Consideration of paying for outcomes from
a set of the population for domiciliary care
FOREWORD BY ALAN LONG
Executive Director of Mears Group PLC
Too often we see demanding service specifications in tenders, calling for innovation, new ways of working, but
where the payment system behind the specification remains one of simply paying for the minutes of care that
are delivered. How on earth have we let this happen? Why have we not been able to create a commissioning
system, where payment is actually aligned to the goals of the service?
There are some huge challenges across health and social care, that demand significant change in
commissioning approaches. Simply changing service specification requirements to be more outcome focussed,
will not be enough in itself to drive real innovation amongst the provider community. Innovative and real
change will happen more readily, when the payment system is much more aligned to the outcomes required
within the service specification. Ultimately, if we remain with a task and time system, we will continue not to
focus enough on reablement, service integration and service improvement.
Of course having a creative and aligned payment system, will put greater emphasis on the ability to measure
and evidence the effectiveness of various care interventions. This in turn will need better use of technology and
analytical skills that can support these developments. This can also only be a good thing, when there is so
much pressure on the Public purse.
Professor John Bolton's initial findings are thought provoking and we need to work together as a sector to
ensure the best of these recommendations are implemented well, to the benefit of service users,
commissioners, care workers, providers and indeed tax payers
Page 1 I Consideration of paying for outcomes from a set of the population for domiciliary care
FOREWORD BY PROFESSOR JOHN BOLTON
Independent consultant in social care and visiting Professor
at the Institute of Public Care at Oxford Brookes University.
In Adult Social Care there has been a slow move towards outcome-based commissioning for services (See my
report on “Emerging practice in outcome-based commissioning for social care” published by the Institute of
Public Care in April 2015).
This approach has been encouraged by those local authorities who have placed a strong emphasis in their
delivery of care on those interventions that either prevent or reduce someone’s need for longer term care.
This is supported by the evidence for the benefits from reablement for older people; the recovery model in
mental health; and the emerging progression model in learning disability services.
Outcome-based commissioning is in part a natural evolution of the way in which commissioning might take
place when a council is seeking improved outcomes for its customers as a result of the resources it purchases
or deploys.
The overall expectation is that if a provider can produce outcomes for customers that may reduce their need
for longer term care they should be rewarded. At the same time, if fewer people need longer-term care, this
will reduce the overall costs to the council. The benefits can then be shared between services commissioners
and providers.
This paper explores a specific way of approaching this, through commissioning a provider to deliver a range of
services for a population of people and ensuring that their care needs are met.
There may be four distinctive sub-sets of services that are offered under the heading of domiciliary care:
n Reablement to support recovery and rehabilitation
n Support to help a person (and their carer) live with a series of long-term conditions or illnesses
n Support to help a person (and their carer) to live with dementia
n Support to people who need end of life care.
All of the services identified ought to be part of the menu that is offered by a domiciliary care provider who is
looking to deliver improved outcomes for older people.
Consideration of paying for outcomes from a set of the population for domiciliary care I Page 2
The basic approach
The proposition is that a council agrees to pay a provider to meet the care needs of a set of older people who
are deemed to be eligible for council-funded domiciliary care through a fixed price1 . The provider is
incentivised to deliver good quality care in the best possible way that delivers the required outcomes. The
evidence suggests that about half of those who are eligible and need care can be helped to “get back on their
feet” with a simple set of solutions – getting the right equipment (including assistive technology), help with
finances, linking people to their communities and/or therapeutic support to help restore a lost function.
Usually this can be supported by some short-term domiciliary care (reablement). Recent evidence suggests
that this short-term care should be more targeted as some older people will improve their condition on their
own with guidance from a therapist.
Older people who require care and support are for the most part referred for help by different parts of the
NHS. The majority of new referrals are most likely to come from Acute Hospitals with further people referred
by GPs and Community Based Services. Some people do refer themselves (but relatively low numbers) and
some are referred by family or friends.
For most older people, it is usually a series of critical events – serious illness, a medical intervention, the loss
of a loved partner, break up of family or community support – that leads them to requiring care.
An outcome based framework for domiciliary care might have the following objectives:
n To build a set of services that respond quickly to older people in crisis and ensure that at least 50% need
no further care after a six-week period and a further minimum of 25% require little or no care after a year’s
assistance.
Performance indicators
n Low delayed discharges from hospital
n High rate of reablement – older people needing less or no care after help has been offered.
n To ensure that older people in the service are helped in the most cost effective way, with a stable and
trained workforce that can help them live as independently as they are able. To this end the service will
combine the effective use of contact hours with the use of equipment to help meet someone’s needs.
