THE MIXED ECONOMY OF CARE
BULLETIN 4
May 1996
Nuffield Institute for Health
and
Personal Social Services Research Unit
© Crown Copyright, 1996
The authors of this publication assert their moral rights in accordance with the provisions of section 78 of the Copyright,
Designs and Patents Act 1988.
The MEOC Bulletin is a joint publication by the Nuffield Institute for Health and the Personal Social Services Research Unit.
This issue was edited by Jeremy Kendall, sub-edited and typeset by Nick Brawn at the PSSRU and printed by the University of Kent Printing Unit.
The views expressed are not necessarily shared by the Department of Health, whose support the MEOC team gratefully
acknowledges.
If you wish to obtain previous editions of the MEOC Bulletin, or to be added to the mailing list for future issues, please complete the form on page 19.
THE MIXED ECONOMY OF
CARE RESEARCH PROGRAMME
Structure and objectives
This major programme of research, which examines the
development and consequences of the mixed economy of
social care in England, is jointly conducted by the
Nuffield Institute for Health (NIH) and the Personal
Social Services Research Unit (PSSRU). The NIH is
based at the University of Leeds and the PSSRU is now a
multi-site organisation with the staff working on this
study based at the London School of Economics (see the
panel opposite for details). The work was commissioned
by the Department of Health to start in 1992, and builds
on an earlier study, Managing the Mixed Economy of
Care, undertaken by the NIH/PSSRU team during
1990-92.
The main aim of the current programme, which continues until mid-1996, is to describe, monitor and evaluate
the developing mixed economy of care in England, with
particular reference to the key objectives of choice,
cost-effectiveness and innovation specified in the White
Paper Caring for People. The programme comprises
three interrelated elements:
o mapping the broad development of the mixed economy of social care, including the purchaser and provider functions, and the links between them;
o describing and analysing the organisation and structure of the supply side of the mixed economy; and
o examining market development and regulation, including the interaction of the purchaser and provider
roles and the consequent nature of social care markets.
Much of the fieldwork that underpins this research is undertaken in a representative sample of 25 local authority
areas in England, although for the purposes of the analysis of supply, we have undertaken ‘provider studies’ in a
subsample of these areas. A study of user choice as between residential and non-residential care services and
statutory and independent sector provision is being carried out in a further subsample.
Page 2
Bulletins and other dissemination
The aim of the MEOC Bulletin series is to disseminate
key research findings to a wide range of statutory, voluntary and private sector bodies active in social care. In the
last issue of the Bulletin (No. 3), we included a summary
of the early reactions in our sample of 25 local authorities
to the full implementation of the community care
changes in 1993. Particular attention was paid here to
local authorities’ perceptions of the barriers and opportunities for developing a mixed economy, together with
their longer-term aspirations, concerns and plans for the
emerging social care markets.
This issue of the Bulletin reports on the findings of our
first ‘provider study’ undertaken in Summer 1994 and
relating to independent providers of residential care for
elderly people. A study of domiciliary care provision was
also completed over the Summer of 1995, and will be described in a forthcoming edition of this Bulletin. Responses to our residential care findings are included
here from private and voluntary sector perspectives.
Marian Pickersgill of the Association of Approved Registered Care Homes (AARCH) and David Wigley and Alison
Johnson of VOICES (Voluntary Organisations Involved
in Caring in the Elderly Sector) offer brief commentaries
on issues related to our research. We also include in this
issue a summary of the findings of the personal social
services component of the Johns Hopkins Comparative
Nonprofit Sector Project undertaken at the PSSRU. This
found providers of social services (across all client
groups and service types) to be the largest ‘industry’ in
the ‘voluntary sector’ as that term is most commonly
used in the UK. Finally, we include a summary of the findings of a survey of independent home care providers undertaken in 1995 by the United Kingdom Home Care Association (UKHCA), which was analysed at the Nuffield
Institute.
This Bulletin is just one of a number of avenues through
which the MEOC team’s findings reach the practitioner
and research communities. Two major books based on
this research are now available or forthcoming from the
Open University Press, and articles have appeared in
journals ranging from the academic Journal of Social
Policy to the practitioner-oriented Health Service JourMEOC Bulletin No. 4
nal and Community Care. A number of workshops and
conferences sponsored by the Department of Health have
also served to disseminate results. Among these, a major
conference, Developing Social Care Markets, was held
in December 1994 in the Metropole Hotel, London, attended by over 100 delegates from local authorities, and
the voluntary and private sectors. Speakers at that conference included the Rt Hon. John Bowis, Parliamentary
Under-Secretary; Nick Welch, Assistant Director – Commissioning, at Oxford Social Services; and Stuart
Etherington, Director, National Council for Voluntary Organisations. A further major conference is planned for
the end of 1996.
Future research
THE MIXED ECONOMY OF CARE
RESEARCH TEAM
Nuffield Institute for Health (NIH)
Gerald Wistow
Brian Hardy
Julie Prudhoe (secretary) Ruth Young
Tel: 0113 233 6357
Fax: 0113 246 0899
e-mail: [email protected]
Internet: http://www.leeds.ac.uk/nuffield/home.html
Personal Social Services Research Unit (PSSRU)
Martin Knapp
Julien Forder
Jeremy Kendall
Maureen Weir (secretary)
Tel: 0171 955 6238
Fax: 0171 955 6131
e-mail: [email protected]
Internet: http://www.ukc.ac.uk/PSSRU/
It is planned to continue the current programme of research, with further work over the period from mid-1996
to 2001. This will build firmly on the frameworks and
methods developed to date, and it is intended to focus on
the following five themes:
o
o
o
o
o
Analysis of the rationale for and implications of commissioning decisions as between provider selection
mechanisms, contract type and pricing strategies;
Analysis of the institutional constraints on providers,
and the labour markets in which they operate;
Evaluation of the choice and satisfaction experienced
by users and carers;
Exploration of transaction processes between purchasers and providers, including resource linkages
and efficiency issues, particularly in relation to the
role of trust; and
Care planning and the role of care managers in facilitating user/carer choice.
PSSRU relocation
In January 1996 the PSSRU component of the MEOC research team, along with some other PSSRU staff, relocated to the Department of Social Administration at the
London School of Economics and Political Science. Professor Martin Knapp is Director of this new PSSRU site.
The Unit’s main base continues to be at the University of
Kent at Canterbury, with Professor Bleddyn Davies as
overall Director. A further PSSRU site has been established at the University of Manchester.
RECENT PUBLICATIONS
Details of a new book by members of the MEOC team can be found on page 11 and some other publications
are listed on page 18.
A new issue of the PSSRU Bulletin (number 10) will be available in June 1996, covering the Unit’s work as a
whole. Back issues of some previous editions are available.
Issue 3 of the Mental Health Research Review (a joint production by the PSSRU and the Centre for the
Economics of Mental Health at the Institute of Psychiatry) appeared in April 1996.
Lesley Banks at the PSSRU (telephone 01227 823963) can supply copies of these publications, as well as
lists of other papers, books and monographs available from the PSSRU. At the NIH, Julie Prudhoe
(telephone 0113 233 6357) can provide publications details.
MEOC Bulletin No. 4
Page 3
THE 1994 RESIDENTIAL CARE
PROVIDER STUDY
1. Methods and samples
Information on independent sector residential care for
elderly people was gathered in 1994 by means of a postal
questionnaire and face-to-face interviews in three shire
counties, two London boroughs and three metropolitan
districts. The subsample of authorities was in part selected so as to reflect national intersectoral patterns of
residential care provision for elderly people and the patterns of over- or under-provision across authority types.
