| Description | This study examined the impact of contract setting on the management of the provision of residential care for people with disabilities. |
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| ISBN | (Web Only) |
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| Official Print Publication Date | |
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| Website Publication Date | December 24, 1998 |
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Social Work Research Findings No. 6 (1995) |
The Costs and Quality of Care for People with Disabilities |
Main findings
Introduction and context
The contracting process
Implications for provider units
Needs assessments
Building up costs
Relationships between physical needs and costs
Relating social/emotional needs to costs
Management issues
Contracting issues
| This study examined the impact of contract setting on the management of the provision of residential care for people with disabilities. It examined two examples of contract setting relations between local authorities and the voluntary sector. It analysed individual costs and explored relationships with various aspects of needs assessments. |
| Main findings |
| • | In relating costs to needs, the clearest link was found to be between physical need and cost. Residents who had very severe disabilities incurred noticeably higher costs. |
| • | Using the Barthel Index as part of a screening process can assist in the matching of resources available with individual needs. |
| • | The findings on relationships between needs and costs suggested 'cost and volume' as the optimal form of contract in this area. Cost per case contracts are indicated for clients with very special needs. |
| • | A relatively accurate basis for calculating cost and volume contracts involves |
| (a)basic care costs | |
| (b)a 'standing charge' for the recovery of other essential running costs and | |
| (c)additional tariffs for specific care requirements. | |
| • | There is evidence from the study that the findings may also be of relevance to a further client group - the frail elderly. |
| Introduction and context |
| Until April 1993, residential homes for the care of disabled people received direct funding from local authorities and indirect funding via 'individual residents' DSS contributions and use of their savings. Under this financial regime it was not necessary to know the costs of providing care to individual residents. Changes in funding arrangements as a result of the introduction of the new Community Care legislation on 1 April 1993 have meant that this type of costing information will become necessary. Funding is now received from local authorities on a contract basis. That is, there are contracts between the voluntary organisation (the provider) and the local authority (the purchaser) and between the residential facility and the resident. There is also an implicit contract between the local authority and the resident. These contracts should specify the care which is to be received and the funding which will be given to provide that care. |
| The contracting process |
| The community care framework seeks to create a more sensitive relationship between user numbers, quality of care and the income received by provider organisations. An essential feature of the framework is that providers should charge carefully constructed prices for their services. There will, therefore, be a progression towards more refined costing (and pricing) in agreeing contracts. This can be envisaged as a 3 stage process. |
| Stage 1. block contracts. |
| Stage 2. cost and volume contracts. |
| Stage 3. cost per case contracts. |
| Stage one, block contracts, is simply a fixed sum of money to be paid by the purchaser for agreed services. The basis of this agreement is liable to become more refined, with focus on precise activity levels. The second stage would take this further, establishing minima and maxima for numbers of service users. For example, there might be a minimum level of funding, plus (approximate) costs per case for additional clients up to an agreed maximum level. The final stage envisages that precise costing information is available for individual users and that care managers will be able to agree specific requirements and the related costs. |
| Implications for provider units |
| In establishing pricing information for contracts, the provider organisations will have to: |
| (a) | base prices on realistic costs; |
| (b) | include fully absorbed overheads in costs; |
| (c) | avoid cross-subsidisation. |
| There are both short term and long term implications of constructing such costing information systems. In the short term there will be difficulties because, generally, appropriate costing information, both In the voluntary and local authority sectors, is limited. In general, voluntary organisations have aggregate accounting, ie overall budgets, with subdivisions based on different departments or facilities. This typically includes detailed subjective analysis of salary costs and support costs. On the basis of this information it would be possible to determine average costs for service users. However, for provider organisations to negotiate contracts on this basis would place them at financial risk. It could contain implicit cross-subsidisation, over-pricing on some and under-pricing on other contracts. To negotiate effectively with local authorities, voluntary organisations need greater information on the relationship between costs and activities. In the longer term, voluntary organisations will need to match the devolved budgetary structure of the local authorities with their own system of designated financial responsibilities such that local managers can negotiate effectively on services provided. The study has addressed these issues by showing how disaggregated accounting information could be established and how this could be related to the needs assessments of people with disabilities. |
| Needs assessments |
| Needs assessments for individuals were carried out in four areas: physical dependency; self management skills; social self-sufficiency; and emotional self-sufficiency. The Barthel Index, which measures levels of self-care and mobility in physically impaired people, was used to measure the physical dependency of residents in the study. Residents' self-management skills were assessed in: laundry, housework, cooking, shopping, telephone, health care visits, finance. Information was gathered during interviews with residents, on the number and quality of relationships they have with family, friends in the community (or in the unit) and staff. This provided a measure of the extent of their social network. The residents' emotional state was also assessed in interview through the use of indirect questions. |
