North Yorkshire Market Sustainability Plan: 2023-2024

Section 1: Revised assessment of the current sustainability of local care markets

North Yorkshire is geographically the largest council in England and is responsible for delivering and commissioning social care across vast rural areas, market towns and villages. Because of this, our commissioned social care market is large and diverse, with 231 registered care homes, over 150 commissioned domiciliary care agencies, and a vibrant voluntary and community sector.

As is the case nationally, the social care sector in North Yorkshire is facing unprecedented challenges. The ongoing impact of the pandemic; spiralling costs of living; major workforce challenges; pressures from the NHS; increased demand for services and reduced spending power for social care budgets are all impacting adversely on market sustainability.

In North Yorkshire, these challenges are further exacerbated by the size and rurality of the county. Lower population density makes economies of scale difficult, resulting in higher per-unit costs for service delivery. Furthermore, a high proportion of people self-fund their care, which makes it difficult for the Council to shape and influence the market.

We are acutely aware of the difficult and complex landscape within which providers are operating, and consequently has assessed the sustainability of the adult social care market as one of its most significant strategic risks.

While this Market Sustainability Plan focusses on the sustainability of the 65-plus care home and 18-plus domiciliary care market, many of the issues described cut across all sectors of the market and types of provision.

a) Assessment of current sustainability of the 65-plus care home market

North Yorkshire has 166 registered care homes on its Approved Provider List, with almost 6000 registered beds for people over 65. We currently commission 50% of the registered care home beds across the social care market. A further 9% are fully NHS-funded and the remaining beds are sourced privately by self-funders. The number of care home placements we have made has remained relatively steady over the last two years, averaging at around 2900. 18% of placements are short-stay.
The Council provides 9 care homes for older people with over 240 beds. This includes one Care and Support Hub in Harrogate that specialises in Intermediate Care.
The number of beds per 1000 population is 20.2 for nursing (slightly above the regional average), and 19.5 for residential (below regional average).
Over the last two years, care home occupancy has remained above 95%, making it incredibly challenging to source affordable placements. This is particularly acute in Harrogate, where there is a high number of self-funders, and the fee rates are exceptionally high.
81% of care homes have a Care Quality Commission rating of good or outstanding. This is in line with the England average. The percentage of homes with good or outstanding ratings varies across the county, ranging from 86% in Richmondshire to 71% in Harrogate.
In the last two years, there have been 12 home closures, due to a range of issues including financial sustainability and quality. Home closure has been a particular issue in Scarborough.
Workforce recruitment and retention is an on-going challenge for care homes. There continues to be a heavy reliance upon agency staff to maintain safe services within North Yorkshire. The latest statistics from Capacity Tracker show that agency staff account for approximately 17% of nursing staff and 12% of care staff.
Over the last two years, the county has lost over 200 nursing beds, predominantly due to nursing shortages. More nursing homes are expected to de-register in the future. Contributing factors have been defined by the market as a lack of qualified nurses to recruit; a lack of routes to progression; limited support leading to nurses feeling isolated.
There is a shortage of placements for people with dementia and complex needs. Increasingly care homes are telling us they are unable to meet the needs of people with low-level dementia needs, meaning they are having to be placed in more specialist provision. This is further increasing pressures and costs for placements for people with dementia.
Hospital discharge demand has doubled since before the pandemic. On average, we are discharging 89-95 people (with social care needs) from hospital every week, which is twice the level of pre-pandemic discharge activity. There remains an over-reliance on bed-based provision, with too many short stays becoming permanent.

Cost of the 65-plus Care Home Market

In April 2022, we implemented our Actual Cost of Care (ACOC) exercise for residential and nursing placements for over 65s, and with agreement from DHSC, used this in place of the Fair Cost of Care exercise. The Actual Cost of Care rates for 2023/24 are:

Residential and nursing placements for over 65s	22/23 Actual Cost of Care Rate	23/24 Actual Cost of Care Rate	Direct care hours – care assistants	Direct care hours - nursing
Residential	£742	£812	24
Residential/Dementia	£784	£854	27
Nursing	£819	£896	25	10
Nursing/Dementia	£826	£903	29	8

Our 2021/22 weekly rates prior to the Actual Cost of Care exercise being undertaken were £599.34 for residential care homes, and £592.41 for care homes with nursing. This represented a 24-31% increase in 2021/22 residential rates and 38-39% in nursing rates. The implementation of this was assisted by the use of the Market Sustainability and Fair Cost of Care grant. The actual increase in costs in residential and nursing care between 2021/22 and 2022/23 is estimated to be £22.6m.