Quantitative data on providers were first gathered by
means of a short postal questionnaire, sent to the sampled providers in summer 1994. Fifty-eight usable questionnaires were returned (a response rate of 73 per cent
with some replacement). The questionnaire was addressed to ‘the proprietor or manager’ of the home, and
sought data on registration, current and planned provision, residents’ funding sources and turnover, home and
resident characteristics, and details of pricing and staffing regimes. Semi-structured interviews took place in 62
homes, with the proprietors of owner-managed private
homes, and the managers (or equivalents) of voluntary
sector or ‘corporate’ private sector establishments. The
topics covered by these interviews included:
o details of home ownership;
o admissions policy, marketing and advertising strategies;
o changes in patterns of demand since April 1993;
o pricing methods and strategies, and effects of main
purchaser’s policies;
o local authority regulation: contracts and specification;
o motivation and background of interviewee; and
o plans for diversification
Three-quarters of the homes covered by the survey were
in the private ‘for-profit’ sector. Legal structures were described by survey respondents as: husband and wife
partnerships (twenty homes), other partnerships (five),
private limited companies (ten), sole proprietors (seven),
and public limited companies (two). This predominance
of the ‘husband and wife’ team, although not the outcome
of deliberate stratification, reflected the national picture
fairly closely (Laing & Buisson, 1995).
Eight homes were voluntary and seven not-for-profit, including former local authority Part III homes run as
trusts. All providers who classified themselves as ‘voluntary’ were registered charities or part of larger registered
charitable organisations, with the exception of those providers which were housing associations, some of which
were exempted charities or were not charitable.
There were few large organisations (table 1). A quarter of
these organisations ran homes in more than one local authority area. We compared our sample with ownership
Page 4
nationally. According to Laing & Buisson (1995), just 3.6
per cent of residential homes and 5.6 per cent of places in
the private sector were owned in 1994 by ‘major providers’: that is, companies or partnerships running three or
more homes. Unlike the nursing home sector, where ‘corporate penetration’ has been higher (one-fifth of these
homes were run by ‘major providers’ in 1994), the residential care market remains diffuse. In this respect, it is
unlike most other segments of the wider private economy, although Laing & Buisson suggest that corporate involvement is starting to expand from its very low base. If
anything, our sample over-represented the presence of
large providers, as 11 per cent of private providers ran
three or more homes.
In the case of the voluntary sector, we sampled providers
to reflect the pattern of supply nationally: Laing &
Buisson’s data indicate that voluntary ‘major providers’
in both residential and nursing care accounted for 45 per
cent of homes, and 51 per cent of places in 1994. In fact,
around half of the homes in our sample were run by voluntary organisations controlling three or more establishments.
Occupancy rates averaged 90 per cent of places (excluding short-stay residents) during the year ending 31
March 1994, with no significant difference between the
sectors. The average number of residents was 18 in the
private sector, 28 in the voluntary and 20 overall. Again,
these averages disguise wide variations: ranges of 5-50 in
the private sector and 19-41 in the voluntary sector. Almost all residents were described as ‘permanent’. More
than half the residents were women aged 85 or over, and
another 26 per cent were women aged 75-84.
We also used the postal questionnaire to collect information on client dependency: in terms of numbers of current residents with restricted mobility, incontinence,
confused mental state, difficulty in performing basic
tasks and toileting difficulties. Private homes described
themselves on average as being more likely to have clients
in a confused mental state, and to have clients with more
difficulties of incontinence, toileting and basic living
tasks, while the sectors were similar in the extent to
which clients suffered from restricted mobility.
Table 1: Organisational size: all sectors
Number of other
homes run by this
organisation
0
1-2
3-10
More than 10
Homes in the
registering local
authority
(N)
Homes in
other local
authorities
(N)
47
8
6
0
45
8
4
3
MEOC Bulletin No. 4
Twenty-two per cent of all residents in the 56 homes for
which we had these data were funded under contracts
with local authorities. There was no difference between
the sectors in relation to residents funded by the local authorities in which homes were located (16 per cent of voluntary home residents, 18 per cent private), but more
voluntary than private home residents were funded under contract by other authorities (8 per cent compared to
3 per cent). A third of the residents in voluntary homes
and 40 per cent in private homes were funded from private means, while the proportions funded from preserved rights (DSS) were 43 per cent and 36 per cent respectively. Approximately 2 per cent of the residents for
whom we have data about funding source were funded
from non-preserved rights income support.
ers, twenty of the 53 homes across all sectors (38 per
cent) involved former NHS employees. As table 2 shows,
social care and mixed care backgrounds were also to be
found in the sample, and 11 per cent of respondents
across all sectors had worked in Part III homes. Partnerships combining caring and non-caring backgrounds
were common in the private sector. Finally, table 2 shows
that 60 per cent of our voluntary and not-for-profit sector
interviewees’ backgrounds could most easily be summarised as ‘public sector health or social care’, but five of the
interviewees had pursued a career wholly within the voluntary sector. All had moved between establishments or
posts within their respective organisations to get to their
current jobs.
Funding share from a single source was often very high:
one voluntary home had 62 per cent of residents funded
by its own local authority, and another had 80 per cent
funded by other local authorities. One private home had
all residents funded from preserved rights income support, and another had 93 per cent funded from private
means.
2. Providers’ motivations
Eight categories were used to describe interviewees’
backgrounds, reflecting previous experience in terms of
sector (public, private or voluntary) and field of work
(health care, social care or non-care background). The
most common background among providers was nursing within the NHS: thirteen owner-managers or owners,
accounting for around one-third of all private sector establishments. In addition, three of the seven providers
classified as ‘partnerships’ also involved one partner
with an NHS background. Including owners and manag-
In acquiring information about providers’ motivations, we
sought answers to the six key questions set out in box 1.
With these in mind, in our interviews providers were
asked to identify, from eight given motives, those important to them as individuals and to rank the three most
important. The listed motives are shown in box 2.1
One of the most important findings with regard to expressed motivations was the relatively small proportion
of providers who listed profit and income maximisation
as motives at all: only eight (14 per cent) across all sectors, of which only three rated this as their most important motive (6 per cent of the whole sample; 7 per cent of
the private sector subsample). These responses appear
to provide evidence that the majority of providers do not
Table 2: Interviewee backgrounds
Current sector (sector of home)
Background of provider
Former NHS nursing, currently owner/manager or owner
Former NHS nursing, currently manager (not owner)
Former LA residential home or other SSD
Individual with both health and social care background
Non-care background
Partnership: care and non-care background
Partnership: both care background
Voluntary organisation background
Total
Private
Voluntary
(N)
Not-forprofit
(N)
All
sectors
(N)
(N)
13
2
4
2
8
5
2
2
38
0
3
2
1
1
0
0
4
11
0
2
1
0
0
0
0
1
4
13
7
7
3
9
5
2
7
53
Note:
The two ‘partnership’ categories shown represent only those partnerships for which information on the background of all (usually
two) partners was available, and which involved at least one partner with a caring profession background. Thus non-care partnerships have been classified as ‘non-care background’, and the other categories include some partnerships, but with information
available on only one of the partners.
MEOC Bulletin No. 4
Page 5
Research Questions Concerning Provider
Motivation
o
o
o
o
o
o
Are proprietors and managers of private homes
primarily motivated by profit maximisation?
Do home owners and managers seek satisfactory
incomes rather than maximum profit?
Are voluntary sector managers motivated by their duty
to the community to a greater extent than their
counterparts in the private sector?
Do small private sector proprietors and managers give
particular weight to independence in comparison with
other providers?
Do professional values appear to be of relevance in the
independent sector?
Are home owners and managers without backgrounds
in the caring professions profit maximisers?
