High 50: Tips for staying afloat when paying for parents care

High 50: Tips for staying afloat when paying for parents care

A global community for people over the age of 50 who believe the journey, in all its wonder, has only just begun features Valuing Care. The publication covers the topic: Your folks’ care home could set you back six figures – even with the proposed cap. Fees specialist Ray Hart has tips for cost control.

New figures show that a place in a UK care home is now £28,666 a year (up 23 per cent) and more in the South-East. Fees specialist Ray Hart has tips on staying afloat when paying for parents’ care. With the cost of care rising at almost three times the rate of inflation, this is another worry for the majority of those who fund either their own care or that of a loved one.

In some circumstances, this can have tragic results. In 2013, a court heard that a 74-year-old, devoted son attempted to murder his frail 93-year-old mother because he felt the only way he could afford her care was by selling his own home. Although that’s an extreme incident, many members of the ‘sandwich generation’ find themselves in a similar position to this man: overwhelmed by spiralling costs. Consider these facts: more than 50 per cent of older people are billed for all or part of their residential and nursing costs, and the average weekly care home cost is between £500 and £900. Yet almost one in four people are unaware there may be any charge at all. No wonder it causes such a huge shock.

Cap on lifetime care fees
To be technical, when the care cap comes into force in April 2016, top-up fees paid above the standard local authority rate may not count towards the cap. Likewise, and logically, they may not be covered by the state once a relative has reached the £72,000 limit.

For example, if a care home’s fees were £650 a week and the local authority standard rate was £500, that might entail a top-up of £150 a week, plus a bed and breakfast charge.

Once the ‘extras’ have been stripped out, it would take more than four years before the private payer was deemed to have reached the cap. And rather than £72,000, this will actually cost more than £160,000.  

Cost of care rising more than inflation

With the cost of care rising at almost three times the rate of inflation, this is another worry for the majority of those who fund either their own care or that of a loved one.

In some circumstances, this can have tragic results. In 2013, a court heard that a 74-year-old, devoted son attempted to murder his frail 93-year-old mother because he felt the only way he could afford her care was by selling his own home.

Although that’s an extreme incident, many members of the ‘sandwich generation’ find themselves in a similar position to this man: overwhelmed by spiralling costs.

Consider these facts: more than 50 per cent of older people are billed for all or part of their residential and nursing costs, and the average weekly care home cost is between £500 and £900. Yet almost one in four people are unaware there may be any charge at all. No wonder it causes such a huge shock. High50 readers, though, can be prepared. You can read my article on fee negotiation and financial risk (below), and can consult the Valuing Care Fees Calculator.

You need the right information and a good understanding of the expenses involved. And only when you are familiar with the aspects that can alter the price are you ready to consider a home.

Here, then, are the five main elements to bear in mind. It’s interesting how many parallels there are to buying a house: 

The location
Generally speaking, care homes in the south-east or those in pretty coastal regions are the most expensive. So if location is not an issue, consider moving to a less expensive area such as the north-east, where rates are below the national average.

If, however, moving to a completely new area is out of the question, you could increase your options and look at care homes within a certain radius, as this may throw up cheaper options. 

Size and type of care home
Often the larger care homes have facilities to match. A small independent home may provide very basic facilities, whereas a large national chain may offer facilities comparable to a luxury hotel, with fees reflecting the difference in provision.

If a cinema room, library and onsite health spa are on your wish list, then expect to pay high sums for the privilege. Otherwise, decide exactly what facilities are required and which are not, so that you only pay for amenities your parent will use.

The type of care
Be prepared for the level of care to have a sizeable impact on costs. Nursing care is certainly more expensive than residential care. If full-time assistance is required, rather than part-time, again charges are higher, as is specialist care. 

Personal space in the home
Most homes these days provide private bedrooms. However, for those who are happy to share bathroom facilities, there should be a reduction in price. (Conversely, if a private bathroom or a seaview is a must, a premium is usually added.) 

Hidden extra charges
Those responsible for paying monthly care bills often notice additional charges for added value services such as hairdressing, days out, newspapers and so on. Unless you keep a close eye on them, they can soon accumulate. The best advice here is to understand what the standard fees cover and, if any additional costs are incurred, what these are likely to be.

1st November 2013
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Daily Mail: Best Ways to Negotiate Care Home Costs

Daily Mail – Best Ways to Negotiate Care Home Costs

Worried about care home fees? How negotiating could cut costs and save thousands

Many people who move into care homes do so at a time of great stress, often following a period of illness. Usually, they don’t think to scrutinise the price charged by their care home until it’s too late – but even a discount of £50 a week can save thousands in the long-term. Ray Hart, creator of the Valuing Care Fees Calculator, talks This is Money through the best ways to negotiate costs.