Alongside, but separate from the Actual Cost of Care, we undertook a comprehensive procurement of our Approved Provider Lists (APL) for Residential and Nursing Care. This process updated the specification for care services and supported sustainability by involving providers submitting their rates up to October 2027.

The new Approved Provider List was fully implemented from November 2022 and includes the majority of care homes that are contracted by us. We continue to work closely with homes that have either failed the evaluation or not yet applied to ensure that all care home placements can be commissioned from our Approved Provider List.

Providers that accept the Actual Cost of Care rate are prioritised for new placements. Those that have set their fees above the Actual Cost of Care due to market forces are placed on a secondary list, subject to a value for money assessment. This approach enables us to provide greater choice and ensures we can secure placement in areas with limited supply.

All new placements (or where there is a significant change in need) receive at least the relevant Actual Cost of Care rate. There is an agreement to increase existing/legacy rates to meet the Actual Cost of Care rate within a maximum of three years. Whilst Actual Cost of Care has uplifted a large proportion of weekly fees of care home providers, three-quarters of care home providers on the new Approved Provider List have set fees that are above the Actual Cost of Care rates.
Providers have voiced concerns that although there is a commitment to increase legacy rates within three years, these placements are unsustainable, even taking into account the increased rates being paid for new Approved Provider List placements. The Council is working with the Independent Care Group to negotiate a settlement for 2023/24 that helps to offset these pressures.

b) Assessment of the current sustainability of the 18-plus domiciliary care market

We currently commission more than 150 domiciliary care providers to provide almost 29,000 personal care hours per week. Care is delivered by a diverse range of large national organisations, local franchises and SMEs within people's own homes including supported housing settings.
There is an upward trend in the number of people receiving domiciliary (home-based support) packages, with a 4% increase since March 2021.
We have a strong track record in investing in Extra Care, with 28 operational schemes in North Yorkshire, managed by 12 different housing providers, providing over 1,500 units of extra care accommodation. A further proposal is in progress and four further schemes are planned, as part of our phase 1 procurement programme.
80.65% of domiciliary care agencies have a Care Quality Commission rating of good or outstanding. Care Quality Commission ratings vary widely, from Craven with 100% of domiciliary care agencies with a rating of good or outstanding to Harrogate with 73.17%.
40% of domiciliary care providers are reporting staff shortages, and retention has dropped for some providers by 10-15%. Many staff are choosing to leave the sector, due to burn out and higher pay in other sectors including hospitality and retail. Recruitment is more costly and often unsuccessful. Staff shortages are resulting in a reliance upon agency staff. Agencies are also struggling to meet the demand.
Sourcing packages of care in rural areas is particularly challenging. Delivering services in rural and super rural areas is becoming unprofitable, resulting in providers refusing or handing back packages, and removing rural areas from their service footprint. Key factors include increasing fuel costs; workforce shortages; inability to secure office bases or create sustainable runs; and concerns about the safety and welfare of lone workers
For all the reasons outlined above, we have a high number of unsourced packages of care at any given time. Over recent months there has been an average of 67 unsourced packages of care per week, making up approx. 570 hours of care per week.
It is particularly difficult to source domiciliary care in Scarborough and Whitby, where there are significant workforce challenges. It is also difficult to source packages of care in our most rural areas within Vale of York and Hambleton and Richmond localities. The market is stronger in Harrogate and Craven, where there are very few unsourced packages of care.
The lack of capacity for domiciliary care is impacting our ability to fully embed Home First within discharge pathways. The Council’s in-house reablement service is picking up a large proportion of unsourced packages, which is diverting resource away from delivering core reablement objectives. Similarly, people are being placed in short-term residential care without the necessary support to help them regain independence. This is often results in people deconditioning and remaining in residential care.
Providers have told us that spot purchasing, which is the primary method of commissioning domiciliary care packages by North Yorkshire, is unsustainable, impersonal and not fit for purpose when funding support in super rural areas.