Hypothesised Provider Motives
o
income and profit maximising
o
a satisfactory level of personal income
o
duty/responsibility to society as a whole
o
duty/responsibility to a particular section of society
o
to meet the needs of elderly people
o
independence and autonomy
o
professional accomplishment or creative achievement
o
to develop or use skills and expertise
have profit or income maximisation as a goal, especially
not as a primary goal. None of the providers outside the
private sector referred to this as an objective.
Most interviewees in the private sector (68 per cent) reported that a satisfactory level of income was important.
However, several of those in the private sector who
ranked satisfactory income as important, without
prompting, went on to qualify this observation: making a
profit was sometimes seen as allowing the achievement of
other goals, rather than as a primary goal or objective in
itself.
As one interviewee remarked, simply, ‘income has got to
come into it; if [we] weren’t making money, [we] couldn’t
operate’. Another pointed out that it was the combination
of factors that was important to them: ‘[While] income is
important, just to have income without meeting the
needs [of elderly people] wouldn’t be satisfactory.’ The
message that securing satisfactory income is subsidiary
goal is reinforced by figure 1. This shows that only a very
small proportion of providers who rated satisfactory income as important ranked it as their most important motive: of the 28 private sector providers who said it was important, only three (11 per cent) ranked it higher than the
other motives listed.
That some providers did not identify income as important at all may be explained by the fact that earnings were
too low to qualify as even ‘satisfactory’. As one private
provider remarked: ‘it definitely wasn’t that … [if it was]
I’d be doing something else’.
Monetary rewards are regarded as less important by providers in the voluntary and not-for-profit sectors. None
listed a profit or income maximising motive and only
Figure 1: First ranked motive, by sector
Profit maximisation
Private sector
Voluntary sector
All sectors
Satisfactory income
Duty to society
Duty to particular section
of society
Meet needs of elderly people
Independence and autonomy
Professional accomplishment
etc.
Develop skills
0
10
20
30
40
Per cent
Page 6
MEOC Bulletin No. 4
two-fifths mentioned satisfactory income, compared
with over two-thirds in the private sector. There were also
differences between the sectors with respect to other motives: duty/responsibility to particular sections of society
was referred to more often by voluntary and
not-for-profit providers. In addition, while 40 per cent of
providers in the voluntary sector rated duty and responsibility (to society as a whole, or to parts of society) above
all other motives, only 7 per cent of private sector providers did so (figure 1).
2.1 Small businesses and independence
Figure 1 also confirms the importance of other provider
motives — independence and autonomy, professional
accomplishment and creative achievement, and the development or use of skills and expertise. These motives
are more likely to be found among small providers, whatever their sector of ownership. Nearly twice as many single-home as multiple-home interviewees ranked independence first, although this ranking still accounted for
only 15 per cent of single-home providers. A slightly
larger proportion of single-home interviewees also registered independence as important at all: 67 per cent as
compared to 58 per cent of multiple-home interviewees.
2.2 Significance of background
We have already suggested there was some evidence that
individuals working in voluntary organisations were less
interested in monetary rewards. But how are attitudes affected by providers’ background? Are providers without
either a caring or voluntary sector background more
likely to emphasise income and profit-related goals?
Figure 2 shows how first-ranked motives were linked to
provider background. The data suggest that an appreciation of providers’ background, as well as sector, is important in understanding patterns of provider motivation.
Significantly, six of the eight providers who indicated that
profit or income maximising was a motive had a non-care
background. While half of the non-care and mixed partnerships acknowledged profit as important, only two interviewees with public sector backgrounds and none of
the six with voluntary sector backgrounds did so.2
Of the public sector caring professionals, who accounted
for the majority of providers in the sample, ‘meeting the
needs of elderly people’ and ‘professional accomplishment’ were the most frequently cited motives. Their importance is reinforced by figure 2, which shows that these
two motives accounted for two-thirds of the first-ranked
motives of all providers with this background. It is noticeable that both in terms of the listing and the ranking of
motives, ‘professional accomplishment’ tended to be associated with providers from caring professional or
mixed backgrounds.
Independence and autonomy, as we have already noted,
tended to be ranked highest in free-standing, single-home units in the private sector. How important was
the previous experience of these providers? A small number of interviewees referred to a perceived lack of autonomy they had experienced in the public sector. One former nurse described how she ‘was frustrated with the
whole NHS set up’, and several of those with a local au-
Figure 2: First ranked motive, by background
Profit maximisation
Satisfactory income
Duty to society
Duty to particular section
of society
Meet needs of elderly people
Independence and autonomy
Public sector caring background
Voluntary sector background
Non-care background
Mixed (care and non-care) background
Professional accomplishment
etc.
Develop skills
0
10
20
30
40
50
Per cent
Note
To make our analysis more manageable, we have reduced the number of provider background categories by collapsing all
those with a health and/or social care public sector professional background into a single category, ‘public sector caring’.
MEOC Bulletin No. 4
Page 7
thority background had seen the opportunity to operate
independently in these sorts of terms. A housing trust
manager who had formerly been an assistant director of
social services described how he had got ‘fed up with being behind a desk … listening to claptrap while services
were deteriorating’; a former officer-in-charge of a Part III
home suggested that levels of administration were becoming too onerous, and this had prompted him to set up
a partnership with his wife. Another former Part III home
manager, who had purchased the home he previously
managed, referred to his experience of ‘inertia and bureaucracy’. While these remarks suggest that independence and autonomy was important for these interviewees, the other motives were also relevant.
could be due to their general non-business orientation,
but it could also be that larger homes have greater capacity to undertake such an exercise.
Two other factors affected the likelihood of homes undertaking market analysis. First, homes which were started
from scratch were more likely to undertake market
analysis than those purchased when already operating.
This may be explained simply by the fact that established
homes have a track record and existing information. Second, providers in less competitive markets were more
likely to undertake market analysis, arguably reflecting
the view that the existence of a large number of providers
in the local market is an indicator of a healthy level of demand.
2.3 Links between motivations and other factors
The above discussion suggests that profit maximisation
in the private sector is relatively rare, and that income
satisfying goals are more common, although even these
were often rated behind other objectives. Sector, size and
background each have relevance in explaining provider
motivation. However, we also analysed the relative importance of these factors, alongside other provider and
wider market characteristics.3
The overall message from these analyses is that no clear
relationship between sector and motivation actually
emerged, cautioning against pigeon-holing providers according to their sectoral label. Yet there was statistical
evidence that the size of homes (number of places) was
positively connected with the likelihood of financial goals
being relatively important, conceivably because larger
homes tend to be more profitable and so perhaps tend to
attract people oriented towards profit. Furthermore, a
significant relationship appeared to exist between stated
motives and the extent of competition. The significance of
market environment — in terms of actual behaviour
rather than stated motivation — is an issue to which we
now turn.
Providers’ behaviour
We sought to examine both market awareness and the extent of commercial orientation in terms of selectivity of
clients, advertising and pricing.
We also sought to gauge the extensiveness of providers’
knowledge base about their market context. Sixty-five
per cent of all providers had some information on other
providers operating in their (self-defined) local market,
while 36 per cent claimed to have complete knowledge.
Interestingly, small businesses (single-homes) were
more likely to have extensive information about other
providers, whether or not originally acquired for commercial purposes. The analysis also revealed greater
likelihood of information about competitors in competitive local markets. This may reflect a greater desire for
such knowledge in such situations.
3.2 Commercial orientation
Advertising
Seventy-one per cent of homes advertised to prospective
clients and their relatives. ‘Proactive’ methods used for
advertising included press (used by 44 per cent) and
local TV or radio (7 per cent). What might be referred to
as ‘non-active’ formats were also used: 85 per cent used
Yellow Pages, 21 per cent left pamphlets in GPs’ and dentists’ surgeries, and 19 per cent held open days. Forty-six
per cent of providers also advertised to statutory authorities (as purchasers). ‘Word of mouth’ was said to be the
most frequent method of attracting clients among those
providers who had not advertised (and was also regarded
as important by many who were advertising).
