Decision details

13.1

The Executive Director, Communities submitted a report in relation to the Care Home Market and Fees Analysis 2015/16.

13.2

RESOLVED: That Cabinet:-

(a)

notes the market analysis;

(b)

confirms a 2.33% increase in Residential Care home fees for 2015/16; and

(c)

confirms a 2.45% increase in Nursing Home fees for 2015/16.

13.3

Reasons for Decision

13.3.1

There has been a “freeze” in Care Home fees for the last two years. During this time we know that the cost of running a Care Home has increased.

13.3.2

This year the National Minimum Wage rose by 3% and inflation by 1.2%. Together these cost drivers create an estimated 2.33% cost pressure for care home providers.

13.3.3

In previous years, there has been sufficient confidence that the market would continue to develop and deliver modern, efficient accommodation to replace the capacity lost as less efficient care homes have closed. This confidence, coupled with the Council’s challenging financial position, meant that fees have not been increased for the last 2 years.

13.3.4

This year there has been further unplanned closures and there are a limited number of new care home developments at the planning stage. However, there is still capacity in care homes and providers tell us that they are benefiting from increased occupancy levels.

13.3.5

Our view is that the care home market is now in a stable position, with sufficient capacity for the short- to medium-term. However, we believe that given the cost pressures providers are under, there is a risk that a further fee freeze could de-stabilise the market and lead to unplanned closures. These closures would reduce choice for people in Sheffield needing to move into a care home, and increase the risks of capacity falling below demand.

13.3.6

Following consultation with providers, we have also acknowledged that staffing cost pressures for nursing homes are a particular challenge as staff costs inevitably form a greater proportion of overall costs in homes that have greater levels of staffing.

13.3.7

The recommendation this year is therefore for a rise of 2.33% in residential home care fees and an increase of 2.45% in the fee for nursing homes. These increases are based on a consistent calculation of increased costs given that inflation is at 1.2% and staff costs have risen by 3%.

13.4

Alternatives Considered and Rejected

13.4.1

There were three options considered:

·         Freezethe fee level for a third year

·         Increase fees by 1.75% to partially off-set cost pressures on providers

·         Increase fees by 2.33% and 2.45% for residential and nursing respectively based on estimated rises in provider costs

13.4.2

Consideration of the three options regarding fees 2015/16 was undertaken taking into account the following;

·         Market factors as described in this report

·         Costs of care as calculated in the report

·         Provider feedback from engagement events & planned consultation

·         The financial position of the Council.

13.4.3

Each option was risk assessed as summarised below. Detailed risk assessments are included on the following pages. The summary position is as follows:

Freeze the fee level for a third year

·         Risk of unplanned exits from the Market and of legal challenge

Increase fees by 1.75% to partially off-set cost pressures on providers whilst recognising Council’s financial position

·         Reduces risk of further unplanned exits and legal challenge – but still a real terms reduction in fee at a time when the market is finely balanced

Increase fees by 2.33% and 2.45% for residential and nursing respectively based on estimated rises in provider costs

·         Should stabilise market but increases risks on Council social care budgets.

The additional 0.18% (2.45%) reflected the additional staff costs faced by Nursing homes

13.5

Any Interest Declared or Dispensation Granted

None

13.6

Reason for Exemption if Public/Press Excluded During Consideration

None

13.7

Respective Director Responsible for Implementation

Laraine Manley, Executive Director, Communities

13.8

Relevant Scrutiny and Policy Development Committee If Decision Called In

Healthier Communities and Adult Social Care