Which kind of care home fees are negotiable?

Most people who are planning on privately funding a residential home move will be looking for residential or nursing home care – both of which are negotiable. You normally agree a contract directly with the care or nursing home, which also sets aside a certain number of places for those that can’t afford to pay and are being supported by their local authority.

However, you may be charged substantially more than the local authority pays, because councils block book a sizeable number of places and can negotiate a cheaper price. However, you can negotiate, too – and if you do, savings can amount to thousands of pounds. At £500 per week, the average length of stay in a residential home would total £60,000, so even a £50 per week reduction could save £6,000 over the duration of the placement.

Are there any that aren’t?

As in any private marketplace, the laws of supply and demand prevail. If you are wishing to purchase a placement in a home with high demand, or a long waiting list, it is unlikely that you will be able to make a saving on the purchase price.

Alternatively, it may be that the home offers additional services above the standard care that may justify that additional fee.

If that is the case and you use the services of a care fees specialist (independent financial advisers that specialise in the care industry) you will still have the peace of mind of knowing that the fee that you pay can be justified by these extra services supplied by the home.

How do you actually negotiate?

Identify the expected price range
Understand the price range for the area in which you are searching. Free care comparator tools (such as this one) are available to help you.

If you get a quote that’s identified as not providing value for money, now is the time to get bargaining.  

Know what you want
Before negotiating, determine your exact needs, such as the level and type of care, and any extra facilities you require.

Clarify prices
Get a copy of the contract and ask the manager to confirm exactly what the fees cover, including additional charges.

This varies across care homes. While some have transparent pricing and make residents aware upfront of all potential costs, it may be more difficult to establish with others if only referred to in the small print.

Also, know what price you are prepared to pay for your individual requirements.

Meet with the manager
Ask to speak to the care home manager; the person who can make financial decisions.

Approach negotiations with a clear mind
Be clear on what it is you want, and for what price. Be chatty, and friendly. It should be a positive discussion for both parties.  

Consider the alternatives
If price isn’t negotiable, consider added value for the same fee such as a larger room.

Don’t take it personally
Although finding a care home for a loved one is an emotional decision, don’t take negotiations personally if they don’t materialise in the way envisaged.

Keep your options open
If you don’t get value for money from one provider, approach other suitable homes that meet your requirements. 

Top tips to keep costs down

Unfortunately self-funders are largely price-takers – accepting fees without trying to influence the price of an individual placement. Most people accept the first available space in a care home, limiting any chances of saving money. However, for those in the early phases of finding the right care home, it is worth remembering that there are ways to reduce costs:

Widen the search area
If you currently reside in an expensive location, think about moderately or lower-priced areas – you may be amazed what a difference adding 10 or 15 miles to the search area makes to the price.

If you’re looking for the lowest price area consider Yorkshire; avoid London, as this is the country’s highest. Generally speaking, places with a beautiful view, such as some of the pretty Cornish coastal towns and villages demand higher fees. 

Level of care
Although it’s wise to think ahead, and consider the type and level of care needed in the future, don’t overlook existing requirements. Some people find themselves in a situation where they are paying for unnecessary nursing care. 

Always remember that the greater level of care needed, and the more specialised, the more money charged. Hence, nursing homes are more expensive than residential homes.

The provider
There are more than 10,000 independent care homes in the UK, and 42 per cent of these are major corporate providers such as Bupa, Anchor Trust, Barchester Healthcare and so on. There are also hundreds of smaller care homes. There is no regulation on prices in the UK, and as such prices vary significantly between care homes, and also between providers.

Personal Space
Although a rarity, for those happy to share a bedroom, or a bathroom with another resident, rates are cheaper than having a private room, or an en-suite. There will also be additional supplements for different categories of rooms such as those with an en-suite, sea view, or a larger room for couples for example.

The facilities
The additional facilities that care homes provide varies enormously. While some are very modest, providing basic facilities such as homely lounges and quiet gardens, others boast seemingly endless facilities – guest accommodation, libraries, bistros, gift shops, and beauty rooms, to name a few.  As with anything in life, nothing is free, so expect rates to reflect provision of services. 

If you’re not going to make use of certain facilities, it may be worth revising your search.  

The extras
While optional activities or extras may be included in the fee at some homes, it’s best to check as others will charge, so clarify this with the care home manager. If they do charge, understand what the charges are for and how much they will be.

This may include items such as newspapers, transport or hairdressing, or activities such as boat trips, sightseeing trips, or cookery clubs. All of these extras could add up to an unexpected bill at the end of the month.

