Councils risk driving good social care providers out of business and propping up bad ones by making blanket cuts to the fees they pay for services, a consultant has warned.
Less efficient services would be able to bear such cuts more easily than those that provide good value, said Ray Hart, commercial director at OLM Financial Management.
OLM works for councils and primary care trusts to negotiate lower placement costs with providers by comparing their spending on overheads, such as property, insurance or electricity, against market averages.
Hart said 60% of more than 4,250 placements studied by OLM failed to offer value for money, but the rest offered commissioners a good deal.
But he warned: “Certainly, every council is [at most] freezing fees for next year. Some are doing less than that. That’s a mistake. This could drive value-for-money providers out of the market.”
Hart said OLM had found massive variations in costs charged to commissioners, with a maximum price of £9,137.42 for each bed each week and an average of £1,734.16.
He claimed OLM’s service had cost £2m since it began three years ago but it was saving commissioners £9m a year through reduced fees. He said OLM was paid a fixed fee, not a commission.
However, Hart admitted it was unpopular with some providers and their umbrella organisations.
What do you think?Join the debate on CareSpace
Keep up to date with the latest developments in social care. Sign up to our daily and weekly emails