Performance indicators
n Lower average costs per head for domiciliary care packages.
n To have a service which has very low new admission rates to residential care as a strong ethos of the way
in which it is run.
Performance indicators
n Low admissions to residential care
n That the transaction costs between the providers and the commissioners are kept to a minimum for both
parties.
n If the NHS is involved in commissioning the service – lower admissions to acute hospital for this group and
lower readmissions for those supported through discharge.
1
This would have to be linked to personal budgets
Page 3 I Consideration of paying for outcomes from a set of the population for domiciliary care
Modelling the costs
A council will want to set an agreed price (through a competitive tender). The provider would have to have
some control over the amount of care they offered each customer and the way in which they offered that care
– based on setting agreed outcomes which could be measured if they have been delivered. Providers should
be free to use technology, equipment and other interventions. Councils and Providers would need to be able
to agree the cost model for any procurement. Most of all, if older people are encouraged within the service to
regain as much control of what they are able to do, the packages of care might reduce. From within this group
of older people it is likely that a small number will experience further improvement in their condition and they
will require less service over time. An equal number might require more care and in particular some may even
be considered to need residential care to meet their needs. The provider may determine that they will meet all
of these costs for the people for whom they have taken responsibility. This means that they will be rewarded if
more people are enabled to live independently with less care and have to meet the costs of those in
residential care.
The rest of this section now explores how councils and providers might agree a cost for the care of a
population of eligible older people.
1.
The Impact of reablement
It should be expected that at least half of those older people who are referred to a domiciliary care agency for
the first time and receive either a therapist or a reablement domiciliary service, will require little or no longer
term care or support.
In some Councils referrals to longer term domiciliary care services aren’t made until after therapy or
reablement has been offered and the course completed – as a result, there is a much lower percentage who
require on-going care from a Provider.
So if people are passed straight to a Care Agency it should be expected that at least half could be helped in
such a way that they won’t need on-going support after a six to eight week care package.
An episode of domiciliary care reablement is estimated to cost £1,500 (based on an examination of council’s
costs, which are less than those expressed in the PSSRU study of reablement of £2,000). If domiciliary care is
delivered at £15.00 per hour, then this equates to 100 hours of help to get an older person back functioning
and doing most things for themselves. (One may want to add in the cost of a therapist – say £75.00 per
intervention or about half a day per person – into each person’s assessment, if this cost was to be met by the
provider rather than the NHS or council.
A council could then commission a service for 100 older people for £157,500 and expect that 50% of this
group would require no further care.
There is a small risk to the provider if a number of people require double-handed visits, though these can be
significantly reduced through the use of the right equipment – an Occupational Therapist is invaluable in
assisting with this.
Consideration of paying for outcomes from a set of the population for domiciliary care I Page 4
The Costs of Longer-Term Care
2.
For half of the customers who are likely to remain in the service (after an episode of reablement), there may be
substantial costs. For those who are receiving on-going care the average (in England) is that 46% of
customers receive 10 hours or more a week. That means 54% of customers have lower packages. But the
variations on these proportions between councils varies significantly, so unless this pattern is understood for a
specific council area, it is hard to predict what the longer term service will look like and, therefore, what it will
cost. This would need to be considered by both providers and commissioners in agreeing the final costs. This
demand and patterns of care assessed to be needed by customers are usually determined by Assessment and
Care Management Staff.
Residential care costs vary, but the average in England is £503.00 per resident per week – from which the
income from the resident is deducted, which is a minimum of £126.30per week. So residential care is rarely
the cheaper option to domiciliary care. If double-handed visits are required then it does become a more
expensive option, at least short term, but these can be significantly reduced if care workers have the right
equipment and they are trained to use it (with the help of occupational therapists) 2.
2a.
Model One for Longer Term Care Costs
To model a cost on the service it is probable that one third will require an intensive package while the other
two thirds will have reducing levels of need (or a carer is providing some of the support).
An intensive care package is likely to cost between £262.50 (2.5 hours for 7 days) and £367.50
(3.5 hours for 7 days) per week, depending on the number of visits being made and the support required.
A package of 10 hours support a week (2 hourly visits for 5 days a week) will cost £150.00 per week.
A package of 5 hours a week (2 half-hourly visits per week) will cost £75.00 per week.
