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More than £100m of Hertfordshire CC's adult care services budget is tied up in care home fees. Iain MacBeath describes how the county ensures value for money, while maintaining the quality of service With more than £100m of its adult care services budget allocated to care home placement fees, Hertforshire CC completed a thorough investigation into how we could transform our fiscal spend, and achieve budget saving targets. And high cost care services were to be examined in depth. We quickly identified a number of causal factors. First, the substantial number of residents requiring daily assistance in the county. Today, in excess of 3,500 people with learning disabilities require daily support. A large number of these people live in care homes or supported living placements. In the early 20th century, several long-stay hospitals were built around London. Wishing to be near to their loved ones, those families with members in Hertfordshire hospitals, moved into the county, making it their home. And, as a result, the dependent population grew disproportionately. Second, located in close proximity to the capital, we experience one of the highest rates of care package fees across the UK. This can be attributed to soaring prices of land and high living costs. Third, the closure of the long-stay hospitals in the 1980s and 1990s contributed substantially to the county's mammoth care package costs. With hundreds of people needing homes which offered specialist care, many were re-located to out-of-county residential care placements. Today, we see residential care costs ranging from £600 to £4,000 a week per resident – a significant expenditure, considering there is a large number of residents which require some form of residential accommodation. And finally, the ageing demographic of the UK population is further straining our adult care services funds. Just over 10 years ago, the life expectancy of an individual with learning disabilities was 54. Nowadays, life expectancy can reach 75 years, and so care placements have to be extended by around 20 years. Naturally, this further diminishes our adult care services budget. It was paramount that we took action in order to look after our dependent population, but also to ensure streamlined efficiencies. We focused our efforts on transferring our out-of-county placements back into their own tenancy within the county, with personalised social care budgets. The average annual cost of specialist care outside of Hertfordshire is £125,000 per person. Returning them to the county and designing personalised care packages could save £50,000 for each person, each year. Not only would this result in colossal financial efficiencies but, more importantly, it would empower our residents to live fulfilled lives. We took further action through collaborative work with OLM Financial Management, a service team within OLM Group. Deploying a consultancy service known as MyCareCosts, we are now able to renegotiate care packages and establish a fair price for the care that service-users are receiving. We implemented a three-year project. During year one, 50% of care packages were reviewed, 500 were renegotiated in year two, and a further 500 in the third year of the project. During the renegotiation process, a number of factors were considered. How many carers might it take to feed or dress an individual? How costly were the day care, food and utility bills? What were the profit margins of the care provider? Aiming to establish a fair price of care, we only challenged those providers which were seen to be generating significant profit margins and, therefore, charging an unreasonable price for care provision. Many care providers, be they care homes or supported living placements, were found to be charging justifiable fees and so, were not contacted for fee renegotiation. The first year of the project – 2008-9 – achieved savings of £345,000 a year. The second financial year – 2009/10 – reviewed a further 500 cases, returning £2m to Hertfordshire's budget. During our final year of renegotiations – 2010/11 – we plan to review another 500 cases. Equating to £30m a year, it is hoped that from these care packages, a 10% saving will be found. So, £3m will be available for alternative use within the department. Target savings of £7,345,000 are then proposed for every subsequent year. As the fiscal pressures mount from our ever-changing demographics, we must consider alternative methods of sourcing value for money and heightened business efficiencies. Here at Hertfordshire, our mission is to provide the highest standards of fairly-priced care provision to our residents. Iain MacBeath is assistant director, performance and business support adult care services for Hertfordshire CC

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How to balance the budget

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