Cost of the 18-plus Domiciliary Care Market

The Department of Health and Social Care-recommended Fair Cost of Care model produced a low response rate in North Yorkshire (28 fully completed responses with a 22% response rate), generating a very limited picture of the costs associated with the delivery of care in a diverse county.
However, alongside the completion of the cost of care exercise, we undertook the procurement of its Approved Provider Lists (APL) for domiciliary care. Applications were received by 98 domiciliary care providers which provided a much more reliable indicator of the cost of care that reflects the geographic variations in delivering care in North Yorkshire. The average rate submitted by providers as part of the Approved Provider Lists (APL) exercise was as below and are being used as the basis for 2023/24 inflationary uplifts. The 2022/23 APL rates represent between six and 10% increase on 2021/22 rates.

Personal care (generic)

urban - £23.55
rural - £24.91
super rural - £27.30

Personal care (enhanced)

urban - £24.52
rural - £25.73
super rural - £27.55

Section 2: Assessment of the impact of future market changes between now and October 2025, for each of the service markets

We recognise that the Adult Social care market in North Yorkshire is experiencing extreme volatility and distress due to unprecedented inflationary pressures, significant challenges with workforce recruitment and retention and the additional pressures caused by the rural nature of our county.

This is at a time when demographic trends tell us demand for care will continue to rise exponentially, with increasing complexity of need.

We have built excellent relationships with our providers, and they are committed to working with us to develop an innovative, vibrant and diverse care market. However, many are struggling to survive and thinking of exiting the market. Others are considering redirecting resources from delivering local authority-funded support towards a more profitable private and NHS-funded customer base.

We have already taken significant steps to support market sustainability. We have invested in an integrated quality improvement team to proactively support providers with quality concerns with the aim of driving up quality and reducing the impact of provider failure. We have introduced a Sustainability and Hardship Scheme, enabling providers who meet the relevant criteria, to request financial support or an increase in fees.

We have also invested significant resources to support workforce recruitment and retention, by employing a dedicated HR business partner to support the Care Market and funding a major ‘Make Care Matter’ campaign.

Nevertheless, if robust action is not taken to manage demand for services, and support the market during these economically challenging times, there continue to be significant risks not only to the social care market but to our financial sustainability and our ability to meet our Care Act duties. Ultimately this will impact on the safety and wellbeing of vulnerable adults within the county.

For example:

We will not be able to meet specialist dementia and nursing needs, particularly for older people. This will adversely impact on outcomes for the individual, as well as quality and safety within homes. Costs for health and social care will also continue to increase due to increased reliance on 1 to 1 provision.
Without the capacity to deliver intermediate care, more people will be admitted to hospital, and those who are discharged without appropriate reablement support will be more likely to decondition resulting in an increase in re-admissions into hospital, or long-term admissions into care homes.
If we don’t build capacity in the voluntary and community sector to prevent, reduce and delay the need for social care support, demand will soon outstrip supply in many areas within the county.
The number of people waiting for a package of domiciliary care will soar, resulting in more long-term residential care placements and hospital admissions.
This will lead to high levels of unsourced packages of care, leaving vulnerable people without the care and support they need to keep them safe and have the best possible quality of life.
Workforce shortages will impact on a provider’s ability to deliver safe and effective care, leading to packages being handed back; an increase in quality and safeguarding concerns, and provider failures.

Charging reform impact

The single biggest area of spending for us remains adult social care. The government has delayed its proposed reforms to the cost cap but it has helpfully provided the earmarked funding to deal with some of the fundamental issues impacting upon social care. However, even with this additional funding, we still face a £7m shortfall in our budget for social care.

We have therefore identified substantial funding as part of its corporate budget to support the implementation of care market support, including a support payment to assist with the rising cost of energy and insurance.

Should the government revisit the cap on care costs and other associated changes then this is likely to result in further significant costs for us, which in turn will reduce the resources available to support market sustainability.

Section 3: Plans for each market to address sustainability issues, including fee rate issues, where identified

The North Yorkshire Market Development Board oversees our Care Act duties of market shaping and oversight of the care market. The Board’s ambitions to transform the market over the next three years are set out in the Commissioning and Service Development Strategic Plan and the Market Position Statement.

