AGENDA ITEM 7
BOROUGH OF POOLE
CABINET
24 JANUARY 2006
PROVISION OF SPECIALIST SERVICES TO PEOPLE WITH DEMENTIA
REPORT OF THE PORTFOLIO HOLDER FOR COMMUNITY SUPPORT
1.PURPOSE OF THE REPORT
1.1.The purpose of this report is to inform Cabinet of the outcome of negotiations with Care UK PLC regarding the provision of dementia services andto seek approval for the letting of the contract overall and for specific decisions relating to the contract.
2.DECISIONS REQUIRED
2.1.That Cabinet recommend Council to award the contract for the provision of dementia services to Care UK on the terms agreed.
2.2.That Cabinet recommend to Council that Care UK is required to apply for admitted body status enabling transferred employees to remain in the Local Government Pension Scheme, but that the scheme will be closed to any new joiners employed on this contract, who should instead be offered either a good quality employer pension scheme or a stakeholder pension scheme.
2.3.That Cabinet agrees to a renewal of the current lease at Garland Road until such time as it is no longer required.
3.BACKGROUND INFORMATION
3.1.Following a meeting of Community Services Overview Group on 6 January 2004 at which Members heard that there was an increasing need to develop services for older people with dementia in Poole, Cabinet decided on 20 January 2004 that further work be undertaken in respect of possible options for the provision of dementia services, including the possible transfer of in-house dementia services to another provider. On 28 September 2004, Community Support Overview Group received an update on the work undertaken to that date and agreed that the Portfolio Holder should be asked to agree that tenders should be sought from five possible providers to manage dementia home care, Garland Road Day Centre and Mitchell House. On 22 March 2005, Community Support Overview Group received a report on the result of the tendering exercise which included representation from three cross-partymembers on the evaluation panel. The Overview Group resolved that Council be recommended to declare Care UK as the preferred provider following the tender exercise. Full Council so resolved on 12 April 2005.
3.2.Since then, officers have been conducting contract negotiations with Care UK. These negotiations have covered a wide range of issues and involved officers from Legal and Democratic Services, Financial Services, Adult Social Services Commissioning, Adult Social Services Provider, Property Services and Personnel and Training Units. Meetings have also taken place with staff directly concerned, with Adult Social Services Commissioning staff and with Trade Unions. Service users and carers have been kept informed and a good deal of preparatory work has taken place “on the ground” involving first line managers and representatives of Care UK.
3.3.A Project Board has met throughout the process to monitor and evaluate progress and specialist issues have been taken up through advice from particular Service Units.
3.4.Whilst legal advisors to both parties have yet to resolve every last detail of contract wording, the main elements of the contract are now in place, except for the issue of future pensions. A recommendation is made below to Members on this issue and Members are asked to recommend to Council that the contract be awarded on the following basis.
4.CONTRACT TERMS
4.1.From the date of transfer, currently expected to be at the beginning of April 2006, Care UK will manage residential services for people with dementia at Mitchell House, together with day services for people with dementia at Garland Road Day Centre, and specialist dementia home care services. All staff currently employed in those services will be transferred to the employment of Care UK who will then charge the Council for services in the same way as other providers. The term of the contract is fifteen years so as to allow investment in a replacement high-quality building for Mitchell House, which is reaching the end of its useful life.
4.2.Within two years of the transfer date, Care UK will acquire land in the town and build on another site a replacement residential home for Mitchell House which will incorporate a separate purpose-designed day centre with its own entrance together with an office base for the dementia home care service. At this point, Mitchell House will be returned to the Council for other use or for disposal and the lease on Garland Road Day Centre will be given up.
4.3.Although it is not part of the contract, we understand that Care UK propose to provide a further 20 nursing care beds for people with dementia to supplement the 49 residential care beds which will be replaced at the new home. Adult Social Services Commissioning will carry out an additional tendering exercise when these nursing beds become available. If they provide value for money, the Unit will consider if a further contract should be negotiated so as to provide an integrated service. This would range from specialist home care support, through day support at the day centre, to residential care within the main residential home – and, for those who become severely ill, for care within the nursing home element of the new residential home.
