Fair Cost of Care: Why Reforms Must Start with Understanding the Real Cost of Support

 
Nik Jones has worked in health and social care for over 25 years, with just under 20 years as a Registered Manager across a range of care homes. The experience he gained from working on the front lines of the sector has been translated into data and insight to help understand how CareCubed can best serve providers and commissioners alike. (Connect with Nik on LinkedIn)

CareCubed’s mission is to build a successful and imaginative company that delivers innovative solutions that advance and improve the social care sector. This is why the CareCubed team is made up of experienced individuals who know the heart of the sector.

Market Sustainability and Sector Reforms.

Market sustainability sits firmly at the centre of the social care reform conversation and aligns closely with the ambitions set out within Baroness Casey’s agenda. In multiple ways, sustainability is not a separate issue from reform; it is the foundation upon which meaningful reform must be built.

Throughout my time in the sector, both in frontline care and through CareCubed, I have seen first-hand that sustainable systems are created when providers, commissioners and wider partners develop a shared understanding of demand, resources and the true cost of delivering quality support.

A good example of this can be seen in Greater Manchester, where adult social care commissioners, children’s services and the local Integrated Care Board (ICB) have used CareCubed Cost of Care to establish a common approach to benchmarking costs and sharing intelligence. By working from a shared evidence base, organisations have been able to strengthen collaboration and develop a more informed understanding of their local market. It is this type of collective approach that can help create stronger foundations for long-term sustainability.

At the same time, it is important to recognise that the adults and children’s sectors face different challenges and therefore require different responses.

In adult social care, the focus is often on ensuring providers are funded in a way that enables them to deliver safe, effective, and person-centred support over the long term. In children’s services, a majority of local authorities continue to face significant pressures arising from limited supply, increasing demand and exceptionally high placement costs.
For that reason, sustainability cannot be viewed through a single lens. What sustainability looks like in one part of the sector may differ from another. However, the common thread remains the same: creating conditions where providers can remain viable, commissioners can manage finite resources responsibly, and people drawing on support receive the care that they need to achieve positive outcomes.

As social care continues its reformation journey, there may be value in shifting the conversation away from annual uplifts and inflationary adjustments alone, and towards a broader understanding of sustainability. Ensuring that providers, commissioners, and individuals all have a sustainable future is likely to be one of the most crucial factors in building a fairer and more resilient care sector.

Cost Versus Price

One of the longstanding challenges within social care has been the tendency to rely on broad assumptions when making funding decisions.

Historically, fee-setting approaches have been influenced by general inflationary measures, resulting in percentage-based uplifts being applied across large sections of the market. While this approach may appear straightforward, it does not always reflect the realities of individual services, local labour markets or the differing needs of the people being supported.

For example, the cost drivers associated with services for older people may differ significantly from those supporting working-age adults with complex needs. Applying a blanket percentage increase may therefore overlook important variations within the market.

This is where independent, evidence-based cost analysis can play a significant role.
A true cost of care approach seeks to understand the factors that influence the delivery of support on an individual basis. It considers multiple variables and provides insight into what it reasonably costs to deliver care. Price, by contrast, is determined by the provider and influenced by wider market conditions, availability of provision, negotiating positions and broader commercial pressures.

This distinction is important.

A price may accurately reflect the cost of delivery, but it may also be influenced by market scarcity or limited commissioning options. This is particularly relevant within some areas of children’s services, where local authorities can find themselves paying prevailing market prices in response to urgent need rather than having a clear understanding of the underlying cost of support.

It is equally important to recognise that profit itself is not inherently problematic. Sustainable providers need to generate sufficient returns to invest in their workforce, maintain quality and continue operating effectively. The challenge lies in understanding what constitutes a reasonable return compared with situations where market conditions may lead to excessive pricing.

Developing a clearer understanding of the true cost of care can help create greater transparency and support a healthier, more sustainable market for everyone involved.

Evidence-Based Commissioning and Relationship Building

If sustainability requires better market understanding, it also requires stronger relationships.

Evidence-based commissioning enables commissioners and providers to have more constructive and transparent conversations about the cost of delivering care. Rather than relying solely on assumptions or historical arrangements, discussions can be grounded in independent evidence and shared understanding.

In my experience, tools such as CareCubed Cost of Care can act as a useful benchmark within those conversations. The value is not necessarily in providing a definitive answer, but in creating a consistent evidence base that both parties can use to explore and understand differences.

Where providers and commissioners engage with the same information, conversations often become less adversarial and more collaborative. Providers are better able to explain their operating models, while commissioners gain greater visibility of the factors influencing cost.

This matters because sustainable markets are built on trust as much as they are built on funding. Transparency helps strengthen relationships, improves confidence in decision-making and supports a shared focus on achieving high-quality outcomes at a fair and reasonable cost.

Considerations for Social Care Decision Makers

A key challenge for decision-makers is not simply understanding sustainability as a concept but understanding how to apply it within increasingly complex systems.
This may involve examining how framework rates are established, how purchasing arrangements influence market behaviour and how future demand is likely to affect capacity and provision.

The reality is that commissioners are operating within significant financial constraints. Demand continues to rise across several parts of the sector, while available resources remain under pressure.

Against that backdrop, there may be value in focusing on building internal capability and long-term market intelligence rather than relying solely on short-term interventions. Developing a deeper understanding of local markets can help commissioners make more informed decisions and identify opportunities for innovation.

Prevention should also form a part of this conversation. Earlier interventions and preventative services may help reduce future demand for higher-cost support, improve outcomes for individuals, and contribute to a more sustainable use of resources over time.

Sustainability for the Future

Understanding and funding the true cost of care is an important foundation for a sustainable social care market. However, sustainability extends beyond finance alone. It also requires evidence-based commissioning, collaborative relationships, workforce development, and a wider recognition of the value social care brings to society.

When providers, commissioners and policymakers share a collective understanding of costs, capacity and outcomes, there is greater opportunity to build a system that is most financially sustainable and genuinely person-centred. Ultimately, creating a stronger sector is not an end in itself; it is how we achieve better lives and better outcomes for the people who draw on care and support.