more than £500 a minute.
In their Social Care 360 publication, The King’s Fund, an independent charity working to improve health and care in England, demonstrate that per 100,000 population, more working-age adults and fewer older adults are receiving social care support. There is also a growing crisis in the social care workforce, with 8 per cent of jobs vacant and 390,000 staff leave their jobs each year[5].
WHY CURRENT SERVICES FAIL
The home care market consists of the commercial home care market, which includes provision by local authorities (15.5% of the market), the NHS (4% of the market), private and voluntary sectors (3%); and the informal care market (78%), which includes care provided by neighbours, friends and relatives on an informal basis, often free of charge[6].
High-cost, low-profit market conditions
The main trend in the sector is the increasing sourcing of local authority-provided domiciliary services through the private sector.
Local councils purchase around 70% of domiciliary care, with some providers claiming that authorities often use their purchasing power to drive pay rates below costs. Some providers have become financially unsustainable – where their revenues do not cover the cost of providing services. The Competition and Markets Authority estimates that councils are paying 10% less than the total cost of care home places[7].
The value of the private sector market, which typically involves low intensity care provided by sole traders or small local organisations, has benefited from increasingly stringent local authority eligibility criteria. However, as the market typically involves low intensity care, low contract value tends to make it relatively unattractive to larger private sector home care providers.
This extract from Social care: forthcoming Green Paper (England) The current financial state of social care providers in general, states: “An important factor in a social care provider’s business model is likely to be selecting the mix of self-funders to local authority supported clients (although local socio-economic factors will also be of relevance). Those social care providers with a business model based on a greater share of clients in receipt of local authority funding support, especially those with significant debts, are already struggling to be profitable… Similarly, in the domiciliary care market, LaingBuisson noted that “the profitability of homecare providers with a high exposure to public sector funding has collapsed”. In contrast, for some businesses with a greater proportion of self-funding clients – who typically pay more for the same level of service than those clients receiving local authority funding support – the picture has been relatively more rosy recently...”
Quality concerns
The fragility of the home care market has been raised as a concern by the CQC, which has highlighted large churn among providers registering and deregistering. Concerns have been raised about quality and there has been an increase in the number of complaints and a fall in satisfaction.
Rising demand, lower resources
Demand for home care is forecast to increase significantly. Older users of local authority-funded home care are predicted to rise by 82 per cent, from 257,000 in 2015 to 468,000 in 2035. Users of privately funded home care are projected to rise by 49 per cent over the same period while younger adults with learning disabilities using home care are predicted to rise by 51 per cent (Wittenberg and Hu 2015). At a time when population projections might indicate a rise in demand for social care, the amount local authorities are spending and the number of people eligible for local authority-funded home care are falling (Phillips and Simpson 2017).
According to Mintel, the old age support ratio[8] is projected to fall to 2.91 by 2043 from the estimated 3.42 recorded in 2018. This will add further pressure to the affordability of social care, as the increased tax revenue the government receives from the working age population will struggle to provide care to the growing number of people of pensionable age.
Dependency on local authority contracts
The majority of the independent sector’s business activity is still derived from local authorities. The ability to win local authority business at the time when many social services departments are reducing the number of suppliers remains a critical barrier to market entry[9].
Uncertain future
The King’s Fund believes that the future of home care is uncertain, and the market is fragile. A survey of directors of adult social services in 2017 found that 39 per cent had experienced home care providers ceasing to trade in the previous six months and 37 per cent had experienced contracts handed back [10].
Staffing problems
Home care providers employ around 680,000 people and there are around 110,000 vacancies across social care at any one time. More than half of care workers are employed on a zero-hours contract and turnover for domiciliary care staff is at 42.4 per cent [11].
WHAT CUSTOMERS WANT
There have been several research reports looking at what people want from care delivered in their home and exploring what good-quality care looks like. These include the following[12].
Person-centred care
Valuing and involving people, as well as their carers and family members
Continuity of care
Personal manner of staff – a caring and compassionate approach
Development and skills of staff
Good information about services and choices
Focus on well being, prevention, promoting independence and connection to communities – to be able to stay in their own homes and be supported to do things themselves.
POTENTIAL FOR BUSINESSES
According to Mintel, The UK market, worth £85 billion 2017/18, is expected to grow by 5% between 2018/19 and 2022/23, when the market is forecast to be worth £90 billion. In the commercial home care sector, the trend towards local authorities concentrating on higher intensity consumers is almost certain to continue, following the enforcement of minimum eligibility criteria.
Growth in the 75 to 84-year-old and over-85 population will force local authorities to adapt and innovate service provision to make it as cost efficient as possible, while also maintaining adequate quality to those with the most serious care needs. The following projections for the period between 2005 and 2041 from PSSRU[13] in 2008 and from parliamentary research in 2010 provide some indication of the potential scale of increasing demand:
The numbers of disabled older people, unable to perform at least one instrumental activity of daily living (ADL) or having problems with at least one activity of daily living, would grow by 108% - from around 2.4 million to around 4.95 million.
The number of older people with moderate or severe disability, needing help with one or more ADL tasks, would increase by 122% - from around 950,000 to around 2.1 million.
The numbers of disabled older people in households receiving informal care would increase by 102% - from approximately 1.75 million to over 3.5 million.
