Annex B Care Homes - Hounslow Cost of Care Exercise


From the outset, it is important to acknowledge the fundamental limitations of the data and the unknown variables that are key constraints for the analysis of the cost of care data. Hounslow proceeded to analyse cost lines and applied a consistent approach to profit/surplus, with reference to evidence-based industry guidance. Nevertheless, the data quality concerns are such that, even after final analysis, it is necessary for the local authority to consider other factors in setting fee rates as the Cost of Care outputs alone do not provide a reliable basis for fee setting.  

The outcome of the cost of care exercise is not intended to be a direct replacement for the fee setting element of the local authority commissioning process or individual contract negotiations. It is expected that actual fee rates may differ, as the outcome of sound judgement, evidence and local negotiation. The outputs of this exercise will be one element to inform future negotiations, taking into consideration other known market factors including inflation, demand, capacity, benchmarking, quality and importantly affordability for the Local Authority and availability of funding.

From a sub-regional perspective, North West London will be referring to this exercise as the ‘cost of care’ dropping the ‘fair’ prefix as it is misleading. As a collective we have agreed that the cost of care figures can realistically only inform the fee setting process. The exercise has been fraught with difficulty due to a small sample size with results therefore being unrepresentative of the market, poor quality of data submissions, time constraints not allowing for appropriate due diligence, and the median being an unsuitable metric. NWL is therefore not confident in the numbers they have submitted as part of the exercise. Subsequently, for these reasons, replacing the current pricing model to align to the cost of care outcomes would be wholly inappropriate. 

As a sub-region we have in place effective data analytics illustrating bed-based price and trends, with reporting refreshed every quarter. We will therefore use the cost of care insights within our data analytics for comparative purposes allowing NWL to review in year inflation and enabling comparisons between, price bands, current spend and cost of care where appropriate. This will lend itself well to wider discussions regarding sustainability and a means to consistently monitor market developments. This approach will enable NWL to direct future work programme activities such as the need for demand and capacity modelling as we move forward into the new financial year and the journey to understanding the true cost of care.

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