Cost of Living Support

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Fair Cost of Care 2022

Cost of Care Context

Essex County Council are working with an independent specialist consultancy firm called LaingBuisson to support the delivery of our Cost of Care Exercise across Essex.  All Local Authorities have a statutory requirement to complete a cost of care exercise across our social care market to understand the Fair Cost of Care for our Essex Market.  This work must be completed by the 30th of September 2022, which is a government deadline for all local authorities.

The outcome of this work will support the delivery of our Sustainability Plans and aid future financial decisions necessary with central government to support the delivery of the Care Act.  Essex County Council are working with our regional partners within the LGA and to deliver a regional approach to our Cost of Care exercise.  We are keen to ensure that all Essex Providers are fully engaged in this exercise and as many providers as possible contribute to the delivery of cost of care tasks which will support the Fair Cost of Care outcome.

To ensure this task is successful Essex County Council are keen to ensure that obtain a true reflection of our markets associated costs to deliver a quality service for our Adults in Essex. To do this our providers will be required to complete the LGA Cost of Care Tool Kit either for Homecare or Residential Care. All completed Cost of Care Tool Kits will be analysed to provide qualitative insight and a true reflection of the Cost of Care Rate for our specified markets which will inform central government.

Timelines

Please find below details of our Cost of Care Timeline:

  • April 2022: Secure independent consultant to support our Cost of Care exercise and initiate early engagement with our providers across Essex. 
  • Early May 2022: LGA Cost of Care Tool Live and LaingBuisson and the Council are working with our Domiciliary Providers to complete the Domiciliary Cost of Care Tool. 
  • Late May 2022: iESE to supply a Cost of Care Tool through CareCubed for Residential Providers to complete the Care Home Cost of Care Tool. 
  • June/July/August 2022: LaingBuisson and the Council to support Providers to complete the Cost of Care Tool. This will include continue engagement, communications through provider bulletins and direct contact to providers.  Closing date for all tools is the 31st July 2022
  • End of August 2022: Analysis of the outcomes and obtain a median of Fair Cost of Care rates for Domiciliary and Care Homes. 
  • September 2022: Briefings with Councillors on findings and the development of the Market Sustainability Plan (MSP) for Central Government.
  • 14 October 2022: Cost of care prices for Essex and a market sustainability plan to be  submitted to the Department of Health and Social Care. 
  • October 2022: To communicate findings with providers, ECA and relevant organisations. 

Contact us 

If you have any queries or concerns and would like to talk to us you can speak to:

To prepare markets, we expect local authorities will carry out activities such as:

  1. conduct a cost of care exercise to determine the sustainable rates and identify how close they are to it
  2. engage with local providers to improve data on operational costs and number of self-funders to better understand the impact of reform on the local market (particularly the 65+ residential care market, but also additional pressures to domiciliary care)
  3. strengthen capacity to plan for, and execute, greater market oversight (as a result of increased section 18(3) commissioning) and improved market management to ensure markets are well positioned to deliver on our reform ambitions
  4. use this additional funding to genuinely increase fee rates, as appropriate to local circumstances. To fund core pressures, local authorities can make use of over £1 billion of additional resource specifically for social care in 2022 to 2023. This includes the increase in Social Care Grant and the improved Better Care Fund, a 1% adult social care precept and deferred flexibilities from last year’s settlement

As a condition of receiving further grant funding in the 2 following years, local authorities will need to submit to the Department of Health and Social Care (DHSC):

  1. a cost of care exercise – produced by surveying local providers for 65+ residential and nursing care and 18+ homecare to determine a sustainable fee rate for different care settings[footnote 1]. Exercises will need to accurately reflect local costs such as staff pay and travel time, and provide for an appropriate return on capital or return on operations. Local authorities will be expected to publish the exercises
  2. a provisional market sustainability plan setting out local strategy for the next 3 years (2022 to 2025) – using the cost of care exercise as a key input, this provisional plan will demonstrate the pace at which local authorities intend to move towards a sustainable fee rate, in particular taking account of the impact of section 18(3) as well as other pressures they have identified. We will also expect to see strategic planning for changes in types of provision in response to local need with other local areas, taking into consideration the role of new models of care (including housing)
  3. spend report – this will detail how money has been allocated in line with our expectations in order to achieve a more sustainable local market (as set out in 1 to 4 above)

The Domiciliary Cost of Care Tool Kit has been developed by the Care and Health improvement Programme (CHIP) with ARCC-HR Ltd. It is an excel spreadsheet and is available now to download via the LGA website. Link: Domiciliary Cost of Care Tool Kit

*Please note that Supported Living and Extra Care Housing Providers do not need to complete the tool.

The toolkit will gather information on your actual business costs over the last 12 months, this will include:

  • Building and business costs
  • Staffing, recruitment and workforce costs. 
  • Other ancillary costs that you may occur.

