Health CommitteeWritten evidence from Bupa (SC 46)

Executive Summary

An quality rating system is required which does not just simply relate to essential standards and which older people and their families can readily and quickly understand.

A system of fair fees is required.

There should be greater integration between the NHS and social care.

Implications of the Southern Cross scenario for the sector.


Bupa commends the Committee’s call for evidence and welcomes the opportunity to respond. This response builds on our response to the Social Care Green Paper consultation in 2009, and the following works:

Bupa Care Services/PSSRU analysis of length of stay.

A summary of Bupa’s previous long-term care insurance products.

Incidence rates and probability of lifetime risk, prepared by Bupa Health Assurance.

Data on length of claim.

PSSRU costs of care calculation (including hotel costs).

Bupa Care Services international census summary.

Bupa’s response to the call for evidence by the Commission on Funding of Care and Support.

As the above indicates, we have worked closely with and funded a number of diverse projects with external organisations and gather data to inform the social care debate. In line with the committee’s instructions we have not annexed these documents. Copies can be provided on request.

Our Response

In addition to the observations and views contained in the above documents, there are four areas which, in our opinion, need further consideration by the Committee:

A. The establishment of a workable system of quality ratings to replace star ratings

The Care Quality Commission (CQC) is currently consulting on a new rating system for indicating assessments of quality of care homes in England. Our response stressed the importance of:

learning from the shortfalls of the former rating system when developing any new system; and

creating a system which older people and their families can understand and use to judge a care home’s service.

The CSC’s proposals so far have centred simply on meeting their Essential Standards of Quality and Safety for care homes in England (ESQSs). This system assesses whether the ESQSs have been met, if not an establishment will either not be registered or will be required to take action to achieve the required standard.

Our experience of supporting people who are seeking care home places shows that unless a new rating system looks at factors over and above the ESQSs, it will have no useful purpose for older people and their families.

There were many advantages to the previous system which was discontinued in October 2010. It used the now-suspended KLORA (key lines of regulatory assessment) which were established by the Commission for Social Care Inspection (CSCI).

The system used for the “star ratings” looked at more than just compliance with the Minimum Standards. Its ratings of “poor”, “adequate”, “good” or “excellent”, proved effective in driving up quality in the sector and were relevant to older people. Even so, there were ways that the system could have been improved. A rating of adequate implied that the service was below the acceptable standard. This interpretation was exacerbated by the fact that local authorities are judged on the numbers of good and excellent service providers they commission. This issue has been acknowledged and addressed by OFSTED which rates a service, equivalent to “adequate”, as “satisfactory” a clearer term .

In addition, KLORA contained very general statements about what a service might look like; hence gradings awarded could be very subjective. The new system needs to provide more objective benchmarks that can be used to determine the grading and to check whether the award is accurate. At the moment there is nothing which can be used to assess objectively whether an inspector has awarded the appropriate grade. These benchmarks could also ensure that all providers are assessed consistently without judgments being influenced by the size of the organisation, or preconceived perceptions.

By comparison, the Scottish system has a greater number of categories with each general quality area divided further. The “adequate” grade (grade 3) applies to performance at a basic level where most aspects of the Quality Theme/Statement are met and aspects which are not met may be subject to recommendations but don’t cause concern. The “excellent” grade (grade 6) is awarded only where all aspects of the Quality Theme/Statement are met or exceeded and the service is exemplary. This has the advantage of making the Scottish system a more accurate and analytical process but it is quite complicated to follow.

We believe that the CQC is best placed to run the new system as they are already assessing compliance with the ESQSs. There is a need for the new system to be established as soon as possible to add stability in an area which has seen many changes in recent years.

The ideal for a new system, would be a system more prescriptive than the KLORA, but less complicated than in Scotland. It would also include categories and descriptions that are relevant to older people and their families, while also incentivising and recognising excellent care homes. Such a system would allow older people and their families to confidently compare providers and to locate care homes which fulfil their particular needs and wishes.

As we have said, a new system needs to look further than the ESQSs to be a useful resource. It also needs to clarify exactly where a service meeting all the ESQSs falls on the scale, ie where is the bottom line. It then needs to be explicit in setting out the factors that would decide whether one provider is better than another, ie which outcomes will be targeted and what performance measures are needed to achieve a rating better than the bottom line. Additionally, more emphasis needs to be given to focussing on what the service does well and what has improved since last inspection.

B. Funding of Social Care: Fair fees

We know that many people are living longer which means that people are entering care homes at an older age and more frail than ever before. Bupa’s most recent international census of the dependency levels of residents in its care homes in Australia, New Zealand, Spain and the UK, showed that:

62% are living with the effects of dementia, stroke or Parkinson’s disease;

48% are immobile; and

94% have a clinical reason for seeking a residential care home place.

In 2003, Bupa care homes in the UK looked after just under 4,000 people who were living with dementia, in 2011 this figure is close to 7,000 and rising.

To provide aged care of the standard that meets this higher dependency level, there needs to be a public acceptance that investment is needed to continually train and develop staff, research new and innovative approaches to care, upgrade existing facilities, and build modern care homes that can cater for the individual needs of older people.