Key priorities include:

Ongoing investment and support to address the critical shortfall in care workers, promoting social care as a valued career with opportunities for progression across the health and care sector and ensuring recruitment and retention strategies reflect the specific challenges within each locality. Any negotiated settlement with the care market will need to help address recruitment and workforce issues across all parts of the North Yorkshire market as a priority.
Collaborating with the ICB and NHS Trusts to transform the provision of intermediate care to prevent hospital admissions, support timely discharge and optimise recovery and independence. We will continue to promote ‘home first’ but recognise there will still be a need for bed-based provision.
Working with the voluntary and community sector, Public Health and our Leisure Services to develop a broad range of community-based support services that increase independence and reduce or delay the need for care and support – with a particular focus on those areas where it is difficult to source packages of care
Improved personalisation and choice through innovative use of individual service funds and direct payments, and the development of a micro-provider market to meet needs in rural communities
Developing and testing new models of delivering nursing provision within care homes.
Transforming our in-house service provision to ensure it helps to fill defined gaps in the market
Working with providers and partners to develop a broader range of services to support people with dementia and those with more complex needs.
Investing is services for unpaid carers to support their wellbeing and enable them to sustain their caring role for as long as possible.
Testing new ways of working with domiciliary care providers, including trusted assessments and alternative payment models
In addition to traditional Extra Care, we are exploring options for supporting a wider range of people, such as those with Learning Disabilities and Mental Health needs within Extra Care settings. Alongside developing these alternative models of accommodation with care, we are focussing on smaller towns and villages where the need for full-scale traditional style extra care schemes is not appropriate, but a smaller or hybrid scheme might be.
Driving forward the use of technology-enabled care (TEC) across the country, particularly in more rural locations, where traditional social services are hard to commission, and providers are limited. This includes the use of predictive sensors and analytics, including wearables, which allow care to be focussed on the right place and the right time whilst not impinging on people’s independence.
Continuing to update our systems to ensure we are as efficient and effective as possible in our interactions with the market and people using services. This includes the implementation of a small number of portals to allow people, professionals and providers to communicate effectively with us, this includes new approaches to the commissioning and sourcing of care packages.
Implementation of the new integrated Quality Pathway to enable early identification of concerns and provide targeted support for providers. This will support sustainability by driving up the safety and quality of services and preventing provider failure.

Inflationary uplifts and financial support to support market sustainability

Contractually we have a commitment to review fee levels on an annual basis. Annual inflation adjustments take into account market pressures and are subject to consultation with the North Yorkshire care market via the Independent Care Group.

For 2023/24, it has been proposed that the uplift will be based on a 45/55 percentage split of minimum wage and CPI. In addition, the Independent Care Group (ICG) has advocated that we link the domiciliary care uplift to the HCA cost model. In order to support provider sustainability, the Council will ensure the uplift will be greatest for providers that are being paid the lowest rates.

We continue to monitor and will keep under review whether there is a need for any local market supplement. We are not recommending this at this time but will evaluate the impact of the new Approved Provider Lists.

To support cash flow within the market, payments will continue to be made four weeks in advance with retrospective reconciliation. We are also moving towards automated payments for all types of care provision which will expedite the application of agreed inflationary uplifts.

In addition to the range of national funding schemes to support the market, the Council has implemented a Sustainability and Hardship funding scheme.

This allows Care Providers to request one-off financial support or fee increases in association with specified criteria. We are seeing an increasing number of applications and are reviewing the criteria to ensure support is targeted where it is most needed.

As stated above the implementation of Actual Cost of Care (ACOC) for residential and nursing care began on 1 April 2022 and this was supported by the use of the Market Sustainability and Fair Cost of Care grant. Of that £1.636m grant, we have allocated £851,000 to Residential and Nursing. However, sustainability support from this grant of £659,000 was also provided to support additional payments to Domiciliary Care and Supported Living providers. The remaining funds were used to fund staffing (£100,000) and payments to providers and the Integrated Care Group (£26k) to support the Fair Cost of Care exercise.

In 2022/23, we topped up the additional £4m Market Sustainability and Improvement Fund by another £1m and this will be used to support further implementation of Actual Cost of Care (with a review within six months to ascertain whether any providers still paid below Actual Cost of Care rates can be accelerated to the Actual Cost of Care rate in-year, subject to funds).

The grant will also be used to support the implementation of increased rates arising from the new Approved Provider Lists (APL). An inflation award of up to to 9.4% has been given and that is on top of revised APL rates. The inflation award also took into account the Fair Cost of Care exercise for Domiciliary Care as well as the Homecare Association’s recommended rate for 2023/24.