Guidance on how to complete the tool can be seen via the LGA Website. Link: Guidance

It is really important that you do not inflate the rates as we appreciate this reflects the last 12 months and not current or future inflationary costs that will occur. This will be factored in at a later date by our financial department. 

The Council are asking you to complete this at your earliest convenience as we require a robust Cost of Care Rate to ensure we can provide central government with a solid figure. The last day to return your completed tool kit is the 31st July 2022.

Queries

If you have any questions or require support with completing the toolkit please contact senior researcher, Estelle O’Neill directly at estelle.o'neill@laingbuisson.com or 01268 767292.

Completed Tool Kits

Once you have completed your toolkit please send it directly to estelle.o'neill@laingbuisson.com and alex.devkota@laingbuisson.com. LaingBuisson will review your completed tool kit and will verify it is completed correctly. The team will be in contact if they have noticed any issues. 

The Care Home Cost of Care Tool Kit has been developed by a company called iESE. The system is known as Care Cubed. All Care Home Providers will need to register to obtain a log in to complete this tool. To register to gain access please flow this link: Register to use the Care Home Cost of Care Tool Kit. 

The toolkit will gather information on your actual business costs over the last 12 months, this will include:

  • Building and business costs
  • Staffing, recruitment and workforce costs. 
  • Other ancillary costs that you may occur.

iESE have written guidance on how to support you, this will provide you with how to set up your organisation, how to use the system and support on technical issues. The link is: Guidance

Care Provider drop-in sessions with iESE:

It is really important that you do not inflate the rates as we appreciate this reflects the last 12 months and not current or future inflationary costs that will occur. This will be factored in at a later date by our financial department. 

The Council are asking you to complete this at your earliest convenience as we require a robust Cost of Care Rate to ensure we can provide central government with a solid figure. The last day to return your completed tool kit is the 31st July 2022. 

Queries

If you have any questions or require support with completing the toolkit please contact senior researcher, Estelle O’Neill directly at estelle.o'neill@laingbuisson.com or 01268 767292.

Technical Issues on the Tool, please contact iESE at carecubed@iese.org.uk

Completed Tool Kits

Once you have completed your toolkit, we will be notified that the tool has been completed through the system. estelle.o'neill@laingbuisson.com and alex.devkota@laingbuisson.com from LaingBuisson may be in contact to verify any calculations or if they have noticed any issues. 

 

I am a supported Living Provider or Extra Care Housing Provider, do I need to complete the Cost of Care Calculation Tool? No, the current tool kits do not cater for your services fully. The LGA are working on developing a Cost of Care Calcuation Tool Kit which will be available in November 2022. At this point Essex contact providers to complete the tool. 

Can I put in our aspirational costs to run our service? No we would like you to enter the last 12 months costs into the system. This does not mean we wont factor in existing inflationary or workforce pressures. 

How do I reflect any temporary funding we received for Covid last year? We would like you to reflect all costs as they were incurred regardless of income received to offset. If you received additional monies to bring forward pay increases to staff prior to April 2022, please calculate pay as if this pay increase had been in place for the full 12 months as we will assume that you have continued this arrangement in the current year.

Will the costs provided be used in any way to lower current fees that the Council pays? No they won’t. The costs that providers feedback via the toolkit will only be used to establish what a Fair Cost of Care is within Essex for domiciliary and older people residential and nursing services. The Council then has to draft a Market Sustainability Plan which will detail how we will close the gap between the Fair Cost of Care and the fees we currently pay. If anything the fees will rise as a result of this exercise at some stage.

What does ROO mean? Return on Operations (ROO) This is a gross profit or surplus number – this is the gross amount before tax. Care Providers can provide this as a % markup on operating costs identified in the expenditure tab OR as a per resident per week value within the FCOC tool. Return on operations can be calculated as a percentage markup on operations and head office costs. These are operating costs excluding Interest, Tax, Depreciation, Amortisation and Rent (ITDAR) which is captured separately as part of Return on Capital. Return on operations will consider operational risks such as drops in occupancy, inflationary pressures, a provision for future investments (where not capitalised) and dividend payments.  For Not-for-Profit organisations this should consider a surplus in line with their reserves policy.

What does ROC mean? Return on Capital (ROC) Investment by nature involves risk. The cost of capital is the return that investors require to invest in a business. Return on capital is a judgement rather than a hard science. However, return on Capital is an important consideration, as it is one of the main fixed costs in a care home and should include borrowing, interest, depreciation, cashflow funding, and capex etc. It should also include mortgage and rental payments where required. You can, like return on operations, provide this either as a % of a property valuation – as per the DHSC guidance (https://www.gov.uk/government/publications/market-sustainability-and-fair-cost-of-care-fund-2022-to-2023-guidance/annex-e-further-detail-on-return-on-capital-and-return-on-operations)  OR as a per resident per week value if the property is rented

Last updated: 04/07/2022