3.1 Extent of market awareness
Only 23 per cent of the sample had undertaken formal
market analyses, around half of these because it was a
condition of obtaining a mortgage. Voluntary sector
homes were less likely to undertake formal market
analysis. It is relevant to note in this context that voluntary homes were often longer-established than private
homes, and the concept of market analysis might have
been less relevant simply because it is a relatively modern notion. The analysis also revealed a lower likelihood
of smaller homes undertaking market analysis. This
Page 8
Proactive advertising is the more obviously ‘commercial’
behaviour, and we found the expected positive association with private sector operators, although there was no
significant link to organisational size. Unsurprisingly,
the likelihood of advertising either proactively or through
more passive methods was related to home age: older
homes have less reason to advertise because of their
track record or reputation. There was also, once again
unsurprisingly, a positive relationship between the probability of advertising and the degree of competition.
MEOC Bulletin No. 4
Selection of clients
By far the most common method of discriminating between or targeting clients was their level of dependency.
Sixty per cent of providers indicated that they had formal
or informal admissions policies of this nature. Client selection on the basis of their membership of a professional, religious or ethnic group, or their geographical origins, was characteristic of only 15 per cent of providers,
and tended to be associated with voluntary homes. Even
rarer were providers who chose between clients on the
basis of how they were funded: just 5 per cent adopted
this approach. The analysis also suggested that small
homes were more likely to select clients on a geographical basis. This may reflect the deliberate targeting of
local residents: perhaps another example of local ‘nous’
also manifested by higher levels of awareness about
other local providers. Finally, we compared dependency
scores in each sector and found that crude dependency
scores were higher in the private sector.4
Price setting
What factors affected providers’ price-setting strategies?
Figure 3 summarises our findings.
Among first-ranked factors, two criteria predominated:
operating costs (ranked first by 54 per cent of providers)
and local authorities’ preferred prices (ranked highest by
30 per cent). Other factors which emerged as important
(ranked second or third by at least a quarter of providers)
included repayment burdens, service characteristics,
client characteristics and competitors’ prices. Occupancy levels, home demand and area demand were mentioned by few providers, while none suggested that advice
from trade associations or future expectations made any
impact on their current pricing policy.5
We would expect profit-oriented providers to take account of competitors’ prices and local demand conditions; however, we found that multiple-home organisations, while more likely to subscribe to such goals (see
section 2), were actually less likely than single home providers to incorporate these two factors in their price. This
may be in part because most chain organisations have
their prices set at head office, so that prices tend not to reflect local conditions. In addition, large organisations
tend to be market ‘leaders’ anyway, and may view local
competitors’ prices as of little importance in their pricing
strategies.
A third of the sample reported that local authority prices
failed to cover costs. When asked about the effects of local
authority pricing, most said that the imposed prices decreased their profitability (50 per cent) or viability (30
per cent), while 29 per cent indicated that imposed prices
had or would prompt them to diversify (see below). However, only a small minority suggested that their selection
of clients was affected by these prices, and just 12 per
cent said that it already had, or would, prompt them to
leave the market altogether.
Figure 3: Principal factors affecting policy decisions: rankings
60
50
Per cent of providers ranking
each factor:
1st 2nd 3rd
Per cent
40
30
20
10
0
Operating
costs
LA preferred
price
Client
characteristics
Occupancy
levels
Repayment
burdens
Service
characteristics
Note
Figure shows only those factors ranked first by at least one provider.
MEOC Bulletin No. 4
Page 9
4. Diversification and potential
market exit
home size — would aid the commissioners’ task. This research has explored some of these linkages.
One of the prime concerns of recent government policy in
this area has been to encourage independent sector residential care providers to diversify into other areas of
social care. The twin purposes of this policy have been to
buttress proprietors in a shrinking residential care market and to increase the volume of independent sector provision of non-residential services, where local authorities
have historically maintained a dominant market share.
The evidence from our provider interviews on motivations, taken together with the evidence on purchasers’
over-simplistic perceptions of provider motivations (see
Wistow et al., 1996, chapter 4) implies that significant
gaps in understanding between purchasers and providers exist. A number of the latter — especially small private homes — appear to be markedly less commercial in
their expressed motivations than many purchasers have
tended to believe. Some owners even described themselves as ‘not business-like’ or ‘not really in a business’,
and professional goals which were related to user welfare, as well as norms of duty and responsibility, all
emerged as highly relevant. At best, recognition of these
qualities appeared often to be understated in the crude
conceptual maps developed by purchasers.
In asking residential home proprietors about diversification we were asking about firm plans, not just possibilities or considerations. One-third said that they planned
to diversify into domiciliary care, 38 per cent into day
care, and 28 per cent into respite care. Fewer than one in
five were planning to operate new services in other areas — most often nursing care and sheltered housing.
We also asked home owners about planned changes, if
any, to residential provision: 61 per cent were planning
no change, 32 per cent were planning some increase in
the number of places, and only 7 per cent planned to reduce them.
Three key findings emerged from our statistical analysis
in terms of the likelihood of diversification in different
types of home.
o Homes purchased recently were less likely to be planning to diversify than homes acquired in other ways
or purchased less recently. One explanation for this is
that such homes were likely to have a reasonably
healthy current demand for places — otherwise there
would have been little incentive to purchase — and so
less of an imperative to diversify.
o Homes located in competitive markets were more likely
to intend to diversify. The most straightforward explanation here is simply that they are less sure of relying on
sustained demand for residential care services.
o Plans to diversify into domiciliary care (but not day or
respite care) tended to be associated either with small
or large homes. This may be linked to a greater imperative to diversify for small homes due to less favourable cost conditions in residential care (lack of access
to scale economies), and a greater ability to diversify
in the case of large homes (in terms of the capacity to
cover the fixed costs of diversification).
5. Conclusion
If commissioners are to be in a position to manage the
market, they must understand and be able to predict the
likely behaviour of both current and potential new providers to changes in commissioning arrangements and
regulation. An essential precondition for this is an understanding of the motivations, values and beliefs of providers. However, motivations are not directly observable,
and therefore a means of linking motivations with more
easily discerned characteristics — such as sector and
Page 10
A minority of organisations did appear highly aware and
commercially ‘switched on’, but most organisations displayed rather unsophisticated market behaviour. Homes
which did exhibit the most noticeable market awareness
and commercial orientation (along our range of dimensions) tended to be from the private sector, relatively
large, part of a multi-home organisation, of intermediate
age, and purchased rather than inherited. We found that
for almost all facets of behaviour considered there was a
significant relationship between the likelihood of such
behaviour being commercially orientated and the extent
of local competition. One of the clearest findings, however, was the enormously wide range of provider behaviour related to the considerable variety of home characteristics.
In order to shape and manage the developing market sensitively, local authorities need to develop a richer understanding not only of the relationships between homes
and market characteristics, but also of the diverse patterns of motivations and behaviours which we have identified. They need at least to acknowledge the complexity
of this market and the dangers of proceeding on the basis
of ill-informed stereotypes of providers.
Notes
1. Conducting only one interview for each home inevitably
meant that we were unable to capture systematically any differences in motivation that might have existed within agencies.
However, we did ask whether significant divergences existed between the personal motivations of the interviewee and the home
or organisation’s overall aims and activities, and relatively few
interviewees identified this as being the case: 94 per cent considered that their own personal motivations were consistent with
the overall objectives of the home and (where appropriate) the
wider organisation of which it was part.
2. It should be noted that this may in part reflect not only variation in provider motivation according to background, but the effects of background on providers’ propensity to admit to certain
goals. In particular, those with professional care backgrounds
may not be prepared to reveal financial aims for fear that this
would be inconsistent with the values instilled as part of their
professional training.
