Outline business case for using ISFs – Draft 2

By Tim Gollins, Simon Duffy and Helen Turner November 2015

Executive summary

We are between systems. A care management approach, on one side, which is premised on managing large numbers of people through an eligibility assessment. The success of this approach lies in the provision of services purchased at the best price possible by the state for the vast majority of people. And on the other side is a system which takes the Care Act not only at its word but also in its spirit and intention. This system places personalisation, wellbeing and coproduction at the centre of the social care model. This latter system recognises that services, when provided too early or too much, can create long-term dependencies that are counter-productive and costly.

Individual Services Funds (ISFs) are an innovation which is firmly developed for a personalised wellbeing-based operating model. Viewing ISF innovations through the lens of a care management model will lead to complexity and confusion.

ISFs are a straight forward innovation, but implementing them does mean turning some things upside down and re-thinking priorities. That’s not easy at a time or unprecedented cuts, demographic pressures and technological advances. But, maybe there is no better time to innovate? Maybe the current way of doing things is no longer tenable? Maybe if we continue the service-based salami-slicing of the current system, the system collapses? Maybe as one person said to me the other day...’we are not slicing the sausage anymore, we are cutting the string at the end!’

Is the time right for councils to take a risk and try some innovative practice? The answer will be different for each council but ISFs provide one such innovation which should not, indeed cannot be over looked! This outline strategic business case sets the scene for this debate.

Dr Tim Gollins (TLAP SDS and PB policy lead)

Purpose

The purpose of this business case is to present core issues and key benefits that ISFs offer. The paper aims to help those individuals and teams who want to develop ISFs in their local area.

Strategic case

Strategically ISFs offer a solution to a fundamental problem encountered in many local authorities across England at the moment. Austerity is cutting deep and the Government spending review at the end of November promises further swinging reductions in funding for Councils.

The main ways in which adult social care departments seem to be finding the cash to save is by:

a) Managing demand better – supporting people to find their own solutions with family, friends and their local community

b) Providing early intervention services to reduce the demand for more formal services

c) For people who want to exercise more choice and control, offering them a direct payment (DP), and reducing the DP rates

d) Using domiciliary care services to maintain people in the community rather than using residential care homes

e) Only providing a limited range of council purchased services to those who are eligible

f) Buying council supplied services in bulk and at the cheapest possible price

These ways of saving cash can be summarised as diversion, (a and b), providing lower cost alternatives (c and d), and exercising the power of large scale purchasing (e and f).

There is a fundamental sense to these approaches, as collectively they address the need for financial efficiencies. However, there are problems with each one:

Diversion takes time. There is a need to change cultures and practices established over many years in a number of departments, and actually this takes a change management process…which, of course, needs to be resourced to be effective.

Providing lower cost alternatives works well, but it requires the cooperation and positive contribution of primary and secondary care to work alongside councils, and not refer directly to more expensive options as winter pressures, or other kinds of pressures mount.

Exercising large scale purchasing power is a good solution, but it too can be easily undermined by the risk that providers cannot recruit good staff and maintain quality.

But, ask which of these approaches are in the power of councils to control, and the answer is obvious. Procurement approaches which bulk purchase lower cost alternatives to more expensive service solutions is the tool councils have direct control over and produces timely results with no additional change management needed. Neither does it entail the risks associated with innovation as it is an understood technology with well-established techniques.

However, in the longer term continuing downward cost pressure on social care providers, in-house services will lead to some fairly major shortcomings.

1. When social care providers can no longer offer wages that compete with other employers such as supermarket chains, hairdressers, retailers and fast food chains, the workforce reduces, or it gets increasingly casual.

2. Temporary, less able, less qualified staff are the only people interested in the opportunities on offer, and as the quality of staff reduces choice and

control for people using services reduces and the incidence of safeguarding issues increase.

3. If providers try and maintain wage rates to keep staff, they have to raid their training, facilities and equipment budgets. The working environment suffers and quality reduces again.

It is also worth bearing in mind that the introduction of the living wage will be felt across the social care sector in a number of ways. The care sector workforce competitors – retail, catering etc. are already gearing up to paying the living wage rates, but the austerity of the public sector means councils will not be able to pass this increase on through contracts. This will create further financial pressure on providers which could see many leaving the care sector. Similarly, because competing sectors are already advertising their commitment to the living wage the social care sector will lose again in terms of recruitment and retention of its core workforce.

