Smaller care providers face being squeezed

Older people’s care faces exodus of small providers

Smaller care providers risk being driven out of the older people’s market because of rising costs and council cuts, a survey has found.

Ninety-four per cent of providers surveyed by consultancy PricewaterhouseCoopers said providers faced rising costs, and 92% said there was downward pressure on provider fees from councils.

Meanwhile, 83% felt smaller organisations would struggle to cope and three-quarters said the market for care had already consolidated.

The survey of 117 residential and home care providers found that, although 61% of large and medium-sized providers expected their turnover to grow over the next three to five years, just less than half of smaller providers did.

The findings are likely to cause concern for sector leaders as a diverse marketplace of providers is seen as crucial to delivering user choice, under the personalisation agenda.

Des Kelly, director of voluntary providers’ umbrella body the National Care Forum, raised concerns that anticipated cuts to social care of up to a third in real terms would exacerbate the dominance of larger providers.

“The way that the market operates favours bigger providers. They are better equipped to tender for work and better able to do a deal with local authorities.”

His concerns were echoed by Alex Fox, chief executive of Naaps, which represents micro-providers in social care: “This report suggests that the ‘Tesco-isation’ of social care is seen as inevitable just as we are learning that there is no real choice without niche and micro-providers.”

Amanda Kelly, lead partner for social care at PwC, said smaller providers found it difficult to respond to the replacement of council block contracts by users purchasing care directly.

Two-thirds of respondents cited the loss of contract certainty as a concern.

“If you are a small provider and your income stream is linked to one or two local authorities and you move from a block contract, when you have guaranteed income, to personalisation, where you can’t guarantee what income you are going to get, consolidation will take place,” added Kelly.

PwC found 55% of providers felt they had insufficient support in managing current market conditions, while 94% agreed that government ought to articulate its vision for social care.

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