Is it value for money?
Unless you work in the industry, it’s difficult to know whether you have received a value for money quote. Use a free comparator tool such as this one to get a guideline on the level of fee that should be charged for that area. Alternatively, local authorities can assist.

If you think you’ve been quoted an unreasonably high rate, negotiate with the care home manager.

The experts
Specialist care fees advisers, the trade term for independent financial advisers who specialise in care funding, provide support and advice in care home costs. Their expertise covers all aspects of care fees funding so they are an invaluable point of call if you need extra guidance. 

Although these are paid-for services, if you don’t know what you’re doing, in the long run they could save you more money. 

16th October 2013
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High 50: How to check a care home’s finances

High 50: How to check a care home's finances

When establishments go broke, residents and families suffer. Fees specialist Ray Hart outlines how to reduce the risk.

Across the UK, there are weekly news reports of residents and their families campaigning to fight care home closures. But why is it happening so often? The usual reasons cited include falling demand (which is debatable, given an ageing population), increases in utility costs, failing to meet industry standards, or the simple fact that the books don’t add up.  In fact, according to recent reports, it is estimated that one in three care homes is in danger of collapse because of dangerously high borrowing levels. This causes alarm bells to ring, and raises fears of another Southern Cross disaster, which affected 30,000 residents back in 2011. 

The consequences of such closures can be distressing. Residents may be moved away from friends they’ve made in the home, as well as family members nearby. In the worst cases, there have been claims that the upheaval has led to fatal outcomes. And of course, it is just as bad for the families.

So is there a foolproof method of spotting care homes that are at financial risk? Unfortunately not. But there are simple measures you can take to minimise the tangled situation whereby your loved one is in a home on a downward spiral.  

Check company finances

With the average lifetime costs of a care home placement starting at around £80,000, it is imperative to check the financial health of the company in which you and/or yours are planning to invest such large sums of money.

The financial accounts for all care homes can be obtained from Companies House. The basic information is free, and there is a minimal charge for more in-depth data. If, however, finance isn’t your strong point, be sure to delegate the task to a more capable friend or relative. The consequences of such closures can be distressing. Residents may be moved away from friends they’ve made in the home, as well as family members nearby. In the worst cases, there have been claims that the upheaval has led to fatal outcomes. And of course, it is just as bad for the families.

So is there a foolproof method of spotting care homes that are at financial risk? Unfortunately not. But there are simple measures you can take to minimise the tangled situation whereby your loved one is in a home on a downward spiral. 

Research the rate

Although the rates may seem exorbitant, they are dictated by a highly competitive market. Still, it is so important to know whether the fee quoted is value for money. Most people don’t know where to start with this; after all, how do you know what you should be paying?

The Valuing Care Fees Calculator  helps here: it’s quick and free of charge, and provides an indication of whether the rate quoted exceeds, is acceptable, or falls below the average rate for the local area.

But beware! Sometimes, if the rate seems very low for the level of care and location, it may mean the financial management of the home is inadequate.  

Scrutinise staff statistics

Staff costs are one of the biggest elements of a care home’s costs, so establishing information on the number of employees, turnover levels, training and staff-to-resident ratios is important. As a guide, efficient residential care homes usually have staff-to-resident ratios of 1:8 in the day, with a slightly lower ratio at night.

But remember, too many staff lead to unnecessary additional costs, and under-staffing may mean that industry care standards are not met. Optimum staffing levels are generally an indication of an efficiently run home.  

Review resident numbers

The monthly costs of running a care home will remain much the same, whether they are full or not. A home with low occupancy levels may be cause for concern as it may not be bringing in enough money to keep the business afloat.

In such cases, try to discover the reasons behind the situation. Are the fees too high? Is local competition too stiff? Does it have a reputation?

The reasons could be more innocent. It might be newly-opened, for instance. The best way to approach this is to ask the care home manager face-to-face or in writing.  

Study the standards

The Care Quality Commission (CQC) publishes independent reports on more than 18,000 care homes across the UK. Every year it checks that essential standards of quality and safety are met and this information is available on CQC.

If any quality issues are identified, it is worth trying to look into these in more detail because ultimately, if the home fails to address problems within a certain time frame, it may face closure.  

Vet the visuals

While some care homes may be incredibly modern and luxurious, others look tired, dated and unattractive by comparison. It’s worth asking why. Is it because the home lacks the funds to undertake general DIY? Or simply because the manager doesn’t place aesthetics high on the priority list?

The key here is to identify whether a refresh would just make the home more attractive, or whether general maintenance is being overlooked, which could imply financial troubles. And once you’re satisfied, it’s time to cut a deal…  

7th October 2013
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Older is Wiser – Funding care from your own pocket?