So, overall, with ongoing austerity there is a pressure to procure bigger and provide more with less, and because of the depression of wages, the workforce will be of reduced quality. Direct payments are offered as the only alternative to a bulk purchased system. However, restrictive monitoring of direct payments because of the pressure to claw back unspent cash, and poorly scripted social work – customer conversations about direct payments mean uptake is low in many council areas. This is not because councils don’t believe in personalisation, but because the drive for savings is quite simply overcoming the need for choice, control and quality. The preferred efficiency solution is not innovation and transformation, but block purchasing the minimum essential services. Procurement is seen as the one solution able to create the kind of efficiencies needed in the time scales required.

Strategically there has to be another way. And there is, but it would be naïve to say it doesn’t carry risks. There are three largely untested solutions that don’t create the downward spiral: reduced funding, reduced capacity and reduced quality, and associated negative impacts: increased dissatisfaction, lowered outcomes for people and more safeguarding incidents.

The solution is threefold:

1. Support the diversion approach, invest in early intervention services, and prevention, there are some excellent examples of councils who are providing asset-based interventions pre-assessment and again at assessment that are diverting up to 97% of people way form formal service provision.

2. Invest in the direct payment market and support individual employers to manage effectively, outcomes are better and costs are lower, as long as cost effective proportionate approaches are used to audit and monitoring. There are many good ways by which this can be achieved.

3. Create an individual service fund option for people who use services, rather than pushing people into the bulk purchased one-size- fits all

managed personal budget route. It doesn’t mean stopping providing a fully managed service, but it is about providing another alternative

The ISF alternative is a way of saving cash by top slicing the budget for a provider, but then enabling the provider to work with people in flexible ways, and to be accountable to the person, not the council, for the cash that they have.

This means that the council must relate directly to the person and talk to them about the services they are receiving, their satisfaction, safety, whether or not needs are being met and their wellbeing. Only getting involved in the provider – person relationship when needed by the individual.

This solution has multiple strategic benefits:

1. It makes savings

Savings can be made right up front, in clear and transparent ways, and whilst the provider could be cut quite severely if they had to deliver a standardised service, if they can respond to the individual in flexible ways they are more likely to be able to make the funding go further

2. It focuses on what is important to the individual

The way providers can operate differently is important. If they can spend some time to get to know someone they can be careful and support informal networks that may already exist, support the carers to maintain their role and their input, and provide the services needed to maintain these natural connections and do what these networks can’t do.

3. It enables providers to be flexible in how they respond to people’s needs

Being more person centred means being more efficient, because less service provision may be needed, and over the long-term this could make a significant saving.

4. It maintains quality by reducing bureaucracy and control

Let’s be clear, an ISF is likely to result in less service provision. But what is received should be much more valuable to the individual and delivered with less interference and state control.

There is however a key issue: The idea that ISFs may result in less services being delivered may start alarm bells ringing in some people’s ears? This is because it raises the unwanted prospect of returning to some ‘golden age’ of disabled people managing in close-knit families in caring communities, but where the reality is one of isolation, disagreements, abuse and unmet need. However, ISFs need to be seen as part of a system change, not in isolation. So that, if:

Commissioners can trust providers without micro managing their activity

Social workers can do more asset-based health and wellbeing assessments rather than spending time setting up services

Council officers spend more time talking to people who use services and addressing satisfaction

People are properly supported by family members in agreements brokered by social care workers

Then the likelihood is that there will be fewer safeguarding issues, and more time spent doing valuable face-to-face with people, without creating a service dependency culture.

The question is: Are social care departments prepared to take a risk on uncertain system change, when the pressure to find efficiencies is so great? The answer of course depends on whether there really is a plausible procurement-based solution still available, or whether this traditional approach has already taken the market to the point of failure?

Economic case

ISFs produce efficiencies in two ways:

1. People who are supported by a provider with an ISF get more of what they want because they are able to influence the kind of package they receive.

2. If a provider gets an allocated amount of money, albeit smaller than they would like, they can manage the reduction if they have an increase in the flexibilities they have.

