Kieron Steele, Chief Financial Officer, Lifeways
You don’t have to scroll too far down your news feed to know that social care providers – whether for-profit or not – are feeling the pinch right now. Slim margins continue to be squeezed – sometimes to the point of being non-existent.
The clearest causes are high inflation, coupled with typically constrained budgets of Local Authorities, who pay for much of the population’s working-age adult social care. Sector-wide staff shortages and the ongoing energy crisis only serve to compound these issues.
You might say: so what? After all, inflation seems to be everybody’s problem.
Yet without fee uplifts – Local Authorities increasing what they pay social care providers to cover annual cost inflation (typically through increases in National Living Wage) – parts of the sector risk having to exit running services entirely and sadly we are seeing that today in increasing numbers.
Squeeze on margins
This squeeze on margins also discourages investment in the social care sector. This funding shortfall risks stalling the development of new fit-for-purpose accommodation, which can make such a life-changing difference to people who receive support.
Local Authorities (and the new ICBs) must act to address their social care funding levels – and fast. The Care Act 2014 places a statutory duty on local authorities to provide appropriate levels of care for those who need it, and explicitly states their responsibility to pay a fair rate to the providers of this care.
The Act notes that “LAs must not undertake any actions which may threaten the sustainability of the market as a whole, … for example, by setting fee levels below an amount which is not sustainable for providers in the long-term”.
However, as social care strategy experts Connell Consulting noted earlier this year: “many LAs in the UK have failed in their responsibility to ensure a healthy level of service provision by underpaying their local social care providers.”
The consultants add that “most LAs” have failed to offer fee uplifts that cover the increased inflationary costs faced by providers, with energy, food, supplies, and staff costs having “skyrocketed” in recent times.
A Way Forward?
Of course, no-one has all the resources they’d like. Social care providers must also play their part in running their services as efficiently as possible, whilst maintaining high quality standards.
One clear way to do this is through technological and digital innovation – common buzzwords, definitely, but a necessity for the people-intensive social care sector.
A new breed
When people talk about technological and digital innovation within social care, they often refer to the enabling hardware such as motion sensors, pressure sensors and door alarms used by individuals who receive support.
As helpful as these user-facing technologies are, what’s too often missed is software-focused systems investment.
There’s a new breed of digital support, risk monitoring and staff management tools, to name a few, that will drive cost efficiencies that could contribute to balancing the books and create a more sustainable funding environment for all.
This much-needed investment is often overlooked. Yet in a sector where pencil-and-paper can still sometimes be king, it’s an area with massive promise.
As we embrace these much-needed system enhancements in the coming years, we’ll be doing our bit to drive value for money and ensure sustainability and continuity of support.
Coming with a cost
Unfortunately, these efficiencies come at a cost and without greater upfront investment, social care providers simply can’t be efficient.
Ultimately the sector needs confidence in the availability of future funding and uplifts. This confidence will allow for long-term investment decisions and planning that will ultimately boost the efficiency of the sector. Grant funding is well received (for example in the adoption of Digital Care Planning), but what is needed is security over long-term funding that supports longer term investments.
A time for choosing
In essence, high inflation and underfunding have led the social care sector to a time for choosing.
As social care providers, we can choose to continue to operate in the now-precarious traditional way. Or we can drive cost efficiencies through embracing digital innovation that will allow us to thrive – and deliver even better, more sustainable support.
Now more than ever we need the support and backing of Local Authorities, ICBs and Central Government to facilitate this change by giving the needed confidence on fair future funding.
