Greater oversight of social care provision necessary

7 December 2011

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7 December 2011 | Angeline Albert

Public sector buyers are failing to monitor the financial health of care home providers, putting the provision of such services at risk.

That is the view of the House of Commons’ Committee of Public Accounts (PAC), which criticised local authorities and the Departmentof Health (DH) for their ignorance of the risk they face if providers of care homes they contract with go bust.

This summer Britain’s biggest care home operator with 750 homes, Southern Cross, closed following financial difficulties. The DH announced this week that all of Southern Cross’s homes in England have now moved to new operators. However, the PAC raised concerns about the financial stability of some providers that have since taken over homes.

In the report Oversight of user choice and provider competition in care markets, authorities were criticised for their poor of visibility of the competitiveness of care home markets at a local, regional and national level.

“The Department [of Health] does not monitor the financial health of large-scale providers. The department acknowledged that it was unaware of the financial difficulties at Southern Cross until the company approached it in March 2011,” it said.

Labour MP Margaret Hodge, chairwoman of PAC, said: “There is currently no early warning system for providers getting into difficulty. It is deeply worrying that the department has not made clear what will happen when providers fail.”

The public sector purchases 63 per cent of care. Southern Cross had a market share of more than 30 per cent in the North East of England when it was operating care homes. Hodge said there were no controls to stop dominance by a care home provider in a regional care home market, which could put services at risk.

The DH told the PAC it has insufficient powers and information to identify or prevent providers becoming dominant. In response, the group of MPs said the DH must specify what market share at the local level is acceptable, and what will be done to review market shares of large providers.

Care services minister Paul Burstow said in response: “In October we set out a range of possible approaches to market oversight. The feedback we are receiving, including the PAC report, will inform the government's white paper, which will be published next spring."

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