Older is Wiser – Funding care from your own pocket?

Ray Hart reveals 8 tips that could save you money on long-term care costs

For self-funders the long-term costs of moving into a care home can be bewildering. Ray Hart, creator of Valuing Care Fees Calculator, highlights the key points that could help save you money. If you’re not eligible for local authority funding for long-term care, you’re not alone. More than 40 per cent of placements in independent care homes in the UK are privately funded. As private individual buyers, people are most likely to pay for a placement from the proceeds of selling their homes along with their accumulated life-savings, and as such are only too aware that life in a care home is an expensive prospect 

 

With average costs of care topping £500 per week, saving money out of your own pocket is a welcome concept.  Unfortunately self-funders are largely price-takers; accepting fees without trying to influence the price of an individual placement.  Furthermore, the first available space in a care home is often accepted; limiting the ability to save money.  However, for those in the early phases of finding the right care home, it is worth remembering that there are ways to reduce costs.

Adjust the area
If you currently reside in an expensive location, think about moderately or lower-priced areas; you may be amazed what a difference adding 10 or 15 miles to the search area makes to the price.  If you’re looking for the lowest price area consider Yorkshire;  avoid London, as this is the country’s highest.  Generally speaking, places with a beautiful view, such as some of the pretty Cornish coastal towns and villages demand higher fees.  

Correct level of care
Although it’s wise to think ahead, and consider the type and level of care needed in the future, don’t overlook existing requirements.  Some people find themselves in a situation where they are paying for unnecessary nursing care.  Always remember that the greater level of care needed, and the more specialised, the more money charged.  Hence, nursing homes are more expensive than residential homes.

Switch provider
There are more than 10,000 independent care homes in the UK, and 42 per cent of these are major corporate providers such as Bupa, Anchor Trust, Barchester Healthcare and so on.  There are also hundreds of smaller care homes.  There is no regulation on prices in the UK, and as such prices vary significantly between care homes, and also between providers.

Personal Space
Although a rarity, for those happy to share a bedroom, or a bathroom with another resident, rates are cheaper than having a private room, or an ensuite. There will also be additional supplements for different categories of rooms such as those with an ensuite, sea view, or a larger room for couples for example 

Organisations should develop an insight into the cost components that make up the price. For instance how many staff, and at what grade, are on shift, and what is the likely hourly rate for each staff type. CCGs that have robust models and banding levels for determining rates for services, which reflect the needs of the patients, will have an advantage here. 

Some CCGs find it useful to create framework agreements to inform providers of the value for money price they would expect to pay for a service. There are also many tools and models you can use to create an activity-based cost for individual packages, enabling commissioners to compare quotes against national averages. If the rate is as too high, it is time to negotiate. 

Fancy facilities
The additional facilities that care homes provide varies enormously.  Whilst some are very modest providing basic facilities such as homely lounges and quiet gardens, others boast seemingly endless offerings; guest accommodation, libraries, bistros, gift shops, and beauty rooms, to name a few.  As with anything in life, nothing is free, so expect rates to reflect provision of services.  If you’re not going to make use of certain facilities, it may be worth revising your search

Back to basics
Whilst optional activities or extras may be included in the fee at some homes, it’s best to check as others will charge, so clarify this with the care home manager.  If they do charge, understand what the charges are for and how much they will be.

This may include items such as newspapers, transport or hairdressing, or activities such as boat trips, sightseeing trips, or cookery clubs.  All of these extras could add up to an unexpected bill at the end of the month. 

Know what’s value for money
Unless you work in the industry, it’s difficult to know whether you have received a value for money quote.  Use a free comparator tool such as Valuing Care Fees Calculator to give a guideline on the level of fee that should be charged for that area.  Alternatively local authorities can assist.

If you think you’ve been quoted an unreasonably high rate, negotiate with the care home manager; you can save thousands of pounds.  

Call the professionals
Specialist care fees advisers, the trade term for independent financial advisers who specialise in care funding, provide support and advice in this area. Their expertise covers all aspects of care fees funding so they are an invaluable point of call if you need extra guidance.  These are paid for services, but in the long run could save residents more money. 

 

2nd September 2013
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News, Older is Wiser, ,

Local Government Information Unit: Review of Council Support for Self Funders

Local Government Information Unit: Review of Council Support for Self Funders

LGIU, a local democracy think tank, published a report into independent ageing.

This report assesses local authority support for older people making decisions about choosing and paying for care and support In this report the Valuing Care Fees Calculator is a recommended solution for Councils in supplying information and advice to their citizens. Further details of the report and their recommendation of our company can be found below.