MEOC Bulletin No. 4
3. To explore the relative significance of these factors in ‘explaining’ motivations, we undertook multivariate analysis, deploying probit and logit regression techniques. This allowed us
to assess simultaneously the relative importance of sector, background, home size and market characteristics.
4. However, after controlling for the characteristics of providers
(including size) and prices charged, our analysis would predict
that this relationship is reversed.
References
Laing & Buisson (1995) Care of Elderly People: Market Survey
1994/95, Laing & Buisson Publishers Ltd, London.
Wistow G., Knapp, M.R.J., Hardy, B., Forder, J., Kendall, J. and
Manning, R. (1996) Social Care Markets, Progress and
Prospects, Open University Press, Buckingham.
5. We did not explicitly ask about DSS rates in all our interviews, but this was undoubtedly also a major factor for many
homes.
Social Care Markets: Progress and Prospects
Gerald Wistow, Martin Knapp, Brian Hardy, Julien Forder, Jeremy Kendall and Rob Manning*
Open University Press, Buckingham, June 1996. 208pp. appx.
Paperback (0 335 19546 6) c.£14.99; hardback (0 335 19547 4) c.£45.00
This is the successor to the widely welcomed first
book, Social Care in a Mixed Economy, also published in the Public Policy and Management Series
from the Open University Press.
Based on detailed research in twenty-five local authorities, this book focuses on initial experiences of, and
attitudes towards, operating within social care markets. It examines perspectives on and capacities to implement the community care reforms, and locates
them within conceptual and policy frameworks which
help us identify implications for local authorities, private and voluntary sector providers, central government and the research community.
Generally, local authorities have moved from a relatively crude anti-commercialism to a belief that markets, appropriately managed, are capable of delivering benefits to users and carers. However, there is
relatively little evidence that authorities have developed understandings of how to use markets to achieve
social goals.
MEOC Bulletin No. 4
Contents
Preface
Part one: Markets in social care
o
Developing social care markets: background and
context
o
Enabling and market configuration: steering and
rowing
o
Opportunities and barriers revisited
o
Mapping the market
o
Purchasing intentions and arrangements
o Provider motivation and behaviour
Part two: Is the market working?
o
Policy perspectives
o
Is the market working?
o
Economic perspectives
o
Conclusion: harnessing and developing the market
o
Appendix: research methodology; references; index
* All the authors are current MEOC team members with the exception of Rob Manning, who is currently research student
(economics M.Phil), University of York.
Page 11
RESIDENTIAL CARE: A
PRIVATE SECTOR
PERSPECTIVE
Marian Pickersgill*
It is pleasing that new research strongly supports what
private providers have been saying for years — that most
of us are not primarily motivated by profit. Traditionally
the private sector has been regarded in that light. This
view appears to have been built on a foundation of misunderstandings, assumptions and shaky anecdotal evidence. Negative images portrayed in the media have
added fuel to these misconceptions and, in some ways,
widened the gulf between public and private providers.
There is a clear need to develop from the ‘us and them’
mentality to a ‘let us all work together for the benefit of all’
culture, if we are to achieve maximum effectiveness and
provide a true ‘mixed economy of care’. Whilst there are
still some difficulties in the relationship between the public and the private sectors, there is now much more communication and consultation and a mutual recognition of
the strengths and weaknesses of each. All sectors within
the long-term care industry need to pull together to offer
the best possible service to the public.
In this context, it is important that the skill-mix and staffing levels can be clearly and openly managed so as to be
entirely appropriate to the social and health care needs of
residents within any single care home. However, the massive benefits, not only to the taxpayer but to home owners, of only one independent inspectorate with one set of
guidelines, make its development a priority on the current agenda for change set by the government. What is essential is to set the ground-rules absolutely right at this
stage, so that the long-term care sector can undertake its
job in as free a working environment as practical, working in partnership with the regulative and contracting departments.
Another major concern is the urgent need to ensure that
the general public are enabled to utilise their right of
choice fully. There is growing evidence from all areas of
the country that some people needing care services are
not being provided with all the necessary facts on which
to make an informed choice. Indeed, we have recently
seen documentary evidence of deliberately restricted
choice by a social care ‘professional’. Not only must this
be stopped, but directors of social services must set up,
and use, effective monitoring (and disciplinary systems
too, if necessary) to ensure that every member of the public (or their relative or other advocate) is given and understands all the options available to them. This includes the
full financial cost of those options to the taxpayer.
cost to the taxpayer. Whilst the Audit Commission is finding evidence of this and other such difficulties in the development of community care, the time it takes to resolve
these matters is of great concern, and rightly so, to the
people who live and work in the long-term care sector.
One way in which many of these matters could be resolved relatively quickly would be the stronger promotion of ‘open management’ by local authorities. If the full
statistics for all referrals (i.e. the numbers of referrals
handled by each care manager, to which homes and
when), were required to be published by each local authority to all those who have contracts with it, say on a
monthly or quarterly basis, then a clear picture would
emerge. All stakeholders could easily see at a glance, any
trends as they develop. This would put a stop to any likelihood of excess concerns expressed without basis. It
would quickly expose any ‘rogue’ care managers who are
not functioning in a wholly professional way. The professionals working in the long-term care sector have worked
to eliminate the ‘cowboy’ providers from the arena, and
continue to do so — we now also find ourselves facing the
same task to ensure that ‘cowboy’ purchasers are
disempowered and removed from the scene.
In conclusion, there is not only a need for greater acknowledgement of the positive caring motives within the
private sector of the care industry, but also a need to utilise more fully their long experience in providing and
monitoring closely-budgeted, quality care provision, by
involving them much more in the designing of the ‘new’
long-term care sector that is being developed. Also urgently needed is a stronger reinforcement of open management practices by both social services departments
and health authorities so that all involved can be reassured of good and fair practice. In this way we can achieve
major change within the industry as smoothly and in as a
pain-free way as possible for the benefit not only of those
people needing some form of care in the community now,
but also for those of the future.
* Marian Pickersgill is Chairman of AARCH, the Association of Approved Registered Care Homes. ‘AARCH is a professional care association which seeks to represent home owners who have a real
commitment to high quality care and are primarily motivated by the
needs of their clients. By working locally and at national level to develop a “level playing field”, it aims to facilitate the implementation of
really effective community care. In addition, by setting high quality
standards for members, it helps and support members taking the responsibility for the standards in their homes.’
An example of the confounding of user choice is the considerable energies being expounded to fill beds in local
authority homes in some areas, despite the excessive
Page 12
MEOC Bulletin No. 4
RESIDENTIAL CARE: A
VOLUNTARY SECTOR
PERSPECTIVE
David L. Wigley and Alison M. Johnson*
Traditionally, local authorities in general have been more
sympathetic to the voluntary sector than to the private
sector. However, in recent years, demand from older
people and their relatives for higher quality accommodation and care practices has led local authorities to close
many of their own homes (which were not up to this standard) and contract with providers in the independent
sector (voluntary and private). In many cases shortage of
community care funding has led authorities to be more
concerned with price and value for money rather than the
moral or ethical stance of the provider.
As the research reported in this bulletin shows, while
many purchasers tend to think of independent providers
in terms of the traditional two sector division (private
and voluntary), this is too simplistic and it is important to
draw further contrasts within each sector. Inside the private sector, a distinction needs to be made between the
small, often proprietor-run, homes and the ever-increasing number of large commercial companies. It is misleading to equate the motivation of the owner-manager of
a small, 30-bed local home with that of the managing director of a publicly quoted company with over 50 homes
and several thousand places. Similarly, distinction
should be made between, on the one hand, charities, and
on the other, not-for-profit trusts set up to run former
local authority homes.
