February 26, 2019 Legal

Care providers – are you ready to negotiate your fee rates?

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With the financial year end drawing near, providers will be awaiting local authorities’ decisions on fee rates for 2019/2020 but are there any tactics you can exercise during negotiations?

In January, Care England reported that in 2018/2019:

• 20% of councils gave no increase for nursing beds; and
• 22% gave no increase for residential beds.

Average fee increases across the country were:

• 2.4% in nursing homes (£494 to £506 per week); and
• 2.6% in residential homes (£457 to £469 per week).

Despite this, providers’ costs and wage bills rose by up to 5%. Low council rates are continuing to be a decisive factor for providers when considering whether to accept contracts and whether they can afford to continue delivering existing packages.

Whilst short-term funding has often relieved the situation, a sustainable solution is still missing. Current short-term measures will need to remain in place to bridge the gap until the measures we expect to be set out in the Green Paper are actually implemented. However, we are painfully aware that the Green Paper is not a Government priority and when it finally arrives, providers will still be a long way from a lasting solution.

How can you negotiate?

Providers may feel that they have limited bargaining power when local authorities state that fees are not being increased. However, most contracts will provide for providers to be entitled to terminate contracts on notice. Whilst this is a drastic step, in our experience handing back packages which are not profitable or sustainable sends a clear message to the local authority and can result in positive change. Providers can also apply for the authority’s decision not to increase fees or to offer an insufficient increase to be judicially reviewed. In our experience, taking these steps can bring about some positive change from local authorities or at least an agreement to undertake cost of care exercises.

Councils cannot afford for providers to exit the market so a threat of this nature can be effective. Providers can also ‘team up’ through their local care association to present a united front.

For assistance with fee negotiations, contact Mei-Ling Huang at Royds Withy King on 01225 459 950 or mei-ling.huang@roydswithyking.com.

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