Norman Lamb unveils proposals to inspect care home finances

24 May 2013

Failures across the health and care system in recent years have prompted an exacting review of organisations delivering health and care services. While the failure of social care provider Southern Cross Healthcare did not result in the dangerous failings of Stafford Hospital or the criminal abuse at Winterbourne View Hospital, it has highlighted the risk a business failure can pose to the quality of care that people receive and the continuity of those care services.

In a range of swingeing changes to the delivery of health and social care services announced this month, new measures have now been proposed to protect people receiving care services by taking steps to ensure continuity of care in the event of the financial failure of the provider.

Under the current system, social care and individual care providers must comply with a certain level of financial scrutiny if they provide services for people via local authorities. However there are no formal measures in place for financial oversight and all the provider is required to do is to take “reasonable steps” to ensure the financial viability of the service they are offering. In particular, there is no part of the overall system – central government, local government or the Care Quality Commission – that has the remit or responsibility to formally monitor financial “health” or performance at a provider level. Further, while the local authority has a duty to help people to arrange alternative care where a provider failure occurs and a service closes, the extent of that duty is not presently clear. These current arrangements need to be strengthened, not least because it is simply unacceptable that an individual should be left without services they need or have paid for, but also because the financial health of a provider has the obvious potential to impact upon the quality of the services ultimately offered.

In 2011 the Government began to engage with a range of organisations to fully consider the most appropriate response and in July 2012 its proposals for a future regime for market oversight were published in the Caring for our Future White Paper. On 1 December 2012 the Government launched a consultation on those proposals and a number of key themes were identified in the responses. In particular, respondents advocated that the role of local authorities in local oversight and failure should be clarified – i.e. it should be made clear that the local authority duty applies in all forms of regulated care.

The Government has therefore proposed to introduce new legislative provisions that:

  • Make clear that the local authority where the person is actually living is the responsible authority for the urgent period.
  • There will not be a requirement to carry out a needs assessment at the closure of a service provider but the responsible body should engage with service users, their family and carers as far as possible when making alternative arrangements.
  • Self-funders will be able to request support from the local authority, either in the form of information and advice or for arrangements to be made on their behalf (where arrangements are made on a person’s behalf the local authority will pay for expediency’s sake but this amount will have to be paid back to the authority in due course).
  • The local authority will “become active” when it knows about the failure.
  • The Care Quality Commission (“CQC”) will be given powers to oversee the financial stability of the largest and most difficult to replace providers and in that respect the providers will be required to submit key metrics, undertake regular dialogue with the regulator and generally satisfy the CQC that they have a strategy in place to manage key business risks.

The hope is a general improvement in the standard and quality across the care sector but whether this works in practice is yet to be seen. While Southern Cross represents the only major failure of a care provider in the last twenty years, recent reports indicate that the number of smaller care homes failing has almost doubled in the past two years. The new powers are yet to receive Parliamentary approval and it will be interesting to see how the proposals fare in the context of all the changes proposed by the new Care Bill.


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