An issue of even more significance than the different motivations within sectors is the question of cost differentials. Research undertaken by the PSSRU referred to by
the Health Secretary, Stephen Dorrell, in setting up his
review of social services found ‘council residential care to
be 31% more costly than that in private homes’ (The
Guardian, 1996). The Audit Commission (1996) stated
in a recent report that the costs of local authority residential homes fell between those of independent residential
and nursing homes and questioned whether this was the
result of inefficient services rather than reflecting relative
dependencies or the quality of care. The Audit Commission advises local authorities to check the situation thoroughly to be sure they are gaining value for money.
The situation would suggest that social services could
ease their financial problems considerably by purchasing more care from others rather than providing it themselves, especially since residents in local authority
homes do not qualify for the residential allowance of £54
per week as independent sector residents do.
In our view, it is important to retain a clear distinction between what providers say about their motivation for carMEOC Bulletin No. 4
ing for older people, and how that motivation is reflected
in all that they do for the older people in their care — that
is, their actual behaviour. There is no evidence, it would
appear, that those who include among their motives ‘income and profit-maximising’ are necessarily providing a
poorer quality of care than those who state the importance to them of non-financial motivations. Furthermore,
as the researchers recognise, providers’ stated motives
may diverge from actual motivations — it is not easy to
declare in the caring field that your prime motive is to
make a profit.
As well as examining expressed motivation, attention
should be focused on the realities of the marketplace in
the current climate. Shortage of funding for social services departments forces them to look for contracts at the
lowest possible prices. Thus, a private sector corporate
provider with the benefits of previous commercial experience combined with economies of scale may be offering
places at a more attractive rate than a small local charity.
But who will provide the best quality of life for older
people?
The challenge for the voluntary sector is how to compete
in the marketplace and ensure that quality of life remains
the key factor in choice for older people. Voluntary providers, whatever their motivation, must improve their
c o s t- e f f e c t i v e n e s s a n d l o s e n o o p p o r t u n i t y o f
emphasising to government and local authorities that
quality standards are at risk as a result of downward
pressure on costs. They must review their special values,
motivations and principles to identify which are relevant
and where their niche market may lie and, where these
involve additional cost, be prepared to justify this.
In its contribution to the social care market, therefore,
the voluntary sector must be seen to be both compassionate and competent. As such, we believe it will continue to
have a significant role as we approach the new millennium.
References
The Guardian (1996) 3 January. [The figure quoted probably
derives from research reported in Bebbington, A.C. and
Darton, R.A. (1995) Alternatives to long-stay hospital care for
elderly people in London, Discussion Paper 1139, PSSRU,
University of Kent at Canterbury .]
Audit Commission (1996) Balancing the Equation: Progress
with Community Care, HMSO, London.
* David L. Wigley is Chief Executive and Alison M. Johnson is Secretary of Methodist Homes for the Aged. Until March 1996 they were
Chairman and Secretary respectively of VOICES (Voluntary Organisations Involved in Caring in the Elderly Sector), an umbrella group of
49 voluntary providers of residential or nursing care for older people.
‘The aims of VOICES include maintaining the voluntary ethos in the
marketplace, promoting high standards of residential, nursing and
domiciliary care and promoting quality of life in care homes for the
substantial number of older people who chose to live there.’
Page 13
DEVELOPMENT OF
INDEPENDENT HOME
CARE — 1995 UKHCA SURVEY
Ruth Young and Gerald Wistow
The community care reforms’ central objective of using
the mixed economy to support increasing numbers of
people in their own homes crucially depends on the expansion of domiciliary services in the independent sector. However, such services scarcely existed in many
parts of the country in April 1993, and those which did
had barely been mapped. A survey carried out by the
United Kingdom Home Care Association (UKHCA) in
January 1995 and analysed by the Nuffield Institute began to shed light on the development of the sector since
the implementation of the reforms (Young and Wistow,
1995). Its findings suggested that, while relationships between independent domiciliary providers and social services departments (SSDs) were improving, providers
continue to operate from a fragile base in many respects.
tion and the British Nursing Association.
From the point of view of the independent sector, the survey illustrated the dramatic change in its funding base in
the period since the reforms. Sixty-two per cent of respondents said that all or most of their clients were referred via the local authority in January 1995 compared
with 14 per cent before April 1993 (figure 1). Similarly,
64 per cent of respondents reported that all or most of
their income came from local authorities in January
1995 compared with 15 per cent prior to the reforms.
Thus, these findings suggest that local authorities have
become the principal purchasers from the independent
home care sector, leaving it exceptionally vulnerable to
changes in SSD purchasing budgets and priorities. This
situation contrasts with the residential sector where
Laing & Buisson (1994) showed that the number of private payers actually increased in 1993/94 and local authorities remained a minority purchaser.
Local authorities have received much publicity for their
claims about increasing pressures on community care
budgets. Such financial constraints could be seen as beneficial to domiciliary care providers if they reinforce incentives for local authorities to purchase comparatively
low cost alternatives to institutional services. However, a
no less plausible argument is that budgetary constraints
reinforce the incentive to purchase residential care. Relatively little home and day care can be provided for the net
cost, to a local authority purchaser, of a place in an independent sector residential home. Evidence suggests that
local authorities are having to take such factors into account, perhaps to the detriment of user choice (Downey,
1994; Department of Health, 1994).
The survey attracted replies from 25 per cent of the
UKHCA membership (198 providers): 66 per cent of respondents came from the private sector and 34 per cent
were voluntary or not-for-profit organisations. The survey confirmed that independent sector organisations are
often relatively young: 26 per cent had been operating for
under two years and a further 23 per cent for between two
and five years. It also highlighted the degree to which the
scale of their development remains modest. The vast majority of respondents (63 per cent) provided less than
5,000 hours of care per month. Half had fewer than 100
Certain types of contracts through which local authoriclients and a further 29 per cent had just 100-200 people
ties buy services may make for a more stable environon their books. These findings are in line with evidence
ment for providers. Although guidance from the local aufrom elsewhere about the relatively small overall contrithority associations on contracting for day and
bution of contracted-out home care services compared
domiciliary care does not recommend a particular type
with in-house provision (Government Statistical Office,
of contract, it does demonstrate, as Denise Platt (1995)
1994) and, within the independent sector, the much
has pointed out, ‘that cost and volume contracts have
greater allocation of STG funding to nursing and residenmuch to recommend them because of their combination
tial homes compared with ‘non-residential’ services
of certainty and flexibility. The problem is for the com(London Research Centre, 1994). The survey gave particmissioners to identify the correct balance in their local
ular cause for concern because it showed that newly essituation’. The potential instability of funding for the intablished businesses, which are likely to be the most vuldependent home care sector is, therefore, underlined by
nerable, also tended to have a narrow business base. Of
those under two years old,
just over half were solely
Figure 1: Dependence on local authority purchasers
providing home care services. In comparison, only
a quarter of the 29 per cent
All/most clients
Pre-1993
of providers who had been
All/most income
in the market for more
than ten years were dealing
All/most clients
Jan 1995
in home care alone, while
All/most income
50 per cent were part of established multi-service or0
10
20
30
40
50
60
70
Per cent respondents
ganisations such as the
Leonard Cheshire FoundaPage 14
MEOC Bulletin No. 4
Resource constraints which lead to ‘stop-go’ purchasing
policies limit business confidence and the expansion of
existing independent sector organisations. Perhaps
more importantly, they are also likely to inhibit the
growth of new providers. Crucial questions remain,
therefore, about the consistency with which local authorities are able to allocate resources to home care throughout the financial year, and what degree of assurance there
is for the future. On a more optimistic note, the 1995 UKHCA survey reFigure 2: Types of contract with local authority purchasers
vealed generally improving relationships between purchasers and
providers of domiciliary care. The
Spot
number of respondents who deBlock
scribed their relationships with local
Cost & volume
authorities as ‘good’ or ‘very good’ increased from 54 per cent to 82 per
Spot & block
cent between 1993 and 1994. MoreOther
over, 84 per cent expected such rela0
10
20
30
40
50
60
70
tionships to be maintained in the
Per cent respondents
coming year. Unfortunately, we have
no way of knowing either the
base-line experiences on which reGiven this context of under-developed providers increasspondents judged their answers or their expectations for
ingly dependent on local authority purchasers, other
the future. In the main, the survey findings suggested that
continuing difficulties reported in the survey also give
the market should be kept under close empirical obsercause for concern:
vation if purchaser-supplier relationships are to develop
o 63 per cent of respondents said that payments were
effectively and the objectives of the community care relate and/or unpredictable;
forms are to be achieved. A follow-up survey of UKHCA
o 60 per cent did not know local authority purchasing
members is now being carried out to this end, and details
intentions for 1995/96;
of this can be found in the box below.