4.4.Care UK have retained a specialist firm to source sites within the town and progress on the acquisition of site and progress of the new facility will be reported by the Head of Adult Social Services Commissioning to the Portfolio Holder and other Members from time to time.
5.RESPITE CARE
5.1.Care UK will continue to provide six respite care places for people with dementia at Mitchell House and at the replacement facility. This requirement is based on average usage of respite care beds at Mitchell House currently and can be varied very easily if the average demand for this service increases or decreases.
5.2.Mitchell House currently offers a respite care facility to older people with physical disability and disease as well. Adult Social Services Commissioning has tendered for and secured a further six beds at residential care homes in the Poole and Bournemouth areas to enable respite care to continue at or slightly above the current level of demand. In doing so, it has enabled the Council to meet one of the key provisions of Carers legislation, as carers are now more able to book care in advance throughout the year with greater choice and flexibility.
6.CONTRACT VOLUME
6.1.Owing to difficulties with the recruitment and retention of staff, Mitchell House has been running at capacity of only 33-35 beds (of 49) in recent years. The contract provides for Care UK to operate Mitchell House at capacity from the date of transfer: this will comprise 43 long-stay beds and the six respite care beds referred to above.
6.2.Care UK have also agreed through the contract to provide 20 day care places instead of the current provision of 12 and to provide 650 hours of specialist home care per week. Currently 600 hours of specialist home care are provided, but the recent success of the Adult Social Services Provider Unit in recruiting more staff will enable 650 to be provided by the date of transfer.
7.EFFICIENCIES AND COSTS
7.1.Detailed costs of the present and future arrangements (in two phases) for the provision of dementia care services are shown at Appendix A. The cost of a residential place will be £503 per week and a day care place will be £31 per day. The residential care cost compares favourably with the current unit cost of £674 and with a 2006/7 price of £472 in our current block contract with dementia care providers in the private and voluntary sector. Staff costs at Mitchell House are inevitably higher than in the private sector, as is the cost of providing flexible respite care to people with dementia (this is only provided at Mitchell House locally).
7.2.Following negotiations, it has been agreed that the pricing for the domiciliary care service should be carried out in a different way. Therefore the contract stipulates that Care UK will start by providing the service for the same amount as the Adult Social Services (Provider) dementia home care budget (£727,000 pa in 2006/7), but that they will find efficiencies of 2.5% per annum for each of the first two years. It was always intended to grow this service in line with the outcomes of the Best Value Review of Home Care Services in 2000. The contract includes mechanisms for this to take place and for such growth to be included within the contract level of service. The growth of this service will be offset by a matched reduction of commissioned dementia home care from other generic home care providers.
7.3.All three prices will be reduced to exclude the cost of employer contributions to staff pensions in the Local Government Pension Scheme. It has been agreed that the Council will fund Care UK’s employer contributions “at cost” and budget for this separately using an annually-updated actuarial report. The Council will therefore be able to monitor and control pension costs robustly in budget-setting each year. Prices in the main contract are to be uprated annually, using a weighted inflation measure based on a proportion of wage costs and of price index costs.
7.4.The primary aim of the tendering of the management of this service was to maintain and improve service and this has been achieved. It is equally pleasing, however, that substantial efficiencies have been achieved as a result of the exercise currently amounting to £304,555 per annum in each of the first two years at 2006/2007 prices. Of this, £214,021 is cashable and reflected in Adult Social Services draft 2006/7 budgets. The non-cashable element reflects the fact that, although the unit cost of providing day care at Garland Road has been substantially reduced (from £37.21 to £31.09), the Council has been successful in contracting for a much improved service, with 20 places per day available each day compared with a current provision of 12 places per day and less at weekends.
AMENDMENT TO ITEM 7: PROVISION OF SPECIALIST SERVICES TO PEOPLE WITH DEMENTIA
7.5 The costs of the land and associated building costs mean that the savings disappear in Phase 2, although effectively we have a substantially increased day care service and a modern purpose-built care home and day centre for the same cost as at present.
