MPs warn ministers of new care home crisis risk

The Department of Health must "get to grips with the very real risks to the social care market" to avoid another Southern Cross-style failure, an influential group of MPs warned today.

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The Department of Health must “get to grips with the very real risks to the social care market” to avoid another Southern Cross-style failure, an influential group of MPs warned today.

Neither the DH not councils had effective oversight of local or regional care markets, in particular whether one provider was becoming too dominant, the public accounts committee said in a critical report.

The committee said knowing how much market share big providers had in local areas was crucial to protecting service users and taxpayers from such providers failing, but warned that the DH only monitored the national picture.

While Southern Cross had a 9% share of the market nationally, it held a 30% share in the North East, creating increased risks in this region when the company failed.

The committee warned that regional care markets were becoming increasingly concentrated in the hands of fewer providers, but said that the DH did not have a view over the level of market share in any one provider that would pose a risk, nor did it have powers to prevent providers becoming too dominant.

The MPs also criticised the lack of systems to identify providers at risk of financial failure or for tackling the consequences of a provider collapsing. The committee warned that market risks were increasing as councils cut their budgets and some large providers increased their debts.

“It is deeply worrying that the department has not made clear what will happen when providers fail,” said committee chair Margaret Hodge. “This is crucial to protect frail and vulnerable users of care and to provide reassurance that the responsibilities of the failed providers will be transferred quickly and with minimum disruption to users.”

The DH is examining how oversight of providers’ finances can be improved and issued a discussion paper on the issue in October. It said the taxpayer would not prop up failing care providers but protection for users against financial failure could be improved by setting organisations more stringent financial tests when registering with the Care Quality Commission or setting up a national body to monitor providers’ finances.

The committee’s recommendations included for the DH to:

• Specify what level of local or regional market share is acceptable for a care provider, and what additional powers it needs to prevent any provider growing too big.

• Put in place arrangements to protect care home residents from the failure of big providers.

• Set up an early warning system to identify providers at risk of failure.

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