So an estimated cost for caring for 50 people with on-going care needs might be – £250,240
(for 17 people with intensive needs @ £320 per week average) + £117,300 for the 10 hour visits and
£55,200 for the lower level visits. Total cost = £422,740 for the remaining 46 weeks in the first year and
a further £55,000 (a total of £477,740) for a full year impact.
2b.
Model Two for Longer Term Care Costs
A different way of calculating the costs of the 50 older people is to use the national average cost for a
package of care of £193.00 per person per week (this figure is known for each council in England). This gives
an annualised cost for meeting the needs of 50 people of £501,000 (still based on £15.00 as hour being the
average cost of home care in England). This is slightly higher than the calculations above – providers and
commissioners can consider the best option in their negotiations.
In a year, a number of older people may have died while were receiving the service – this needs more careful
consideration, but would slightly reduce the costs laid out. It is worth noting that the £193.00 average cost for
a package of domiciliary care will have taken this into consideration.
There is a separate argument here about at what point residential care is cheaper to the Treasury, as some older people may be relying on state
benefits including housing allowances to remain in their own homes
2
Page 5 I Consideration of paying for outcomes from a set of the population for domiciliary care
Moving to Personal Budgets
3.
One issue that is touched on below is that councils are now required to ensure that everyone has a personal
budget. For this purpose figures could be set as following:
Reablement
£1575 per episode (personal budget not required)
Lower Level Dom Care
Higher Level Dom Care
£75.00 per customer week (reduced if less hours required)
£150.00 per customer week
Intensive and Specialist Dom Care £320.00 per week 3
Conclusion
It is possible to calculate the costs per 100 of the population of older people with eligible care needs by
adding together the cost of reablement with all longer term costs (including residential care). The council and
the provider should agree the cost of this service sharing the risks of the costs appropriately. In the
calculations above, if a council wants to commission services for 100 older people it might expect it to cost
circa £500.000 - £600,000.00.
Advantages and risks in the approach
4.1.
Issues for councils and providers
Concerns
Responses
1. Some councils will not want this approach as
they want to ensure that every hour that is
delivered can be accounted for. There may be
internal pressure not to adopt the approach –
auditors and others may prefer a simple model
where each hour can be accounted.
Councils could still monitor the hours actually
spent through electronic monitoring, providing
care as part of contract monitoring in order to
best understand the real costs of the care model
– assisting future negotiations, particularly if
providers found they could deliver this at a
significantly lower cost.
2. Councils may also be concerned that this
approach encourages providers to cut corners
and to leave older people to their own devices
too early in the process.
The main answer is for quality checks to be taking
place (as part of contract compliance) with
customers to ensure that their needs have been met.
And there are disincentives in the traditional system
where providers may be inadvertently incentivised
to increase the care someone gets to maximise
their profits.
3 These figures are for indicative purposes only and would need to be calculated locally in the context of how domiciliary care is used within the
wider care system.
Consideration of paying for outcomes from a set of the population for domiciliary care I Page 6
Concerns
Responses
3. One of the biggest challenges for the approach
is that the model does not fit easily with
requirement in the Care Act for people to have a
personal budget.
The Wiltshire approach4 looking at each individual
and assigning a sum of money to meet their care
needs overcomes this.
Or there could be a sum of money linked to a
person’s needs – as identified above – e.g. £150
for someone with medium care needs. There
would need to be an ability to convert each
individual package into a personal budget to be
compliant with the Care Act.
4. There may be an issue that providers discover a
much more cost effective way of delivering
domiciliary care than had been done previously
and make big profits (than may be seen to be
reasonable) from this approach.
The whole model is based on the balance of risk
between the provider and the council. Providers
are encouraged to be innovative and possibly take
more risks for bigger rewards. Profit sharing can
be introduced between both parties.
5. The supply of care workers has become an
increasing problem for providers in recent years.
Failure of a provider to deliver care workers brings
the whole system to a halt with serious
consequences.
The model should allow providers to recruit staff
to a stable level and to offer firm terms and
conditions which are more attractive than the
current arrangements.
There may need to be a proper transfer from any
previous system to a new one – a minimum of 6
months is required.
Penalty clause can be put in place for failure to
deliver a required service.
An understanding of managing the care market
has to be a main consideration in selecting
providers.
4
See - “Emerging practice in outcome-based commissioning for social care” published by the Institute of Public Care in April 2015
Page 7 I Consideration of paying for outcomes from a set of the population for domiciliary care
Concerns
Responses
6. There may appear to be limited choice for older
people in relation to which provider will meet
their needs.