Trusted providers can work with the person receiving their services and rather than provide the, for example, 30 minutes of domiciliary care; they may actually find out what the person themselves wants help with, when they need help, and who they want help from. They may learn how to support people via informal networks as much as through formal service provision. Or they may learn how they could provide an innovative piece of technology, or just strike an agreement with a peer support network to provide some support. In other words, they may be able to work services around the individual’s life without:

a. Inadvertently isolating people from natural networks and friendships and family member informal help and support

b. Creating a long-term dependency on a service being provided by the council

Case study 1: Calderdale Council introduced ISFs into their domiciliary care market, essentially as a way of providing an alternative to a low-cost more restricted managed service. Providing the alternatives: Direct payment, Council managed service or an ISF, created a more diverse market, more choice and control to people and, whilst the costs of domiciliary care did not reduce, the demand for residential care did. Calderdale council adults services department are gathering the evidence that will confirm this anecdotal finding that residential care costs fell by £19K per

month as a result if this investment in ISFs in the domiciliary care market. (See appendix 1 for further details)

Case study 2: Choice Support, a trusted provider in Southwark took a significant cut to a contract (See the presentation at the TLAP ISF event)

Case study 3: See the attached account of work in Birmingham City Council in Appendix 2, which simply charts their efforts to find an ISF approach that works for people, providers and the council. It also provides a sample ISF two way contract.

Commercial case - Provider benefits

So what is in it for providers? There are a number of benefits of being contracted by the council to mange ISFs rather than contracted directly too delver a specific service:

1. Risk management is easier. The focus of the social care business changes from delivering on a procurement specification to meeting individual expectations. The risk moves from being council based to being individual customer based. That is what most businesses are used to

2. Satisfaction is higherDelivering a service to a council specification can sometimes become an exercise in delivering square services to multi-dimensional people. It’s often just not what people want, but they have no choice but to accept. Offering a more bespoke arrangement will produce a good deal more satisfaction, and be more rewarding for everyone concerned

3. A wider community role is availableThe key to ISF success for a provider lies in making the most of what people already have. This often requires only small input, for example to broker agreements between family members, to set people up with peers and networks, leaving the actual service provision fitting in around a bolstered informal sector. The ISF service is, of course, about providing a service, but it is also about understanding the locality and the individual, where understanding one locality can help address more than one individual’s networking issues. Efficiencies will grow over time as local knowledge and expertise expand.

It should also be noted that local organisations stand to do better than larger national providers who have no local footprint and history.

Management case

The Care Act requires ISF activity.

The statutory guidance says councils should have an ISF offer. It’s not a mandatory requirement, but it is one which councils need to have ‘cogent reasons’ not to do.

Even if a council choses not to have an ISF offer in place, they should be able to demonstrate that they have considered how they could achieve it, and they also need to be able to respond to any individual who requests an ISF with a particular provider with a considered decision.

Councils therefore have to grapple in one way or another with ISFs.

On developing an ISF arrangement, the council should also:

Provide I&A about how the ISF arrangement works Provide I&A about how the provider will manage the money on the

individual’s behalf Provide advice on dispute resolution if problems arise with the ISF Provide examples of how ISFs have been used by others

The Care Act is still relatively new, and working with an ISF as a management tool is also new. The ADASS Personalisation survey 2014 showed that ISFs are used only in 4% of personal budgets and accounts for only 1% of social care spending. The best practice for how to implement an ISF is still only just emerging and there are various reasons why this is the case:

The concept has been somewhat ambiguous in the past The legal basis for contracting for an ISF has been questionable The trust needed between providers and councils has not been

present Councils have not been able to change their way of working to

support accountability between the personal who uses services and the provider

The need for savings has led councils towards more traditional procurement solutions

Continuing with a dualistic ‘all the control you want’ with a direct payment, or a council controls all ’managed service’, is not nuanced enough for many people who want much more choice but not necessarily much more control.

ISFs provide the mechanism to meet this demand. But the key issues are how to implement them.

Implementation – emerging practice

The slow pace of implementation of ISFs may reflect the significant change in thinking it requires by commissioners. Implementation can become too complex and inadvertently cancel out the values or spirit of the core innovation. To make progress on developing ISFs some emerging positive practice is:

1. Build on existing relationships – Focus on one or more organisations that already have a track-record of flexibility and innovation. Many may already want to use ISFs, but may have not been able to agree suitable arrangements. These organisations can then function as key allies in persuading their peers to make the change.

2. Focus on areas of high-cost and high-risk – Much of the best work on ISFs done to date has been with people who have challenged services, where flexibility is central to good support, and where the benefits and efficiencies of moving away from expensive institutional services are greatest.

3. Work within existing legal frameworks – LGA and ADASS guidance on procurement makes clear that there is plenty of room within the law to give people choice of their own provider and flexibility of support. While new contracts and procurement rules may be helpful, in the short-run it is best to focus on where change can be achieved within existing frameworks.

4. Let providers define their own flexible offer – It’s important not to dictate to providers in any details how they should work, plan or organise their own ISF systems. There are existing models, but these should not be enforced by contracts. Learn through the innovation process itself. Don’t over-engineer processes or make support plans part of any contract.