Care by children will still need to increase by approximately 90% if the proportion of disabled older people receiving care from their children is to remain the same today.
The numbers of users of non-residential formal services would need to rise by 102%, from 1.5 million to 3.1 million, to keep pace with demographic pressures.
Much of the business for commercial operations is likely to continue to be focused on supply contracts for local authorities. However, many commercial operators are expected to promote private sector services directly to customers. This should prove immediately successful for companies operating in this sub-sector as more clients are shunning services provided by local authorities and are actively looking for alternative care services.
Emerging models and approaches to commissioning and delivering home care[14]
Technology and digital (eg remote monitoring, telecare and telehealth etc)
Coordinated care planning (eg community volunteering platforms, carer marketplaces etc)
Recruitment and retention (eg values-based recruitment, improved terms and conditions etc)
Autonomous team working (eg small, autonomous or self-managed teams; case management approach; involvement of community and NHS partners etc)
Alternative approaches to commissioning (eg outcomes-based commissioning; integrator models etc)
Personalisation (eg direct payments, personal budgets and individual service funds etc)
Integrated care approaches (eg Integrated health and social care community-based teams etc)
Community assets and connections (eg respite and support for informal carers etc)
Connecting to communities (eg community circles, social prescribing etc)
Family-based support and communal living (eg shared lives, communal living etc)
For detailed information and evaluations of these approaches, please read New Models of Home Care.
An extract from Messages on the Future of Domiciliary Care Services (Bolton, Townson 2018): “The simple aim of domiciliary care is to help people to remain well and independent in their own homes – but other services can also assist with this task. Services such as assistive technology; volunteer visitors; occupational therapists; local community organisations and others can all play a part in ensuring that people are not using the scarce resource of domiciliary care when there are other better solutions.”
IS THE home CARE MARKET WORTH IT?
The King’s Fund concludes that the estimated 249 million hours of home care delivered each year in England, much of it publicly commissioned, has rich potential for improving population health.
“New approaches have potential to improve the quality of home care services if they are not required to compete on a per hour basis with current time-and-task approaches to commissioning. Improving the quality of home care should therefore be seen as part of a wider move towards integrated, preventive approaches to health and care that incentivise better outcomes for individuals and have the potential to lead to efficiency and cost savings in other parts of the system. Focused around the principle of personalised care, they should include a renewed focus on simple home adaptations as well as exploring the potential for newer technologies. They should also aim to build on community development approaches such as support circles, without expecting these to necessarily replace formal provision of personal care. Significant barriers, including distinct funding streams, remain; but a better, more efficient home care service is a prize worth having[15].
The Social Care Green Paper (England)
This consultation paper on social care for adults has been delayed several times (which has caused further market instability). It is intended to be published ‘soon’. The Green Paper was originally going to explore the issue of how social care is funded by recipients, such as: a more generous means-test; a cap on lifetime social care charges; an insurance and contribution model; a Care ISA; and tax-free withdrawals from pension pots. Other topics that the government have said will be included are integration with health and other services, carers, workforce, and technological developments, among others. For further information please read Social Care: forthcoming Green Paper (England).
A FINAL WORD
The home care market is too complex to be covered adequately in a blog post, but I hope that I have given you an idea of the issues in the market and how some of them can be addressed.
There are many opportunities for silver startups to get involved in this sector, either as self-employed carers or small business owners targeting private clients and/or working innovatively with local authorities within communities. If you are interested in becoming a self-employed carer, it is advisable to gain some experience as an employed carer first and also gain relevant NVQ qualifications. A very good article can be found on the Simply Business website How to become a Self-Employed Carer.
If you are interested in setting up a community enterprise, or homecare agency, then you would benefit from learning more about some of the innovative approaches mentioned above. For community businesses, there may be funding and support, for example, through Power to Change or Community Catalysts. If you are interested in setting up a home care agency then, Startups.co.uk’s article is well worth reading.
Best wishes
Viv
FURTHER INFORMATION
United Kingdom Home Care Association
Local Area Coordination Network
FOOTNOTES
[1] https://www.kingsfund.org.uk/sites/default/files/2018-12/New-models-of-home-care.pdf
[2] https://www.kingsfund.org.uk/sites/default/files/2018-12/Home-care-in-England-report.pdf
[3] https://ukcareguide.co.uk/domiciliary-care/
[4] https://www.ageuk.org.uk/latest-news/articles/2018/july/1.4-million-older-people-arent-getting-the-care-and-support-they-need--a-staggering-increase-of-almost-20-in-just-two-years/
[5] https://www.kingsfund.org.uk/publications/social-care-360
[6] Mintel Domiciliary Care UK 2018
[7] www.instituteforgovernment.org.uk/blog/government-must-not-continue-delaying-social-care-green-paper
[8] The old age support rate is the ratio of the population who may be economically active to older people who are more likely to be economically inactive.
[9] Mintel Domiciliary Care UK 2018
[10] Association of Directors of Adult Social Services 2017
[11] Skills for Care 2018
[12] https://www.kingsfund.org.uk/sites/default/files/2018-12/New-models-of-home-care.pdf
[13] Personal Social Services Research Unit
[14] https://www.kingsfund.org.uk/sites/default/files/2018-12/New-models-of-home-care.pdf
[15] https://www.kingsfund.org.uk/sites/default/files/2018-12/Home-care-in-England-report.pdf