A pragmatic approach to care provider failure in Hertfordshire

By Steven Lee-Foster | 29 October 2019

Nationally we all know that adult care services face a number of challenges including economic uncertainty, an ageing population, and budget reductions. Futureproofing these vital services is a key focus for Hertfordshire CC and working with our providers is crucial to this.

Our position on the edge of the capital means we’re an attractive place to live and work, and historically we’ve experienced significant inward investment in residential care and retirement living, with much of this aimed at private funders. While we still have in-house supported living and day services, much of our provision is contracted out or spot-purchased, we haven’t provided any domiciliary care for some years. This is not untypical.

Ask any director of adult care services and they will tell you that their commissioning teams are often wrestling with providers who are struggling (with a frequency mirroring the woes on the high street), and that action is taken every week across the country to safeguard our service users. This includes dealing with those providers that decide to close or sell their business, as well as action instigated by the local council where care standards cause concern.

Much has been written about the squeeze on local council social care budgets and the biggest area to feel the pinch is care purchasing budgets; which in turn has led to more and more providers struggling on lower margins. While it’s not all doom and gloom, many local councils work with long-established local providers who are well run and do a great job, but no-one is sleeping easy at the moment.

There are persistent worries across the care sector about the robustness of the care market generally, and particularly those larger providers with high levels of debt. There’s good reason for this when you consider the fate of care home operator Southern Cross which collapsed in 2011. Roll the clock forward eight years to this April, and the UK’s largest residential home provider, Four Seasons, put its 320 homes with 15,000 residents into administration. The new owner who has bought part of the company is an American hedge fund that will need to restructure the business.

And it’s not just residential care providers that are struggling. Last December the national home care provider, Allied Healthcare, was forced to sell the business following intervention by the Care Quality Commission. No one should be fooled that things will get much better soon. Behind the stark headlines, it is local councils that have had to evolve their approach to cope with the scale and breadth of the challenges they face.

When Allied Healthcare started to get into difficulties last year we had to think about how we might deal with a large provider failure. Our exposure to them was significant as they had nearly 500 customers in Hertfordshire. While we could rely on local private home care providers who were fantastic from the outset, we were concerned about the scale of the task. This led us to set up Herts at Home – a council-owned trading company – to take on a significant part of Allied Healthcare’s local business, placing the remainder with our existing private providers.

The reasons for doing this were varied. Our first aim was to avoid compounding the financial cost of the collapse by bringing services back in-house. The second was our determination to operate the company in a way that focuses on turning around services that need stabilising or improving, rather than setting it up to compete with other providers. Finally, we wanted to develop our own expertise and workforce so we can be more innovative and test new ideas. In Hertfordshire we’re lucky to have many great providers: privately owned and not-for-profit.

We now have another tool in the box if we need it; one that embodies a pragmatic approach to a very difficult set of problems.

Steven Lee-Foster is operations director for adult care services at Hertfordshire CC

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