When the CMA began its market study in December 2016, it was clear that the study would look at particular terms in contracts covering matters of concern to those paying for care, for example, the size of up front deposits, unexpected fee increases and payment periods following the death of a resident. The study was also shining a light on the sustainability of the market and competition generally between care homes in the sector.
In its press release accompanying its final report, which was published on 30 November 2017, the CMA calls for reform of the care home sector to ensure that “people get the support they need in their old age”. The press release focused on the lack of sustainability of the sector with a funding shortfall estimated at £1 billion a year in the UK. The shortfall being a result of councils paying rates for the residents they fund which do not even cover the costs of care homes providing that care, let alone providing for an element of profit for re-investment in services or anything else.
The pressure to drive down rates follows years of austerity and cuts in funding to local authorities with the CMA unsurprisingly highlighting the there is not enough investment in new care home places for local authority funded residents. At the same time, the CMA explains that the sector must grow substantially in the coming years to meet the changing age demographic and increasing acuity of care needs, adding significant numbers of residents to the queue for a local authority funded care home place.
CMA’s areas of concern
The open secret of higher rates paid by self-funders compared to local authority funded care home beds has been analysed by the CMA in some detail. Self-funders pay £44,000 per year, approximately 40% more for a care home place than the local authority. This brings the CMA back to the question of whether, as consumers, those self-funders are being treated fairly and shines the light back on the care home contract they sign up to. CMA’s focus, following the study now being on:
- a lack of indicative pricing information on websites
- non-provision of contracts in a timely way or at all
- charging of large up-front fees and deposits
- care homes having wide discretion to increase fees
- requirements to pay extended fees after a resident’s death. The CMA talks of extended periods of up to four weeks as being unacceptable whereas its predecessor viewed four weeks as a fair period to allow time for family members to remove belongings and for the room to be properly cleaned and redecorated
- care homes’ discretion to ask residents to leave at short notice
- difficulties in residents and their representatives making complaints
CMA takes enforcement action
Using its consumer protection and enforcement powers, the CMA has moved on to take enforcement action against a number of providers over the charging of large upfront fees and for “extended periods” after a resident dies. The CMA intends to work with CQC/CSSIW and what it views as its enforcement partners in Trading Standards to develop sector rules and ensure that compliance with consumer law is more fully incorporated into the regulatory regime, and monitored by CQC/CSSIW.
As is the case in some other regulated sectors, the option of developing model contracts for the care home sector is one that the CMA is willing to support in order to encourage best practice. This might be helpful to some smaller providers in the sector but there is likely to be significant resistance if there was a move to mandate the use of model contracts throughout the sector.
As the CMA pursues its enforcement action against individual providers, they will be:
- making a statement in early 2018 on what providers need to do to ensure that charges after the death of a resident are fair
- issuing guidance in Spring 2018 on the standards of behaviours required of care homes to comply with consumer law
- provide advice for residents and their representatives on their rights under consumer law
In addition to reviewing contracts currently in use, providers should be aware that the CMA is recommending specific rules:
- requiring indicative fees and terms and conditions to be displayed on their websites
- to safeguard deposits against the risk of insolvency
- requiring providers to notify CQC/CSSIW when they ask residents to leave or impose a ban on a visitor
Increased role for sector regulators at market level
CMA’s final report stresses the need for local authorities to take action to ensure additional capacity needs are met by encouraging appropriate investment in to the sector. Local authorities must carry out informed planning for future needs, take suitable steps to commission supply based on that planning and then attract investors prepared to take the risks of building capacity. These tasks reflect a ‘market shaping’ role for local authorities and the CMA sees them as so important that it is recommending an independent body to oversee local authorities’ planning, commissioning and procurement to meet the increasing demand for care home places.
Bets are off as to who that independent body is likely to be in England – non other than CQC. This would be a substantial extension of CQC’s functions and begs the question, in view of CQC’s close working with local authorities in respect of its Market Oversight functions and safeguarding matters, whether CQC could truly discharge this function independently and with what, if any, enforcement powers or sanctions. Oversight bodies without teeth often become no more than ‘talking shops’. If CQC were to truly oversee local authorities in respect of these crucial tasks, the irony would not be lost on providers in the sector.
One hopes that all will eventually become clear when the Government publishes its proposed Green Paper on Care and Support for Older People in the Summer of 2018.
The final report can be found here: https://www.gov.uk/cma-cases/care-homes-market-study