Annex B - cost of care report

The Department for Health and Social Care (DHSC) has been working with local authorities to run ‘cost of care exercises’. We collected financial information from older people’s care homes (65+) and home care providers (18+) in Brighton & Hove, before returning the results to DHSC.

Find a detailed explanation GOV.UK's Market sustainability and fair cost of care fund 2022 to 2023 page.

As part of the requirements for grant conditions, we're required to publish a cost of care report.

This report:

• describes the councils approach to meeting the grant conditions set out in the DHSC guidance and the cost of care processes Brighton & Hove City Council undertook during 2022
• explains the councils approach to this process, how providers were contacted and encouraged and supported to participate
• explains the level of engagement from providers, the information they submitted to the council and how the council dealt with this in order to complete Annex A

As instructed by Department of Health and Social Care, all local authorities were required to survey a range of providers to improve the understanding of the actual costs of delivering care in their local area. We ran a data collection exercise throughout June and July 2022 and included engagement events for care homes and home care providers operating within the city.

The providers asked to submit information were;

• care homes for residents over 65 and offering;
• standard residential care
• residential care for enhanced needs
• standard nursing care
• nursing care for enhanced needs
• domiciliary care for residents over the age of 18

The objective of the exercise was to capture the median actual operating costs, as well as the lower and upper quartile. Providers were asked to use financial information from 2021/2022 as the most recent complete financial year, some providers included information from 2020/2021.

Fair Cost of Care was first introduced to Home Care and Care Home providers in Spring 2022, at that stage it was an overview the aims and how it will be a factor in plans for the sector going forward.

The communication and engagement with providers is well established in Brighton & Hove, it was a supportive factor in response to COVID-19 challenges and we have maintained that relationship. Care Homes providers attend a regular forum with Local Authority Commissioning managers, key items such as Fair Cost of Care are presented with an opportunity for input and questions from Providers. Home Care providers are all invited to a fortnightly meeting, which brings together Local Authority Officers and providers for key issues and ongoing communication.

As the requirements for Fair Cost of Care developed and input from providers was made clearer, Brighton & Hove City Council arranged and delivered a series of engagement events. The events were supported by Local Government Association, Care England in partnership with Local Authority officers and the registered care association. The events were managed as a combination of briefings and opportunities for providers to ask questions and covered the providers in scope.

Details of briefings

Launch events

• 17 June – Dedicated event for Home Care Providers.

All Home Care providers for 18+ in Brighton & Hove were invited to a dedicated session on 17 June, which launched the Fair Cost of Care exercise. As well as lead Local Authority officers, support was provided by LGA rep and Care England. Slides were presented to explain the purpose of the exercise, benefits to the sector and process for providers to respond including timescales.

The event was well attended with over 75% of providers at the meeting, engagement was good and timescales were in line with experience from other Local Authorities.

There was a request from providers to extend the timescale of returns to Local Authority, which was agreed. Providers were given links to documents, how to guides and support available to them. A dedicated Council email address was created for questions and returned documents.

• 23 June – Dedicated event for Care Home Providers.

All Care Homes in scope of the Fair Cost of Care were invited to a dedicated session on 23rd June, launching the Fair Cost of Care exercise and the online tool used to gather the information. Slides were presented similar approach to the event for Home Care providers.

Care Homes were asked to complete information using an online tool, rather than return information back to Local Authority. As a result the support at the meeting included technical support from the online tool provider. The session was also supported by Care England and LGA representatives.

The event was attended by only 9 providers in the city, which allowed for a more detailed conversation with those in attendance. The low attendance highlighted the need for further communication and engagement

Brighton & Hove City Council continued engagement through regular Home Care and Care Home provider forums. Local Authority Officers invite all providers in the City and have open discussion sharing information, best practice and upcoming challenges. The forums presented a good opportunity to continue engagement, remind providers of the exercise and answer any questions. The Fair Cost of Care exercise was included in provider forums in June, July & August ahead of submission deadline.

As well as the engagement Brighton & Hove Council officers contacted each provider to encourage a response to the exercise and maximise the quality of the data collected. Providers were contacted as a group and individually via email, phone calls and meetings. The contact to providers started after the launch meetings explained above, reminding all providers of the aims, objectives, timescales and process of return. Around 40% of providers responded to communication, the majority of those responses explained the current operational pressures on their services and the challenges to participating in the exercise.

Given the low attendance and challenges faced by providers, the deadline for submission was extended twice to allow additional time and complete the exercise.

To complete the exercise Brighton & Hove City Council worked closely with Local Government Association, followed their advice and guidance, utilising templates and support to gather the information from providers. Care Homes were asked to complete the requested information using an online tool and Home Care providers returned template spreadsheets to meet the requirements of the exercise. The online tool and template spreadsheets gave clear guidance on how to complete the information and the rationale behind each category.

Brighton & Hove City Council took the decision to use templates as provided by LGA and use the online tool as commissioned by a large number of other Local Authorities. The decision was taken to try and make the process as straightforward as possible for providers, maximise the number and quality of return.

