Agenda item

To seek approval for the fee levels for older person’s care homes from April 2019, together with the associated fee increases in April 2020 and April 2021; and the commencement of a procurement exercise with all in borough older person’s care homes in line with the requirements set out in the report.

Cabinet considered a report seeking approval for the fee levels for older person’s care homes from April 2019, together with the associated fee increases in April 2020 and April 2021; and the commencement of a procurement exercise with all in borough older person’s Care Home providers to put in place new contracts.

Further to the reports to Cabinet in June 2020 on the Adult Social Care Action Plan which set out an approach to working with the social care market to secure greater market stability, and in February 2021 to the finalise arrangements and to undertake a procurement exercise leading to the award of contracts to preferred bidders. This report provided an update on this and sought approval for the weekly rate for 2019 with fee increases in April 2020 and April 2021, and the weekly price and updates to the commercial arrangements to be included in a proposed procurement exercise.

During the period late 2019 and into 2020, work was undertaken with Care North East (North Tyneside) but was not concluded due to dealing with COVID-19 matters.  The review of the figures put forward by the Authority and those put forward by Care North East (North Tyneside) was picked up again in 2021. Following this work, officers considered the position and a delegated decision was taken on 6 July 2021.  This decision was then communicated to care homes on 6 July 2021.  Subsequently, the decision was formally challenged by Care North East (North Tyneside) by way of Judicial Review proceedings.  A copy of the judicial review claim and a witness statement in support of the claim were attached in the annexes to the report for information.  

As a consequence of the Judicial Review application, officers reviewed the decision and agreed that it be withdrawn, and that the matter be presented to Cabinet for consideration and determination.

As explained above, on the 6 July 2021, the Authority under the Officer Delegation Scheme determined a fee increase for care home provision from April 2019.  This followed the review of information from Care North East (North Tyneside) and the Authority’s own work on care home costs that was undertaken as part of the draft pricing strategy consultation exercise. The Authority also put in place further increases to the April 2019 base costs in line with previously determined inflationary uplifts in April 2020 of 5% and April 2021 of 2.16% to give a new set of rates to be paid for the three-year period commencing April 2019. The outcome of this and the associated annual fee increases were appended to the report.  This decision was one of the subjects of the Judicial Review that the Authority received and it was decided to withdraw that decision pending some further work with Care North East (North Tyneside) and report to Cabinet on the matter.

This additional work had now been concluded and had resulted in the proposed figures set out below.

These proposed figures reflected careful consideration of the figures set out in Care North East (North Tyneside)’s consultation response; the proposed figures in the draft pricing strategy; the figures generated by other models, including ADASS and Laing and Buisson; and fees being paid in other local authority areas in the North East.  The figures also reflected consideration of the costs that providers were facing in delivering care, the care home market in North Tyneside generally, and the care home fees from other local authorities in the North East Region. Appendix 4 to the report sets out a comparison of the grade 1 costs (as at grade 1 rates in 2021/22) against the other Local Authorities in the North East region. For both general care and dementia care the proposed rates placed North Tyneside slightly above the regional average and fourth higher across the whole of the region.

In arriving at the proposed figures the Authority had:

·         Used a figure for staffing costs of £367.00 per week, which was the same as the figure proposed by Care North East (North Tyneside) in its consultation response

·         Used a figure for non-staffing costs of £137.00 per week, which was the same as the figure proposed by Care North East (North Tyneside) in its consultation response

·         Increased the differential between the fees for general and dementia care

There was a significant difference between the approach taken to the return on capital and contingency costs in the draft pricing strategy and the consultation response from Care North East (North Tyneside). Notwithstanding this and as part of the overall calculation of costs in light of the matters set out above, it was proposed that this be indicatively calculated at £84.00 per week to give an overall total blended cost (taking account different grades of home and the mix of general and dementia placements) of £588.00 per week.

The rates as set out below had been agreed by Care North East (North Tyneside) on behalf of its members and were recommended for agreement.

In terms of procurement and contracting arrangements, whilst the Authority must seek to ensure Best Value in terms of the procurement of residential and nursing care, the structure of the existing market in the Borough, the use of a pre-agreed pricing mechanism and the choice of placements afforded by the Choice of Accommodation Direction meant that it had not been previously possible to competitively procure this service.

The current contract ended in 2015 and had been extended since then due to ongoing fee negotiations.  In accordance with the Public Procurement Regulations 2015 a procurement exercise must be undertaken.  Extensive engagement was currently being undertaken to ensure providers were ready to contract with the Authority.

The Authority had developed a three-year plan, attached at Appendix 5 to the report, to set out a review of its commercial arrangements with care home providers and had set an ambition of:

·           Putting new contracts in place that met the Authority’s requirements now and during the contract term.

·           Put in place a new set of fee levels with care home providers and arrangements for dealing with fee increases.

·           Reviewing the quality monitoring and banding levels.

·           Better understanding demand and requirement to ensure there was sufficiency of the right supply to meet that need.

During August / September 2021, detailed engagement and consultation took place with care home providers individually, with Care North East (North Tyneside) and with the CCG. The engagement looked at dealing with Fee increases, Quality of provision and quality improvement, review of quality monitoring methodology and grading, Demand and capacity to deliver, The contract underpinning the provision of care, contract duration, and Procurement process.

The feedback was set out in Appendix 6 to the report.  In summary, the following sets out the key elements for Cabinet’s consideration:

·         Given the current pandemic and uncertainty in relation to Adult Social Care settlements, a shorter-term contract of 12 months plus a further 12 month option to extend would be appropriate.

·         The Authority proposed an increase in weighting to achieve the highest banding, an increase from 80%. During the term of the contract, the Authority would work towards an 85% banding for grade 1.  This would ensure that its vulnerable residents received the highest quality of care. Prices would continue to be increased on an annual basis but in line with a formal mechanism within the contract.

·         Providers would be keen to enter into formal contracts with the Authority.

·         In relation to fee increases, it was agreed there needed to be reference to areas outside of Provider and Authority control to be included, such as links to Living Wage which had recently increased above inflation over recent years as well as other cost pressures that might come through, i.e. utility costs, insurance, infection control (once grants and access to free PPE comes to an end).

Cabinet considered the following decision options: to either accept the recommendations as set out in section 1.2 of the report, or alternatively, to not approve the recommendations.

Resolved that (1) the fee levels for older person’s care homes from April 2019, together with the associated fee increases in April 2020 and April 2021, as set out in paragraph 1.5.4 of the report, be approved; and

(2)  the commencement of a procurement exercise with all in borough older person’s

care homes in line with the requirements set out in paragraph 1.5.7 of the report, be approved.

(Reason for decision: This would enable a decision to be made on fee levels and for the procurement exercise to be commenced for new contracts / framework agreements to be put in place from April 2022.)