Examination of Witnesses (Question Numbers
520-538)
MS SHEILA
SCOTT OBE, MR
MARTIN GREEN
AND MR
COLIN ANGEL
19 NOVEMBER 2009
Q520 Chairman: Does anybody disagree
with that analysis?
Ms Scott: We just advise our members
not to take part. There is absolutely no point because the next
thing you know you will be exposed for providing a poor service.
Q521 Chairman: It is a common complaint
that commissioners drive down costs while ignoring providers'
statutory and regulatory costs. We are expecting a new regulatory
regime next year. Do you think that is going to change matters?
Ms Scott: It is going to make
it worse.
Mr Green: My view about the new
regulator is if what the regulator has talked about in terms of
her desire to move towards outcome-based regulation, then I hope
we will be supportive of that, and I hope that there is the support
of the sector to deliver on the personalisation agenda particularly.
The cost of regulation is always a contentious issue and it will
be a particularly contentious issue in a situation where the cost
of regulation will be the same but the engagement with the regulator
might be far less, so some employers will raise questions as to
why that is. I hope the arrival of a new regulator, particularly
an integrated regulator, should be positive for the sector.
Ms Scott: I am extremely worried
about the fees because previously Parliament set the regulator
fee and now it is to be set by the regulator themselves, with
no scrutiny, as far as I know, and that is why I am so concerned.
We have seen their proposals about what fees they will charge
to the Health Services and to hospitals and they seem quite high
to me and so I am very worried about what is going to happen to
social care as well.
Mr Angel: We, too, are considerably
worried by the new regulator and the new regulatory regime. We
do anticipate an increase in costs, not necessarily just the registration
fees but the time and resources that are used during the inspection
registration process. Looking at the draft guidance which has
not yet been finally published, there is a much greater emphasis
on the providers supplying self-assessment rather than an inspector
visiting and forming the assessment themselves. The document that
is about to be published is going to be far more generic than
those the providers use at the moment. At the moment we have national
minimum standards for home care. There will be one set of guidance
for compliance between regulated health and social care services.
We actually anticipate far more disputes between inspectors and
providers. Because the requirements are so much more generic providers
will have to convince their inspector that they are actually complying
with the spirit of the requirement.
Q522 Dr Naysmith: Colin, can I ask
you about your statement in your memorandum that local authority
commissioners cut costs by only paying "for contact time—sometimes
by the minute—or using short care episodes for 15 minutes".
How prevalent is this?
Mr Angel: Widespread. It is almost
unheard of for a local authority to pay for anything but contact
time, ie arrival at the user's front door to departure. Of course
in the home care sector there is travel time before and after
each of those.
Q523 Dr Naysmith: What types of support
are we talking about that can be provided in these sorts of minutes
only episodes?
Mr Angel: Ideally they are really
only suitable for the observation of physical safety, perhaps
a very simple prompt, "It's time to take your medication."
Unfortunately, what we are seeing are far more complex and intimate
personal care tasks being shoehorned into smaller and smaller
periods of time. That is very distressing for the person using
the service and clearly not a satisfactory position for the care
worker trying to deliver a very human service in a very rushed
and limited time-frame.
Q524 Dr Naysmith: You say that is
widespread?
Mr Angel: Yes.
Q525 Dr Naysmith: So what percentage
of authorities would be using these short slots now, roughly?
Mr Angel: I do not have the data
set but my response is I would be surprised if it was much less
than 90%.
Q526 Dr Naysmith: Really? And what
then are the real problems of this? You have outlined some of
them but what would you say are the major problems associated
with it?
Mr Angel: I think the ones I have
outlined are the main ones. It is lack of dignity and the ability
to perform tasks thoroughly rather than in a rushed manner.
Q527 Dr Naysmith: Presumably when
people are whipping round doing five minutes here or 15 minutes
there then it would be different people each time, or could be?
Mr Angel: Yes, that could happen.
It does not necessarily follow directly that that is the case.
Mr Green: I think one of the other
issues though is if you are there to try to enable and empower
people, it can often take much longer, and if you have a very
short time you might do things for people or to people rather
than enable people to do things for themselves. In terms of the
personalisation agenda we do need to remind ourselves that that
is about empowering people to be as independent as possible not
just doing things for them.
Q528 Charlotte Atkins: Last week
we heard from Baroness Young of the Care Quality Commission that
there is a definite "gradient" in quality of care between
for-profit providers and others. We also see in the British
Medical Journal that on average not-for-profit nursing homes
deliver higher quality care than do for-profit nursing homes.
How would you account for those findings?
Ms Scott: I have not actually
heard that before, have you?
Mr Green: I would account for
them sometimes by the fact that some not-for-profit providers
might for example subsidise their services with other forms of
income so that may be one of the reasons. It may be that they
are able to, for example, have higher staff ratios or there may
be a range of reasons for that. By and large particularly I think
larger not-for-profit organisations are getting much more into
a similar business model and there are some really good quality
organisations that are businesses and there are some really good
quality organisations that are charities, so I would need to see
the background to that to try and unpick it really, but it would
be an interesting issue to try and unpick.
Q529 Charlotte Atkins: UNISON put
it down to care home owners putting profits before quality.