7.6 The table below summarises the position:
Current Provision(Benchmark) / Phase 1 Provision / Phase 2 Provision
£000’s / £000’s / £000’s variance from current provision / £000’s / £000’s variance from current provision
Residential (49 beds) / 1,560 / 1,282 / 278 / 1,470 / 90
Day Care 12 daily places / 163 / 0 / 163 / 0 / 163
Day Care 20 daily places / 0 / 226 / (226) / 296 / (296)
Homecare / 727 / 727 / 0 / 691 / 36
Total / 2,450 / 2,235 / 215
(saving) / 2,457 / (-7)
(saving)
All costs shown are at 2006/7 prices.
All costs shown include pension provision.
Phase 2 provision is estimated to start 2008/9.
Homecare efficiency savings of 2.5% per annum are contractually required.
8.PENSIONS
8.1.The invitation to tender for the dementia service included reference to the conditions of service that the new provider would need to comply with, both with regard to existing Council staff who transfer to the new service and any new staff recruited to work alongside them after the date of transfer. The relevant statutory guidance is the “Code of Practice on Workforce Matters” (Office of the Deputy Prime Minister (ODPM) Circular 03/3).
8.2.In relation to pensions, the provisions of the code are that staff transferring must have ongoing access to the Local Government Pension Scheme (LGPS) or be offered an alternative good quality occupational pension scheme. To enable staff to continue to have access to the LGPS the provider needs to apply to this scheme for ‘admitted body’ status. In doing so, they can opt for a ‘closed scheme’ which restricts membership of the LGPS to existing transferred staff: new joiners on the other hand can be offered membership of a good quality employer’s scheme, this being either a contracted-out final salary-based defined benefit scheme or a defined contribution scheme or a stakeholder pension scheme. Alternatively, they can provide ‘open scheme’ which means that any new joiners can also join the LGPS as can existing staff who have previously opted out of the scheme.
8.3.Early discussions with Borough staff and Trade Unions were carried out on the basis that the new provider would be expected to provide an “open” scheme, and Care UK initially provided costings on such a scheme. In the course of negotiations, however, Care UK became concerned about the difficulty in quantifying the cost of such a scheme over the contract period and in seeking to reduce risk questioned whether the Council still wished to proceed on the basis of an open scheme.
8.4.The recent externalisation of the management of leisure centres has been carried out on the basis of a closed scheme.
8.5.Care UK have estimated that the additional cost to the Council of providing an open scheme for both transferring staff and all new joiners over the 15 year term of the contract will be an average of £80,000 per annum or £1.2m in all.
8.6.The arguments in favour of a closed scheme are:
- Employer costs in an closed scheme are substantially lower than in comparable schemes.
- The invitation to tender referred only to the Code of Practice in Workforce Matters and made no requirement for an open scheme.
- Care UK are concerned about the difficulty in quantifying their potential liabilities under an open scheme and would wish to reduce their risk by ensuring that this was retained by the Council.
- A closed scheme on the other hand reduces risk on both sides.
- A closed scheme increases the efficiency gains arising from the outsourcing of the management of dementia services.
8.7.There is a view that an open pension scheme might help attract and retain staff to the service, and the Trades Unions take the view that the lack of an open pension scheme might lead to a two-tier work force (see Appendix B). Advice from Legal and Democratic services, however, confirms that a closed scheme is within the statutory
Code of Practice in Workforce Matters.
8.8Cabinet is therefore asked to recommend to Council that existing Council employees remain members of the Local Government Pension Scheme but that new joiners be offered a comparable scheme in line with ODPM guidance.
9.GARLAND ROAD DAY CENTRE
9.1.Adult Social Services Provider has leased Garland Road Day Centre for some years from Poole Old People's Welfare and Housing Society Ltd. The current lease expired in September 2003 and officers of Property Services have been in discussion with the landlords since that time, in parallel with negotiations about the dementia service.
9.2.A new lease has been negotiated at a cost of £10,000 per annum, with break clauses at April 1 2007, and at any time thereafter on three months notice from either side.
9.3.Cabinet is asked to agree that this lease be continued on these terms.
Cllr Elaine Atkinson
Portfolio Holder for Community Support
Contact Officer:Nick Molland
Telephone No:01202 261144
Date: 14 December 2005
Report Ref: Jo/Dementia/17 Jan 06 - Report to Cabinet
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