Costing – Cheap vs Fair with Nik Jones

CareCubed’s mission is to build a successful and imaginative company that delivers innovative solutions to help 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.

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 sector’s front lines has been translated into data and insight to help understand how CareCubed can best serve providers and commissioners alike.

What is a Fair Cost? 

One of the most notable considerations in the financial aspects of the sector is the difference between fair costing and cheap costing. A fair cost is something that is repeatable, evidence-based, transparent, and meets the needs of the individual to promote independence.  

A cheap cost is a cost that is not transparent and lacks evidence associated with the reasoning behind it. Whereas with a fair cost, the background to it can be deconstructed anyway. It is transparent and comes with an evidence trail that is attached to it, regarding what the needs are and why the cost is associated with that individual in the first place.  

When costs are too low 

Over my 20 years as a registered manager, a key part of good service delivery was linked to fair funding. This means fair in the sense that it met the needs of the individual, making sure they have the support needed to meet their potential. A high price was not always indicative of a good level of care and support. Equally, I have seen the negative outcomes of pricing journeys that were a ‘race to the bottom’, not transparent and ultimately in search of ‘cheap’ care. It can impact negatively on staff pay, on operational management not having sufficient bandwidth and a drain or complete lack of any specialised staff. 

Getting the costing right is incredibly important as, while we often look at whether costs are too high, costs being too low can be equally problematic. If the cost of care is too low, then it is unlikely to be meeting the essential needs of those drawing on support, and it can result in low or minimum wage hourly rates for those delivering that support. Similarly, while there are discussions around 1-to-1 and how it may be over-subscribed across the country, it is important to be careful within reviews, to work with, firstly, those in the direct receipt of the support and then their families, professionals, and MDT teams to make sure that what is being decided is genuinely best for the individual and not any given organisation.  

Not having sufficient funding or making the decision to cut funding for a particular aspect of the service can also be detrimental. In some cases, where perhaps 1-to-1 is in place, the risk of cutting this feature of support could mean that the individual is unable to visit their friends and/or develop their independent living skills, and therefore negatively impacts their level of independence, making their ‘world’ very small. This can very quickly increase the levels of anxiety. To give a person in care the best chance to obtain independence, it is important to ensure that their care is adequately funded so that they can have the support in place that develops those critical skills. In the long term, underfunding can cause higher care needs and can end up being more expensive for the provider and the commissioner.  

Transparency as a Key  

From my experience, and with the further understanding I have gained with CareCubed, it has made me acutely aware of the challenges both providers and commissioners face today, and I can say one of the biggest challenges in the market is around transparency. The key to successful delivery has roots in the provider’s initial transparency around cost; this is not to say that they need to be ‘cheap’, but simply are able to evidence their costs. Providers can often be worried if their profits are slightly above what local CareCubed says, but the most important factor is justifiable reasons for those costs. If there is a justifiable, operational reason why your profits need to be higher than CareCubed, then having that transparent conversation does a lot of good for the process and for both parties.  

That being said, transparency is not just about cost; it is about ensuring that the package is right-sized, for example, the amount of 1-to-1 needed for the individual and if it is possible to increase core staffing and reduce the 1-to-1 requirement.

CareCubed and Fair Costs

A lack of clarity around non-staffing costs such as food, utilities, building maintenance and commonly head office costs can result in sometimes combative negotiations between providers and commissioners, two parties who both want the same outcomes. So, where these costs are not clear, CareCubed shines a light, helping to deliver fair costs and better understanding for productive negotiations. Commissioners can then make an informed decision on whether a cost is justified, having a well-rounded and better understanding of the market, from staffing costs, to training, to the base costs of running a home. 

The tool provides commissioners and providers with the ability to speak the same language. All stakeholders are then using the same tool, a common currency to ensure transparency and repeatability and ultimately better outcomes for those needing our care and support.