Mr Green: I think one of the things
that we need to remember about the profit issue is that we have
a mixed economy of care and if you run a business you have to
deliver a profit. In the public sector it might be called a range
of different benefits. In the charity sector it might be called
excess over income and expenditure which you then reinvest in
the business. Given that no political party is advocating other
than a mixed economy of care, we have to accept in order to have
a business you have to have a profit, and in order to engage for
example in inward investment you have to have a business that
is profitable, so the notion of having profit is absolutely central
to the system.
Ms Scott: I think funding has
some impact on all of this. I think my members in localities would
think that often some, not all, national not-for-profit voluntary
organisations have more advantageous commissioning arrangements
in place than the private sector does. Certainly I know that some
smaller charities that are members of our organisation would say
that they do not get some of those benefits as well, but I believe
that the differential between responsible providers in any sector
is barely there. I am surprised that both Baroness Young and UNISON
said the same thing because I do not think I have ever seen that
report which suggests that, but I do know that all responsible
providers, whatever sector they are in, are striving to deliver
the best quality service that they can within the framework that
they have.
Q530 Charlotte Atkins: The British
Medical Journal article was on 4 August 2009 if you would
like to have a look at that.
Ms Scott: I do not read it a lot.
Q531 Charlotte Atkins: Colin, have
you anything to add?
Mr Angel: I think that the point
of return on capital invested is fundamental to the supply of
independent sector services. They just will not be there if there
is no return on investment. I have already alluded to the difference
in the gross average hourly rate between what the independent
sector receives and what the councils' own services cost. I do
not think there is an accusation that profit is squeezing quality
down. I think the purchaser would be far more likely to be responsible
for that.
Q532 Chairman: Martin, the latest
Laing and Buisson report shows operating profits (earnings before
interest, taxes, et cetera) in the corporate care sector ranging
from 17% of revenue to 28%. How do you reconcile these levels
of profit with your members' pleas that they are underfunded?
Mr Green: Again, we have to go
back to that issue about what the cost bases are within businesses
and also the fact that we have a business model. I think also
there are some issues where people are subsidising across the
business, so, for example, some of these businesses are very complex
and when you see the profit figure in the round there may be some
businesses that are just very much at the margin in terms of the
group profit position and other parts of the organisation might
be turning in a higher profit. You need to unpick which elements
were producing that level of profit. It may have been as well
that some people had land acquisitions that they decided to divest
themselves of in that particular year so they did not develop
services. It may have been that they had put money aside to develop
a particular service and because of the way in which the market
went they did not use that in a particular given year. I think
it is quite complicated. It is very seductive sometimes to pull
out the headline and then say that means they must be making a
lot out of this. Within that there are grades of different parts
of the business that produce that profit.
Q533 Chairman: 17% is not a bad return
on revenue, is it? I am not a businessman but is it a bad return
on revenue, the lower end of these figures?
Mr Green: I think it is a pretty
good return on revenue but the question is where does it come
from and we would need to unpick that.
Q534 Mr Syms: How many care homes
go out of business? Clearly some are profitable but there are
examples in my constituency of a number which have had to close.
Mr Green: I cannot give you a
figure I am afraid, I do not have that.
Q535 Mr Syms: But it does happen?
Mr Green: It does happen. One
of the issues that needs to be taken account of is if we have
this mixed economy of care as our position in terms of the policy
context, one of the things that is a real issue is how the system
prepares for a business failure. Particularly when we have seen
what has been happening in the financial market, that is a probability
at some point, or a possibility perhaps, and so we need to be
really clear about how we deal with that if it happened.
Q536 Chairman: We know that private
equity investors have taken over large parts of the care home
sector. In 2007 the Observer said that for these investors
"Granny is a profit centre" and in 2008 the Evening
Standard said that they were concerned more about property
values than "the ailments of the inhabitants". Are those
fair comments?
Mr Green: No, I do not think they
are and I would like to see them justify those comments. Of course,
you could make those comments about anybody. You could say nursery
operators are more interested in profit. You could say universities
are more interested in their inward flow than they are in their
students. It is very seductive to just pull out some self-opinionated
view from a newspaper which is not backed up necessarily by any
proper approach to defining where they came from other than the
opinion of a journalist.
Dr Naysmith: It happens to us all the
time!
Q537 Chairman: I would say you would
get good agreement round this part of the table on that one. My
last figure in this session is what profits do small providers
make? Sheila?
Ms Scott: I am glad you have asked
me that. I reiterate what I said at the beginning that we should
have this wide diversity of provision—public sector, voluntary
sector, private sector, the large hotel-like provision and small
provision. For the smaller business it is a lifestyle decision
to have your own business, to invest in that business, to run
it perhaps with your family, and so the profit that they are looking
for is, yes, a comfortable income now, but the investment is the
money they have invested into the business which they hope by
the time they retire will give them a comfortable retirement,
and so I think that small business does not necessarily look in
that very business-like way of a yearly return on investment made.
They are looking for a lifestyle as well as looking at it in the
long term.
Q538 Chairman: Do we have a rate
of return on small providers or not really?
Ms Scott: No, but if I might I
would write to you within the next couple of days and let you
know.
Chairman: Could I thank all three of
you for coming along and helping us with this inquiry this morning.
I am sorry we have overshot by a few minutes but thank you for
a good session.
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