5. Focus on outcomes – people will let you know if these new arrangements are working or not. Social workers should be enabled to move away from planning (a role for people and their supporters) and focus on ensuring people are safe and flourishing.

Appendix 1 - Calderdale and ISF’s

Calderdale introduced ISF’s about 18 months ago as part of a retender of domiciliary care providers. ISF’s were introduced as part of the new model. Existing service users were given 3 choices:

a) To move to one of the new domiciliary care providers on a managed budget

b) To stay with their existing provider via an ISF agreement

c) To take a direct payment and choose any service that meets outcomes

Whilst the initial driver came from the home care retender and the initial ISF providers were all those that did not make it onto the new contract, this did not necessarily reflect poor quality.

50% of existing service users chose option b) to stay with existing provider via an ISF. This did create a real staff capacity problem for the new domiciliary care providers as there were fewer staff to transfer across to the new providers than had been expected.

In terms of the paperwork for the ISF, this was kept to a minimum. A 3 way agreement was put in place which states that a) the council have assessed the individual as having eligible needs, b) the individual has a personal budget, c) the individual agrees to work with the provider to plan services to meet their need, d) the provider will work with the individual to meet their needs. e) The council will agree to pay the provider.

The 3 way agreement was held up initially in legal but the Director intervened and made clear she wanted the process kept simple. The 3 way agreement includes statements about safeguarding and quality assurance. New providers can apply to go onto an ISF Hub, but Calderdale do not endorse providers in any way. Nor is there any guarantee of work.

Hourly rates are published on the Hub and there are a range of rates. Calderdale allowed providers to charge a management fee on top of the hourly rate. At the outset less than 5% of providers charged a management fee and this is now down to 1%

Q: Is this paid by the Council or by the client? It is paid from the client’s budget.

Q: Did you set a limit as to how much management fee the provider could charge? No, the market set the rate and as more providers didn’t charge a management fee others tended to follow.

Calderdale do require the provider to have a client bank account for ISF’s which is separate to the organisations own Business account. The provider is expected to be able to account for each person’s money, but it does not require a separate individual account per client. It can be as simple as a spread sheet (depending on numbers of clients).

Calderdale also developed:

ISF 3 way agreement

ISF Information for Providers

Guide to ISF’s for families and people who use services

Outline organisational profile for ISF Hub

12 months down the line Calderdale are working with front line staff to develop a wider conversation about ISF’s for new service users and for new providers coming onto the Hub.

An evaluation of ISF’s is also being undertaken. Have you any more details on this evaluation? Discussions are still ongoing.

Contact Person: Bob Farr, Contracts Procurement Officer, Calderdale Council and,

Angela Gardner, Commissioning Manager

Appendix 2

One way to deliver Individual Service Funds

The Council will give the citizen’s money (the Individual Budget in the form of an Individual Service Fund) directly to the care provider, on a monthly basis. The care provider will work with the citizen in order to agree with them as to how they would like their care and support to be arranged.

This flexibility means that more than one care provider could be used to support the citizen.

The care provider will work in a person centred way, will develop tailored outcome focussed support and will act as a broker of services.

The care provider needs to be paid to manage the ISF. An amount of £15.00 per month will be deducted from the ISF by the care provider.

The care provider will be able to provide ‘real time’ and ‘on line’ access to the citizen, family members and to the Council in order to show how the ISF has been spent. Printed statements will also be available upon request.

In doing so, the care provider will be able to show the citizen, families and the Council the number of care hours delivered and how those care hours have been delivered.

A signed three way agreement between the provider, the citizen and the Council will be in place in order to ensure that every one is clear about what they need to do.

Any unspent monies on the ISF account will be refunded to the Council. Unless money is being saved for a specific reason, refunds to come back to the Council every three months.

Despite initial interest from three providers and further to the development of a service delivery model the ‘pilot’ failed to get off the ground. The conclusion arrived at was that providers found the process to be too complicated.

A simpler way to deliver Individual Service Funds

The Council will give the citizen’s money (the Individual Budget in the form of an Individual Service Fund) directly to the care provider, on a monthly basis. The care provider will work with the citizen in order to agree with them as to how they would like their care and support to be arranged.

This flexibility means that more than one care provider could be used to support the citizen.

The care provider will work in a person centred way, will develop tailored outcome focussed support and will act as a broker of services.

A signed two way agreement between the provider and the Council will be in place in order to ensure that every one is clear about what they need to do.