15th July 2013
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Community Care: Councils risk driving good social care providers out of business

Community Care: Councils risk driving good social care providers out of business

Councils will be forced to ration the extra money they get from council tax between providers in response to the cost pressures on residential care, says Ray Hart.

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.”

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.

4th February 2011
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Community Care, News, ,

The Guardian: What happens when councils want to cut the cost of residential social care?

The Guardian: What happens when councils want to cut the cost of residential social care?

Enter the fee-reduction specialists

When managers see Ray Hart and his team coming, they sometimes bolt the door. “People don’t like us doing what we do,” he admits. “But we are what we are. As an accountant, I don’t presume to be a particularly popular person. I’m used to it.”

Hart is commercial director of OLM Financial Management, a company that has become notorious in the social care sector for its work on behalf of councils and NHS primary care trusts (PCTs) wanting to cut the fees they pay for residential care of people with learning disabilities and severe mental health problems. So far, it has succeeded to the tune of more than £9m in annual savings.

‘Go to hell’

“We were incandescent with rage about their attitude to cost reduction,” says Stewart Wallace, strategic director of CareTech, a leading commercial provider of residential care and support. “In the end we said: ‘You can go to hell.'” Many others voice similar sentiments, only less politely.

To Hart, it is all water off a duck’s back. He has been in the business of forensically analysing providers’ costs since his days as an assistant director of East Sussex county council between 2001 and 2005. The OLM model, called MyCareCosts, was developed some five years ago and has since been used by 85 councils and PCTs, achieving a typical saving of £150-£200 on a weekly care package costing £1,700.

However, Hart says it is “not unusual” to make a saving of £500 a week on a single package. In one extreme case, involving a person receiving intensive support, there was a weekly saving of £5,000.

Charges for residential care vary widely, especially in the field of learning disability. The work of OLM, which has now examined more than 4,000 individual cases, and the use of the freely available “care funding calculator”, developed in East Sussex and Hampshire, are slowly building a body of evidence of what ought to be the norm. According to Hart, eliminating excessive costs in this way is much more preferable to cutting services altogether.

As an example, he cites a case where a council or PCT may have commissioned one-to-one support for six people with high levels of need at a particular care home. On investigation, it is discovered that the six are being supported by only three staff at any one time. Negotiations to lower the contract price then ensue.

“It’s not about catching them in the act,” he says. “It’s about making sure that commissioners get what they pay for. Normally, it’s that the service has changed over time. It’s not something that has been purposely done.”

Hart denies that OLM works on a percentage basis that incentivises his 17-strong team to search for savings. In 95% of cases, he says, the council or PCT pays a flat fee. Of all cases referred to the team, which includes former care providers and commissioners as well as accountants, 14% are assessed as good value for money at an initial, desk-based stage, as are 26% more after visiting the residential home. But the remainder – six in 10 – do produce savings.

Despite the anger of some providers, none has yet taken a case to court. “I’ve been threatened a few times,” says Hart. “But if it went to court, all the figures would come out in the open. That’s not in anybody’s interests.”

Hart suggests that some “enlightened” providers are now collaborating with OLM on addressing anomalies in their cost base before being referred by commissioners. He says good relations have been established with, among others, CareTech and non-profit operator Turning Point.

This is not quite how CareTech sees it. Wallace insists that the company, which supports almost 1,500 people with a learning disability, flatly rejected OLM’s ideas for cost reduction. But he admits that CareTech did then deal direct, and “purposefully and productively”, with the commissioners who had engaged Hart’s team. Later, CareTech invited OLM to have general talks. “I suppose, if we were being generous, you could say their intervention provoked our bilateral discussions with local authorities,” says Wallace. “I wouldn’t say they are our bedfellows, but we can tolerate them.”

Adam Penwarden, director of learning disability services at Turning Point, says he has dealt satisfactorily with OLM over services the operator provides in Wiltshire and Hertfordshire. “It’s not in our interests to simply refuse to speak with an organisation that a local authority has chosen to work with. With just one exception, every authority we provide services for, whether they use OLM or not, has asked us to make savings,” he says.

Tough but fair

What sets OLM apart, Penwarden says, is its growing database that enables it to judge with some accuracy the reasonable parameters of cost elements within a care contract price, allowing for regional market variation. In the east of England, for example, OLM has worked in 11 of the 13 local authority areas.

Although Penwarden doesn’t use the exact words, his impression of OLM could probably be summed up as tough but fair. However, he warns: “We would be concerned if they came back to us to make more savings in the same service. Once or twice might be fine, but three or four times would get very tricky.”

2nd February 2011 | Subscription Required
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