The Dilnot Commission’s proposals, whilst interesting in the areas considered, would not result in more money coming into the system as it substituted one source for another. Private contributions are to be replaced with state-funded tax payer money, but additional funding is required for those who are unable to provide for themselves. The Dilnot Commission did point to current underfunding of the system and said that more public money is urgently required.

Early in 2011, Bupa published Who Cares?, a report that highlighted the ongoing problems caused by local councils in England paying fees that were below the real cost of providing care for older people. It predicted that, unless action is taken to reverse this trend, a combination of home closures and increased demand would mean up to 100,000 frail older people being unable to access care home places that they need. Given the increasing level of dependency of people living in care homes, it would be likely that those unable to gain a place would instead turn to the NHS for their long term care, creating a bed-blocking crisis for hospitals.

At the same time regulators and others are raising concerns about standards of care provided in residential homes and want to see greater investment in staff training, more activities, better equipment and even more modern facilities.

Further research undertaken for Bupa also shows that the current average residential care fee of £461 paid by local authorities does not cover the costs of simply meeting the CQC Essential Standards of Quality and Safety for care homes in England.

Local authorities are currently offering fee increases of just 0.3%, in real terms a reduction. This comes after previous years of below-cost fee increases in which operators have already worked to identify efficiencies that do not compromise care as their major costs continue to rise.

The research carried out for Bupa shows that, to fill the gap caused by previous years of under-funding and cover the costs of meeting (not exceeding) CQC Essential Standards, local councils in England would need to raise the average weekly fees they pay by between 5% and 8% per year – an increase of up to £41 per person per week each year—between 2012-13 and 2014-15, depending on the type of care being provided.

We also believe that councils should promote and reward investment in providing quality care by paying higher fees where standards are being exceeded.

As fees are set individually by councils, the increases would vary widely, depending on the fees they currently pay.

Recent pressure on public budgets has exacerbated the issue. We already see instances when local councils pay more to their own homes for aged care than they will pay to a private provider. Now we are seeing many of those local authorities which still run homes announcing plans to close them as they can no longer afford to maintain and run them. There is an expectation that private care homes will be able to provide places for their existing and future residents.

We estimate that to redress the existing shortfall, for England alone, would require an extra funding of between £286 million and £294 million year on year in each of the three years from 2012-13 to 2014-15. The annual increases would mean an extra £865 million per year being spent by 2014-15 compared to 2011-12.

C. Promoting integration between the NHS and social care system

While Bupa believes that care homes and hospitals face different challenges, and should be considered separately, we want to see even greater integration between the NHS and the social care system so that older people are not disadvantaged by unnecessary boundaries that slow discharge from acute hospital wards and hamper the exchange of information such as patients’ medical notes.

Greater integration between health and social care would also enable care homes to make a greater contribution to some of the challenges facing the NHS.

In many cases acute hospital wards are not appropriate for the long-term care of older people with chronic conditions and NHS staff and facilities are not equipped to do so. Such people can be looked after far more effectively in residential care than the NHS, yet older people remain in hospital beds longer than necessary as they are unable to return home because adaptations are needed or community-based services are not available. Greater use of nurse-led home healthcare and care homes can help the discharge of older people to a community setting which is more appropriate to their individual needs and helps the NHS use its resources more efficiently.

Councils should work with the NHS to improve the integration of health and social care systems and budgets. Local Government should build further on its initial steps so that integrated plans can be developed that cross “budget borders” in developing alternative care solutions for older people.

Local councils must pledge to pass on in full the £2 billion allocated to adult social care by the Government.

D. Southern Cross implications

Our view is that further regulation of the social care sector, following the collapse of Southern Cross, is not necessary and would not work in practice. For the sake of transparency, it’s important to point out that while we were approached in relation to taking over some of the Southern Cross homes, we have chosen not to do so.

Whilst it would be in the interests of the sector and care users for there to be fewer instances of operators getting into financial difficulty, we believe that there is already sufficient regulation in place and we disagree that the sector is lightly regulated. It is quite rightly, as a result of the previous government’s actions, regulated to the same detailed standards as the NHS.

We recognise that there may be a need for improved market intelligence and monitoring of providers, such as better information sharing and greater analysis of provider performance, as suggested in a recent Department of Health consultation. But we disagree that there is a requirement for improved post-failure regimes such as changes to insolvency or the risk pooling of funds among providers.

It now appears clear that homes operated and residents served by Southern Cross will, in the vast majority of cases, be transferred to new operators with no interruption in care. It may be that a small number of homes which are too expensive to bring up to current standards or in areas where there is an excess of residential care beds will close. But the overall transfer has been successfully managed with no need for direct government intervention, financial or otherwise, in contrast with other sectors.

We believe that provided operators can generate a reasonable return from providing care to support and invest in their homes, operators will always step in to take over homes from an operator who (as was the case in Southern Cross in our view) over- extends themselves and, while generating a surplus from operations, cannot fund the payments to their lenders or landlords to which they may have committed themselves. This may not be the case, however, in future if thinly capitalised operators have their margins squeezed yet further through real terms reductions in fees.

October 2011

Prepared 13th February 2012