o 43 per cent said that an ‘in-house first’ policy was being operated in their area; and
References
o 40 per cent said that payment levels for services were
too low.
Department of Health (1994) Putting People First, Third
the UKHCA survey finding that 63 per cent of respondents had only spot contracts with local authorities (figure 2). Only 2 per cent of providers had block contracts
and cost and volume contracts were reported in just 5
per cent of cases. To expand successfully, independent
providers require a degree of certainty about medium
term income levels that is unlikely to be provided
through current contract arrangements.
On this evidence, local authorities have yet to demonstrate their maturity as purchasers who take into account the impact of their purchasing behaviour on the
business plans and capacities of suppliers. It is also
questionable how far they appreciate the full implications of their actions for the nurturing of new providers
with a fragile income base and infrastructure. Even
where authorities do have such expertise, their resource
and political environment may not enable them to meet
demands and develop consistent, long-term relationships with suppliers. The current context is, therefore,
one in which relatively ‘immature’ providers are heavily
dependent on a potentially unstable purchasing base.
Annual Report of the Chief Inspector, Social Services
Inspectorate, 1993/94, HMSO, London, p.46.
Downey R. (1994) Community Care Choice Limits, Community
Care, 3-9 November.
Government Statistical Office (1994) Statistical Bulletin,
Department of Health, London.
Laing & Buisson (1994) Care of Elderly People: Market Survey
1993/94, Laing & Buisson Publications Ltd, London.
London Research Centre (1994) From Social Security to
Community Care 2: The Impact of the Transfer of Funding
on Local Authorities, Local Government Management
Board, Luton.
Platt, D. (1995) Contracting — The Purchaser Perspective,
presentation to the UKHCA Spring Convention, Manchester,
9 March, Association of Metropolitan Authorities, London,
p.5.
Young, R. and Wistow, G. (1995) Experiences of Independent
Sector Home Care Providers: Analysis of the January 1995
UKHCA Survey, Nuffield Institute for Health, Leeds.
1996 UKHCA Survey
Recognising the need for further data on the development of the domiciliary care market, the Department of Health
has funded a similar survey of UKHCA members to that reported above. This was carried out in January 1996 jointly
by the association and the Nuffield Institute for Health.
Preliminary findings from this survey were presented by Gerald Wistow and Ruth Young at the UKHCA Spring
Convention held on 14 March in Manchester. Their final report will be published by the UKHCA in the near future and
summary findings will be presented in the next MEOC Bulletin together with the results of the MEOC team’s own
study of the perceptions of independent sector domiciliary care providers.
MEOC Bulletin No. 4
Page 15
people also benefit from social services provided by multiple client group organisations. In addition, in constructing these estimates, we relied in part on voluntary
organisations’ own annual reports and accounts, and often these did not allow service categories to be identified
as clearly as we would have liked. Nevertheless, our data
do provide a useful starting point in what has traditionally been an area characterised by an extreme lack of information.
THE SCALE AND FUNDING OF
VOLUNTARY PROVISION: CARE
FOR ELDERLY PEOPLE IN
CONTEXT
Jeremy Kendall
Between 1990 and 1995, the PSSRU conducted the UK
leg of the most ambitious cross-national comparison of
the voluntary sector ever undertaken. The project involved the comprehensive mapping of the scope and
scale of the voluntary sector for the first time, charting its
contribution to the economy as a whole, as well as providing a detailed analysis of its financial base. It also examined the sector’s historical development, its legal treatment, and the nature of the policy environment in which
it operates.1
It is clear that in 1990, as far as care for elderly people
was concerned, residential care still dominated the sector’s activities financially, with payments for this service
type accounting for over four-fifths (83.5 per cent) of total
operating revenue (across all public and private
sources). However, one of the features that has traditionally distinguished the voluntary sector’s contribution
from that of the private sector in this field is that it has operated alongside local authorities as a significant provider of non-residential care — and received significant
financial support from local authorities to do so.3 Furthermore, while the scale of these activities is relatively
small in comparison with residential provision as measured by monetary income, it should be recognised that
a different balance would certainly emerge if reliable data
on non-financial resources were available. Volunteering
is relatively rare in residential care settings (across all
provider sectors; Ernst and Whinney, 1986), and the significant amount of volunteering that is known to be un-
One broad intention of this study was to measure the voluntary sector’s economic contribution to the ‘conventional’ macro economy (without systematically imputing
values to non-financial resources), to identify the range of
services in which voluntary organisations are involved,
and to explore how the sector is funded. The study therefore provides useful background information about the
overall significance of the sector, and
the types of activities in which it is inFigure 1: Voluntary sector services for elderly people in context
volved.
Page 16
100
A
B
60
40
C
D
All other
client
groups‡
80
Proportion (per cent)*
Figure 1, moving from left to right,
starts by revealing the scale of overall voluntary sector activities in the
context of the economy as a whole.
Full-time equivalent paid employment in voluntary organisations
(broadly defined) in 1990 was 4 per
cent of the whole-economy total,
and the sector’s total operating revenue stood at £29.5 billion. Just over
£3 billion of this total accrued to voluntary sector organisations providing personal social services, widely
defined. The figure shows that voluntary providers are contributing
across all of the major client groups.
We highlight here the types of services provided to elderly people, the
largest single client group as measured in terms of overall public expenditure on personal social services. 2 It should be noted that
‘multiple services’ includes activities
across the other service types which
could not be separately distinguished under the other discrete categories shown, and that elderly
For-profit
and
public
sectors
All other
voluntary
sector
fields of
activity
Other
services¶
Children &
families
PSD§
Residential
care
Youth
development
20
0
Vol. sector
Voluntary
sector as part
of whole
economy
PSS†
PSS† as part
of voluntary
sector
Elderly
Services for the
elderly as part
of voluntary
sector PSS†
Service types
for voluntary
sector providers
of care for the
elderly
Notes
* Column A refers to proportion of full-time equivalent paid employment in UK economy.
accounted for by voluntary organisations; columns B to D refer to shares of total income.
† Personal social services: ICNPO subgroup 4100 only.
‡ Services for people with learning difficulties, women’s groups, carers’ groups,
pre-school playgroups, and multiple client group services.
§ Services for people with physical and sensory difficulties.
¶ Multiple services, day care, domiciliary care, advice, other services.
MEOC Bulletin No. 4
dertaken in support of the elderly is concentrated outside
old people’s homes in the community (Lynn and Davis
Smith,1991; Knapp et al.,
1996).