Customers have real choices in relation to the
best way to deliver their desired outcomes.
7. There will be commissioners who do not accept
the central hypothesis –that one can improve
outcomes for older people by the way in which
they are helped, and as a result reduce some of
the demand for social care.
Other commissioners might want to encourage
providers to take the risk in delivering this model.
The benefits to both commissioners and providers
should always be apparent in delivering this
approach.
8. The commissioning/procurement model which
goes along with this approach may well be best
to establish a prime provider with responsibility to
work with the rest of the domiciliary care market
of providers to deliver both the required supply
and preferred outcomes.
This approach saves costs of brokerage (delivering
further savings) and enables older people to have
a say in how and when services are provided, and
to discover the best way of delivering improved
outcomes for them.
9. Why would you want all the costs associated
with moving to this approach?
This model puts much of the risks onto the
providers. They have to meet the needs and
deliver improved outcomes to gain profit from the
approach. There is scope for councils to model
this into their medium-term financial strategies.
The transaction costs for this approach are
significantly less than any of the other models
that have been used in the past. This is one of the
areas in which the council can make savings (but
not at the expense of the provider).
The known costs are fixed in advance. The main
control that the council can put on is the number
of people it refers for a service and the level of
their needs. E.g. if they referred too many people
with very low needs the model would not be cost
effective for them.
Consideration of paying for outcomes from a set of the population for domiciliary care I Page 8
Concerns
Responses
10. How do we best identify outcomes for
customers
There are three main options:
1. include as a key part of the assessment
process within the council;
2. or allow the provider to work with the
customers to develop the best possible outcomes;
3. Or commission for populations or groups of
people within a service area.
11. What payment model should we use?
It is linked to the way in which outcomes are
determined. The lower transaction costs come
from outcomes delivered for a sub-set of the
population who will need the service.
4.2.
Issues for providers
Concerns
Responses
1. There could be increased costs for providers if
outcomes are not delivered in the expected way.
Providers will need to be mindful of both risks
and opportunities – the larger the volume of
customers the more likely that the overall
averages will even out. Smaller numbers of
customers may lead to greater risks.
2. At present, what providers do varies so much
from one council to another – can this help
resolve this problem?
The way in which home care is assessed varies
significantly from one council to the next. This has
to be a consideration in examining the options in
a specific area.
The analysis above will need to be undertaken for
each area before proceeding with a contract. But
there can be increased consistency in the way in
which a provider delivers for a given population.
Getting the care model right might deliver
significant rewards both in financial and
reputational terms. The best reablement schemes
result in 66% of people not requiring further care.
Page 9 I Consideration of paying for outcomes from a set of the population for domiciliary care
Concerns
Responses
Many people who have low level packages of
care may be able to get their needs met in a
different (and lower cost) way. There is enormous
scope for piloting new approaches and being
innovative.
14. The other significant variable is the behaviour
of the NHS in each area with regard to older
people. Less work has been done on this.
Failure to manage the health care of older people
is the biggest risk in the need to increase
packages of care, and this can lead to admissions
to residential care or increased costs of
domiciliary care outside the control of the
provider.
Outside of the fully integrated model of care that
operates in some places - there is limited
opportunity for other places to set a single health
and care system commission.
The level of health care available in the community
varies significantly between areas. This may have a
major impact on meeting older people’s needs as
often their concerns are dominated by their health
and how that is being managed – e.g. poor access
to incontinence services might cause costs to rise
for providers. There will be many similar examples
– from falls prevention; dementia care; GP and
district nurse access etc.
This is probably the biggest risk to the provider
arising from the model.
Conclusion
There will not be a single solution that will work everywhere. Each contract and the way it will run will need to
be negotiated at a local level.
A provider should really understand the past patterns and behaviours of the local authority before entering
into a contract e.g. understanding who gets referred for home care.
However, there are tremendous opportunities if both parties are keen and willing to adopt this approach, and
negotiations should be entered into with an open mind.
Always remember that the key issue is managing the balance of the risks being agreed between the provider
and the commissioners.
Councils and providers are urged to work more collaboratively to develop a model that is sustainable,
affordable and, most of all, delivers improved outcomes for older people.
This paper has been commissioned by Mears Group UK a major provider of Domiciliary Care in the United Kingdom.
The paper was written by Professor John Bolton, June 2015
Consideration of paying for outcomes from a set of the population for domiciliary care I Page 10
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