Providers face financial regulation to avert Southern Cross repeat

Big care providers will have to submit contingency plans for ensuring continuity of care should they fail, under government plans to avert another Southern Cross-style collapse. Monitor or the Care Quality Commission will be charged with collecting financial information on large or highly specialised care providers and request contingency plans from those deemed to be higher risk.

The proposals, which will be put out to consultation shortly, are designed to mitigate the risks of a significant provider collapsing. The Southern Cross collapse was managed without disruption to continuity of care, as council leaders, providers and financial institutions worked together to ensure the successful transfer of its homes to new organisations.

However, the Department of Health is concerned that it does not have a system to identify problems in providers whose reaches crosses many local authorities and intervene in the event of their failure.

The proposals were unveiled by DH officials today at the National Children and Adult Services Conference in Eastbourne. In most cases, providers exit the market without disruption, with local authorities overseeing the transfer of responsibility of care to new organisations. However, Rachel Armstrong, DH policy lead for social care markets, said there this model had limits when it came to larger providers because councils could not keep abreast of their financial position.

“We feel there are limits and gaps in the current model, which just concerns local authorities,” she added.

A key issue for the consultation would be the threshold at which providers would be included within the proposed oversight regime. Armstrong said it would most likely include very large providers, those with a large market share across regions and those who are highly specialised and take referrals from around the country.

She and DH colleague William Vineall stressed that most providers would not be covered by this system, it would not impose significant burdens on those who were covered and that the government’s priority was safeguarding care for individuals, not propping up businesses.

The proposals received a cautious welcome from social care leaders. Association of Directors of Adult Social Services president Sarah Pickup said it was “really helpful thinking”, but warned that some failures would be difficult for providers or the regulator to predict.
Andrew Cozens, an adviser to the Local Government Association, warned there could be a risk that the proposals could stifle risk-taking or entrepreneurship in the care market.

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