| Building up costs |
| Costs for individual residents were obtained by recording staff activity, costing this staff activity, allocating overhead costs to this. A diary was used to record staff time devoted to physical care, self management (eg laundry) and conversations with the particular resident concerned. Cost information was collected from the budgets of the facilities concerned and from information on rates of pay and staff hours. This was attached to the activity data. Budgeted costs were allocated to designated cost centres for the facility concerned and then absorbed to individuals by the use of an overhead recovery rate. These overhead costs were dealt with in different ways depending upon a fixed or variable classification. Fixed costs (eg catering, maintenance and housekeeping) were allocated as a standing charge at a flat rate per resident per week. Variable overhead costs (eg wages and salaries not already accounted for through direct time with a resident) were allocated to individual residents per direct staff contact hour. |
| Relationships between physical needs and costs |
| The total Barthel score, ranging from 0-100 is an indication of an individual's level of dependency. A high Barthel score indicates a high level of independence and a low score a high degree of dependence. For example, a score of 60 or under represents someone who 'is severely dependent; 50 or under represents someone who is very severely dependent. A score of 50 or under is associated with a significantly higher level of cost. Residents scores on self management were related to physical abilities in most cases, reflecting the fact that many of the skills required for independent living (such as cooking and shopping) require certain physical abilities. The notable exception to this is where a resident, although severely physically disabled, is able to speak and express themselves confidently. Such an individual can make their own telephone calls, go shopping, organise healthcare visits and can take responsibility for these tasks even when they cannot physically undertake them independently. Having the use of the arms and hands also improved a resident's ability in self-management skills. |
| Relating social/emotional needs to costs |
| The second area where there was a significant pattern of costs was in the time spent in social interaction with residents. The cost of this was significantly higher where the resident used a slow method of communication (for example, by writing or using a Bliss board). This social interaction cost will also depend on the resident's general desire to talk to staff. This is often related to their past circumstances, with those who have known a 'normal' life or lived at home having more desire and ability to develop social relationships, than those who have been in long-term institutional care, No clear pattern was found between emotional self-sufficiency and cost. The research team recognised that a more refined research instrument may be required to tap emotional self-sufficiency. |
| Management issues |
| Findings from the study suggest the following as possible relevant management practices: |
| • | the use of the Barthel Index as part of a screening process in assessing an individual's independence as part of admissions procedures |
| • | cost recovery policies could be refined through two or three part tariff rates. |
| As regards the first of these, the use of Barthel Index results could have a potential role as a screening device (along with other information on existing service users). Differing dependency levels could have implications for resource levels at care facilities and information on dependency could assist resource allocation decisions. One particular issue was the difficult, unpredictable pattern of changing needs for people with multiple sclerosis. Generally trends in Barthel Index results should be useful in monitoring the matching of resources available with individual needs. The second issue above - cost recovery policies - presents a potential way forward in addressing the resource implications of user mix, dependency and related issues. Costs of care could be defined in terms of (a) the basic care cost (b) a 'Standing charge' for the recovery of other essential running costs and (c) extra tariffs for additional care needs. |
| Contracting issues |
| The study found that the cost consequences of caring for residents with a wide range of needs are that there will be implicit cost cross subsidisation within block contracts. Cost and volume contracts linked with Barthel scores would enable contracts to be similar where individual needs were broadly similar but would allow for the possibility of specifically tailored contracts where necessary. Cost per case contracts could be constructed from the three part tariff discussed above. For service users, such as people with multiple sclerosis whose condition has a relapse/remission pattern, the resources required and hence, care costs are variable. Therefore periodic or interim review is indicated for renegotiating the costs of such people during the year. |
| Finally, 'respite' or empty rooms in provider units was an issue. Where a room is empty because the client is in hospital and the client has 'preserved rights', a reduced weekly DSS rate is received. There is a case for the reimbursement of at least the standing charges of void rooms to provider units, and contract negotiation should make reference to the issue of respite or 'empty' rooms. |
| The study was carried out by the Institute of Public Sector Accounting Research at the University of Edinburgh. |
| It was Jointly funded by the Social Work Services Group of The Scottish Office, The Scottish Council for Spastics and The Scottish Trust for The Physically Disabled. |
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| Eileen Brand, Margaret King, lrvine Lapsley & Sue Llewellyn |
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| "The Cost and Quality of Care for People with Disabilities", the research report summarised in this Research Findings, may be purchased (price £5 per copy). . |
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