Figure 2: Voluntary sector services for the elderly: income sources of
service types
Service type
Residential
Multiple services
Figure 2 illustrates the extent
to which these voluntary proDay care
viders were reliant on public
sector support in 1990. The
Domiciliary care*
importance of public funding
to providers of many forms of
Advice etc.
non-residential care is shown
clearly in the figure, which
All other services
also shows the significance of
private giving (including indi0
20
40
60
80
100
vidual and federated fundraisPer cent attributable to each service
ing, trust and corporate supIncome from local
port) in a number of
Income from private giving
Private earned income
and central government
non-residential forms of provision. Residential care was
Note
also reliant on public fund* Most domiciliary services were not separable from multiple services in our data, and the balance of income
sources shown here is therefore misleading. In particular, we know that local government is a major funder of
ing — in this case from both
voluntary sector domiciliary care services.
local and central government
(most significantly, income
support). But private earned
income was the major source
of non-statutory funding for
this type of care. This primarily reflected the continued sigReferences
nificance of private fees paid by individual users to volunDepartment of Health, OPCS and HM Treasury (1993)
tary sector providers in residential care settings.
Aversion of this article appears in Netten, A. and Dennett, J. (1996) Unit
Costs of Health and Social Care 1996, PSSRU, Canterbury.
Notes
1. The full results of all aspects of the UK leg of the project are in
Kendall and Knapp (1996); summaries of the statistical mapping, and policy issues facing the sector, can be found in Kendall
and Knapp, 1995a and 1995b. Early summaries of the overall
international findings are Salamon and Anheier, 1995 and
Salamon and Anheier, 1996.
2. Services for the elderly accounted for 44 per cent of all net current public expenditure on personal social services in 1990/91.
See Department of Health, OPCS and HM Treasury (1993) Department of Health and Office of Population Censuses and
Surveys Departmental Report, Cm 2212, HMSO, London, cited
in Knapp and Wistow, 1993.
3. Kendall and Knapp, 1996, chapter 7. In 1990/91, voluntary
organisations were receiving three times as much local authority
expenditure as private sector organisations in support of
non-residential care activities (see Wistow et al, 1994, chapter
3). This ratio will of course have changed significantly with the
rapid expansion of private sector domiciliary care services under contract with local authorities since 1993.
MEOC Bulletin No. 4
Department of Health and Office of Population Censuses
and Surveys Departmental Report, Cm 2212, HMSO,
London.
Ernst and Whinney (1986) Survey of Private and Voluntary
Residential and Nursing Homes for the DHSS, Ernst and
Whinney, London.
Kendall, J. and Knapp, M.R.J. (1995a) The Kent/Hopkins
project: summary of the UK statistical mapping, in S.
Saxon-Harrold and J. Kendall (eds) Dimensions of the
Voluntary Sector, Charities Aid Foundation, London.
Kendall, J. and Knapp, M.R.J. (1995b) Voluntary Means,
Social Ends, PSSRU, Canterbury.
Kendall, J. and Knapp, M.R.J. (1996) The Voluntary Sector in
the UK, Manchester University Press, Manchester.
Knapp, M.R.J., Davis Smith, J. and Koutsogeorgopoulou, V.
(1996) Volunteer participation in community care, Policy
and Politics, forthcoming.
Lynn, P. and Davis Smith, J. (1991) The National Survey of
Voluntary Activity in the UK, Volunteer Centre UK,
Berkhamsted.
Salamon, L. and Anheier, H. (1995) The emerging sector: the
nonprofit sector in comparative perspective — an overview,
edited by J. Kendall from a report by L. Salamon and H.
Anheier, in S. Saxon-Harrold and J. Kendall (eds)
Dimensions of the Voluntary Sector, Charities Aid
Foundation, London.
Salamon, L. and Anheier, H. (1996) The Emerging Sector,
Manchester University Press, Manchester.
Page 17
The Voluntary Sector in the UK
Jeremy Kendall and Martin Knapp; Manchester University Press, July 1996. 330pp. appx.
This is one of a series of books on the voluntary sector
published by MUP. It offers the first ever comprehensive
description and analysis of the scope and scale of voluntary organisations in Britain. The sector’s profile is rising
steadily in the context of increasing government interest
and attention from the general public, as the National
Lottery raises awareness of Britain’s many ‘good causes’.
This book fills a major knowledge gap, providing a
uniquely detailed mapping of the sector, accompanied by
interpretation and analysis of its development and current roles. Theoretical perspectives on voluntary activity
are outlined, and its historical development and legal environment charted. The nature of recent relations within
the state and current policy challenges are analysed. Additionally, the evolution and current contributions of the
sector in the education, social services and health
fields are explored in detail.
Contents
Preface, foreword, introduction
o History of the voluntary sector
o Legal position of the voluntary sector
o Mapping the voluntary sector
o Recent developments in state/voluntary
sector relations
o Education
o Health and social care
o Conclusion
o Appendices, references, name index, subject index
Voluntary Means, Social Ends
Jeremy Kendall and Martin Knapp
PSSRU, Canterbury, 1995; 28 pages,paperback, ISBN 0 904938 61 1.
Available from Anne Walker at the PSSRU, Canterbury, at £5.00 including post & packing.
This report summarises the findings of the UK part of a
major international study of the voluntary sector.
The most comprehensive mapping of the sector to date is
outlined, breaking down the sector into categories of vol-
untary organisation and detailing sources of income, expenditure, and numbers of employees and
volunteers. Chapters discuss the sector’s relationship with the state and other policy issues.
The Economic Evaluation of Mental Health Care
Edited by Martin Knapp
Arena, Aldershot, 1995; 260 pages, paperback, ISBN 1 85742 211 2; £14.95.
An introduction to the factors and trends which make
economics relevant in the mental health field and to the
parameters and tools of economic evaluation. Their ap-
plication in some recently completed evaluations is
illustrated and policy and practice implications
discussed.
Unit Costs of Health and Social Care 1996
Compiled by Ann Netten and Jane Dennett
PSSRU, Canterbury. 148 pages (approx.), paperback, ISSN 0969-42268.
Available from Anne Walker at the PSSRU, Canterbury, at £7.50 including post & packing.
Unit Costs of Health and Social Care is available from
June 1996. The report brings together a wealth of information for those involved in providing or evaluating care
and those undertaking costs research.
Each volume in this series (formerly Unit Costs of Community Care) consists of a set of cost ‘schemata’ containing specific information about the various component
costs of each service covered; a commentary detailing the
basis for the estimates; price indices (now with a section
explaining their basis and use); a reference list of key
Page 18
studies; a glossary and indexes. All these are
checked and updated, incorporating more detailed
and accurate information, each year.
New in 1996 is coverage of services for people who
misuse drugs and alcohol; of child psychology and
psychiatry services; and of multidisciplinary teams
for people with mental health problems. Seven
original articles provide insights into current and
recent research in costing and related areas.
MEOC Bulletin No. 4
MEOC BULLETIN
If you would like to receive additional copies of this Bulletin or previous issues and/or be added to the
mailing list for future issues, please photocopy this form and send your details to Maureen Weir, PSSRU
at LSE, Houghton Street, London WC2A 2AE.
Please send me
copies of MEOC Bulletin No.1
Please send me
copies of MEOC Bulletin No.2
Please send me
copies of MEOC Bulletin No.3
Please send me
copies of MEOC Bulletin No.4
Please add me to the mailing list for the MEOC Bulletin.
Name _________________________________________________________
Job title (if appropriate)________________________________________
Address _______________________________________________________
_______________________________________________________________
_______________________________________________________________
__________________________________ Postcode __________________
Research enquiries may be directed to Martin Knapp (PSSRU, LSE) or Gerald Wistow (Nuffield Institute, University of Leeds).
MEOC Bulletin No. 4
Page 19
Cover design by Lesley Farr
Typeset by Nick Brawn at the PSSRU
Printed by the University of Kent Printing Unit