The care provider will not have to provide details as to how the ISF has been spent.

Any unspent monies on the ISF account will not be refunded to the Council.

Trust is placed with the provider to meet the needs and outcomes of the service user …… the provider is expected to apply the principles of ‘Just Right’ levels of support, consider sub-contracting of care, tap into Circles of Support and utilise Third Sector opportunities.

Social work review at start of pilot and then review nine months down the line.

Desired outcome ….. Better outcomes for citizens and the possibility that either the provider or the Social Worker will identify financial savings at the subsequent review nine months down the line.

A provider has intimated that they would be interested in a potential pilot …… this would be a clustered Supported Living service where there are up to 26 citizens supported by one on-site care provider.

Chris MacAdams, Commissioning Manager, Birmingham City Council 28 October 2015

INDIVIDUAL SERVICE FUND AGREEMENT -

INDIVIDUAL SERVICE FUND PAYMENT TO A SERVICE PROVIDER

This agreement is between:

Birmingham City Council

And

Name and address of the organisation who will be receiving the Individual Service Fund on behalf of the Individual (this organisation will need to be signed up to the Council’s Framework Contract and services will be delivered in line with the Terms and Conditions of that Framework Contract):

Name of the Provider:

…………………………………………….....

Address of the Provider:

……………………………………………….

……………………………………………….

……………………………………………….

……………………………………………….

THE REASON FOR THIS AGREEMENT:

1. The Council has determined that ………………………………… is in need of support as described in their support plan.

2. The Council is willing to make an Individual Service Fund Payment to ………………………………. They are willing to provide a service

to …………………..………………… using the support plan as a guide and ensuring that the Citizen’s needs and outcomes are met.

3. The Council will give the Citizen’s money (the Individual Budget in the form of an Individual Service Fund) directly to the Provider, on a four weekly basis. The Provider will work with the Citizen in order to agree with them as to how they would like their care and support to be arranged.

4. This flexibility means that more than one Provider could be used to support the Citizen.

WHAT THE COUNCIL AGREE TO DO:

5. To pay ………………..………………… the allocated Individual Service Fund of £…………… per week. This will be made as a four weekly payment of £..…………….. and will be paid in advance. Submission of invoices by the Provider and payment by

the Council will be in line with the Council’s published invoicing and payment protocols.

6. Regularly review ……………….………………………… support plan. If as a result of the review there is a change in his/her needs this may result in a change in the amount of the allocated Individual Service Fund.

7. Hold back the Individual Service Fund allocation if, for whatever reason, …………………………… is temporarily unable to receive the Services.

WHAT …….…………………………… AGREES TO DO:

8. Keep a clear record of Individual Service Fund funding received for ………………………… and how it is being used to meet his/her support needs. Allow the Council to look at these records as and when requested.

9. Using the support plan as a guide, work with …………………………… in a flexible way to provide services and ensure that the Citizen’s needs and outcomes are met in a way which promotes choice and control for them.

10. Make every effort to explain to ……………………… how their

Individual Service Fund is being used to meet their needs.

11. Notify the Council of any change in circumstances, which may affect ….………………………… eligibility to the Services or the amount of Individual Service Fund payment made.

12. Any overpayment on the Individual Service Fund account, further to the citizen moving on or passing away for example, will be refunded to the Council further to financial reconciliation by the care provider.

13. Any overpayment on the Individual Service Fund account, further to the citizen being admitted to hospital and not being able to be supported for example, will be refunded to the Council further to financial reconciliation by the Provider.

14. As appropriate, agrees to collect any assessed Adult Social Care Contribution from the Citizen and agrees to set up a weekly or monthly payment to this effect.

15. The Provider will work in a person centred way, will develop tailored outcome focussed support and will act as a broker of services.

16. The Provider is expected to apply the principles of ‘Just Right’ levels of support, consider sub-contracting of care, tap into Circles of Support and utilise Third Sector opportunities.

IF SOMEONE WANTS TO END THIS AGREEMENT?

17. Birmingham City Council or the Provider may end this agreement by giving notice in line with the Terms and Conditions of the Framework Contract.

All parties agree to the terms and conditions of this Agreement:

Signed on behalf of the Service Provider

Signature …………………………………………………………………………

Name …………………………………………………………………

Position ………………………………………………………………

Date ………………………………………………………………….

Signed on behalf of Birmingham City Council

Signature …………………………………………………………………………

Name …………………………………………………………………

Position……………………………………………………………….

Date ………………………………………………………………….