- Findings contrast with expectation that care provision for older people is a public service
- Long term care now almost entirely provided through private and third sector suppliers and increasingly funded through private means

Deloitte is today publishing an analysis, undertaken for the Resolution Foundation (1), of England’s long term care markets. Mapping Care of Older People makes the case for defining long-term care in England as a ‘mixed market’ (made up of a combination of public and private funding and supply) and not solely a public service (2) . Mapping Care of Older People is the first holistic overview of the long-term care market. It provides an objective appraisal of long-term care market functionality and assesses the efficiency and faithrness of key areas of supply and demand. This new conceptualisation could enable the development of these markets, through appropriate strategies, to improve outcomes for older people.

Mike Turley, head of Deloitte’s public sector practice said: “70% of the UK population have made no financial provision for their care in old age (3).  This contrasts with the study findings that significant numbers of recipients of long term care make a payment for it, or rely on informal care. There is a widespread expectation that care provision is an integral part of the welfare state. But the reality is that long-term care is now almost entirely provided through private and third sector suppliers, and increasingly, is funded through private means. There is no universal basic entitlement, and unlike public services, care is not free at the point of delivery except for the very poorest.

“Our analysis identifies long-term care as a mixed market. Deloitte believes it is essential to recognise this characteristic in order to develop strategies to improve the quality of life of older people. Looking forward, the whole of the mixed market needs to be tackled, not just that part funded by the public sector. Innovation will be required by intermediaries, by the financial services sector, the supplier market as well as in the public sector.” 

Lord Warner the Labour peer, who served as a minister of state in the Department of Health and who is now a strategic adviser to Deloitte said: "The Deloitte Report is a valuable contribution to the public debate the Government wants to have over social care as our population ages. A mixed economy of care provision is now well established. However we need a new funding partnership between State, individuals and families as we live longer and have higher levels of dependency at the end of our life." 

Some selected analysis from Mapping Care of Older People:

• Informal care accounts for 65% of the market – it is therefore vital to prevent market collapse. Informal care exists because formal supply does not meet demand and because some people prefer to use it as method of accessing the care they need. In a well-functioning market, informal care would always be a matter of personal choice, not necessity, as everyone would have access to affordable formal services.
• Availability of information and access to advisory services is poor. Even if information was fully available, the complexity and local variability of care markets would still represent a barrier to effective navigation. These factors constrain demand for, and access to, services and benefits.
• Two funding streams, two eligibility regimes, and two benefits systems can cause widespread inefficiency, unfairness and confusion.
• Long-term care is not one but many markets where supply, demand, and access is grouped around a community. Individuals in different parts of the country are treated differently according to intermediary processes (like eligibility criteria) and geographic differences (such as property prices). Local authority price-capping and its role as a dominant purchaser can constrain supplier profitability and consumer choice. It also means that suppliers are not able to respond effectively to demand and economies of scale are limited.

Read more and download the full report.

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Notes

Mapping Care of Older People key findings:

• Mixed Market.  Mapping Care of Older People defines long-term care as a ’mixed market for a social good’. It is not a pure ‘private’ market as it deals with a ‘social good’ but it has key characteristics of demand, supply, transaction and price fluctuation. Nearly half of people receiving residential and domiciliary care make a payment for it. When the 1.9 million people who receive informal care are also taken into consideration then the number of people solely receiving publicly funded care is exceeded.
• Market distortion. The long-term care market does not function as a private market, because a series of intermediary processes such as means and needs testing that distort the interaction between supply and demand. These processes also have an impact on ‘self-funders’ who may face higher prices for similar services as a result of cross-subsidisation.
• Fairness and Efficiency. The analysis identifies key drivers of inefficiency and unfairness across the system, and tests the characteristics of supply, demand, and intermediary processes against indicators of a well-functioning market. This shows that whilst supplier profitability and entry and exit are stable, local markets and intermediary processes can distort outcomes for each individual, even for those who fund their care through private means.
• Looking forward. The analysis also looks ahead to possible future market developments, including the likely impact of personal budgets on the supply and demand sides, the challenges brought about by demographic change and challenging spending rounds, together with the possible use of integrated policy and technology to shape preventative and early intervention approaches.

Footnotes
1. The Resolution Foundation is an independent research and policy organisation. The Foundation’s remit is to promote fair and efficient access for low earners to today’s mixed economy. It will publish A to Z: mapping the long-term care markets, at its Annual Conference on Tuesday, April 29th 2008. Speakers include, Nick Clegg MP; David Willets MP; Julia Unwin, Joseph Rowntree Foundation; Julie Jones, Social Care Institute for Excellence; Mike Turley, Deloitte; Clive Cowdery and Sue Regan of the Resolution Foundation. Media enquiries: Cara Brown, Press & Public Affairs, Resolution Foundation - 020 7489 4870. www.resolutionfoundation.org 

2. Research conducted by the Resolution Foundation that polled Over 2000 UK adults in December 2007. The poll explored people’s level of understanding and perceptions of the quality and affordability of the elderly care system, and it asked them how they would be prepared to contribute to their care costs and also resolve the wider funding shortage.

3. ‘Long-term care’ is defined as the provision of nursing and personal care services to individuals aged over 65. 30% of the over 65 population (2.447m individuals) are estimated to require some form of care.

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