Outsourcing adult care: For and against

Southern Cross Healthcare’s Jamie Buchan and Unison’s Helga Pile explain their opposing views on outsourcing adult social care

FOR: The provider

 Jamie Buchan, chief executive officer, Southern Cross Healthcare

At a time when we all need to watch what we spend, many local authorities continue to use their own in-house residential care services, even though these methods cost on average £200 to £300 more a week per placement for older people than the same services provided by the independent and voluntary sectors.

We estimate that local authority in-house residential care homes still accommodate about 24,000 people, which means the outsourcing of these services would save local authorities at least £250m a year.

Worryingly, so many local authorities have unrealistic expectations of how much more efficient independent care providers can be as they continue to lower their usual prices in real terms. They continue to set the average prices they expect to pay for our services at an uneconomic level, which is placing social care in the UK under increasing pressure.

Many local authorities have said that they are unable to afford to increase their usual prices for 2010-11 and we are concerned that residents, their families and carers will be expected to subsidise the local authorities even more. It seems illogical for local authorities to continue to fully support their own expensive in-house care services, when they could fund lower-cost, more efficient services by working with the independent and voluntary sectors.

I’d encourage all local authorities to engage with independent care providers and consider how they can help evolve their strategies. Working together, I am certain we can develop the kind of cost-effective and quality solutions needed to relieve the pressure the sector is feeling.

AGAINST: The union

 Helga Pile, national officer for social services, Unison

The first argument of the outsourcer is that the private sector can do it cheaper. Yet cost comparisons use skewed methodologies so apples are being compared with pears. Then there are the transactional costs of using private sector services: lawyers’ and consultants’ fees, procurement advice, tendering, performance monitoring and so on.

As one Unison branch secretary put it: “If they can spend £1m on how to privatise, we think they could spend a fraction of that on speaking to people in-house and seeing how they can make the service better.”

And there’s the cost of bailing out business failures. In 2008 the credit crunch saw two of the UK’s largest care operators, Southern Cross and Four Seasons, teeter under the weight of their own debts. Smaller providers regularly default on contracts – often blaming staff shortages. Either way councils are obliged to step in and provide emergency care.

There is evidence that council-run services outscore the private sector on quality standards. They deliver better care because their staff are better paid, trained and qualified, so there is much lower staff turnover.

The Care Quality Commission has noted that poor quality is associated with changes of ownership. The social care market is characterised by constant ­mergers, acquisitions and insolvencies with ever more Byzantine funding arrangements: private equity swoops, property market gambling, sale and leaseback, off-shore trusts.

Profits are public funds that are simply not available for care. Healthy profits continue to be siphoned out of the public purse and into the pockets of shareholders and venture capitalists.

Now is a time for public service solutions to public policy problems: social care staff working flexibly alongside other public servants, all democratically accountable to council taxpayers; services driven by the needs of service users not shareholders.

Read more from Community Care’s special report on the future of in-house services

Councils weigh up future of in-house adult care services

Essex Cares combines public and private sector know-how

This article is published in the 29 July 2010 edition of Community Care under the headline “Outsourcing: For and against”