As explained in the events section listed above Care England, Local Government Association and online tool provider were all supporting returns from providers offering technical support, explanation on aims of the exercise and answering questions from providers. The support available was sufficient for completing the exercise.

The templates used in data collection have been designed by Local Government Association, and all returns were analysed to remove outliers to improve data quality.

Providers for Home Care were asked to submit return information into a dedicated mailbox, the submission was acknowledged and each provider was marked as having completed a return. Care Home providers were asked to register and complete all information in an online tool.

The registration by providers and number of submissions was monitored, reminders on deadlines were regularly sent. Initially the deadline was end of July and following the launch events and subsequent meetings this was agreed with providers. However, when reviewing the number of returns the decision was taken to extend and allow further time for providers to complete.

When reviewing the required analysis for the exercise, the number of returns has been significantly lower than first expected for both Care Homes (11/64 17%) and Home Care Providers (9/22 41%). Although when considering the returns against commissioned activity it is much higher for Home Care Providers (over 62% of packages delivered to residents). 

Although there was a low number of returns by providers the overall data quality was in line with initial expectations. Home Care providers submitted returns appear to have given a good reflection of costs in the city and there was only 1 submission that gave a particularly high return on capital, this was queried with the provider and removed as an outlier for the final submission.

The data quality from Care Home providers was good overall, although the number of submissions was low. Following submission and ahead of analysis of overall results one provider took the decision to close, with residents relocated to new providers, the data submitted by this Care Home was excluded from overall results.

There were key ‘costs’ that had to be determined as part of this exercise and on which DHSC invited councils to take the approach that was most appropriate for their area. These were ‘return on capital (ROC)’ and ‘return on investment (ROI)’. This part of the report will set out what approach the councils considered and what approach it took.

A key principle of the overall approach taken by Brighton & Hove City Council was to work with providers throughout the process to submit the most accurate information they could so that the adjustments needed to be made by Brighton & Hove City Council were as few as possible. This principle formed the basis of the councils approach to ROC and ROI, where there are various general approaches and calculations that could offer viable alternatives to arrive at these figures.

Separately, Brighton & Hove City Council sought to understand the approaches and information across the South-East to consider how these broader experiences may influence the Brighton & Hove City Council approach. The council also sought to understand national evidence and guidance, notably that provided by LGA which indicated that a ROC of around 5% is broadly seen as appropriate for providers within the sector.

Finally, Brighton & Hove City Council considered the type of providers that had responded and if this has any influence on the figures that may be expected. For instance, it would be expected that if responses were received from larger providers then investors may require a larger ROI and if responses where received from providers that are owner-operated, then it is common for the owners to not take a salary but instead take a dividend and so the ROI may be higher.

The conclusion Brighton & Hove City Council arrived at was that the best indicator of what the local ROC and ROI was the information shared by providers. This decision was reinforced by the comparator information from the SE and nationally. Brighton & Hove City Council decided that the type of approaches to ROC that were suggested in the DHSC guidance were not necessary and would not only give a less accurate figure than what providers shared, but would also move away from the Brighton & Hove City Council principle of using provider information where possible.

Annual fees paid for commissioned services is reviewed in line with Local Authority budget setting process, which starts in Autumn and is finalised in February.

When setting annual fees, the council considers inflationary pressures, the living wage and other cost pressures affecting Adult Social Care providers. This has to be balanced with managing the overall budget of Adult Social Care services.

For residential settings we have published set rates which cover both residential and nursing homes and for our homecare provision we have a set hourly rate. The table below set out these rates as at 2022/2023. Additional Funding provided through the cost of care exercise has been applied to these rates for 2022/2023.

Fee rates table 2022 to 2023 (updated 65+ Care Homes and Home Care)

Care Homes and Care Homes with Nursing – set rates only

Home Care

It is important to recognise that for our residential provision and due to market pressures we are currently only able to purchase a very limited number of beds at these rates with variable rates above this depending on market conditions.

It is important to recognise that for our residential provision and due to market pressures we are currently only able to purchase a very limited number of beds at these published rates with variable rates above this depending on market conditions.  We will be reviewing our published set rates alongside our commissioning of residential provision throughout over the next few years and consideration to the Cost of Care exercise outputs will be part of this process.  This will be one of many areas of consideration when reviewing fee rates going forward and other factors such as current rates being paid and affordability will also need to be considered.

We do have concerns around the validity of the output from the exercise due to the low number of returns and inconsistency of data. We will however, consider some of the information when reviewing our fees alongside other factors including council budgets, available funding and statutory requirements.

Table A – Lower, Median and Upper Quartile of recorded returns (Care Homes) 

Table B – Median Values for each care type on recorded returns (Care Homes)

Table C – Lower, median and upper quartile of appointments per week by visit length 

Table D – Lower, median and upper quartile on recorded returns (home care) 

Table E – Median value for each care type (home care)