outsourcing shared lives workers guide apr 11

8/3/2019 Outsourcing Shared Lives Workers Guide Apr 11

http://slidepdf.com/reader/full/outsourcing-shared-lives-workers-guide-apr-11 1/17

© Shared Lives Plus UK Ltd 2010. www.sharedlivesplus.org.uk www.communitycatalysts.co.uk |1 Registered charity: 1095562. Registered company: 4511426

Outsourcing Shared Lives – members’ guide

Introduction ..................................................................................................................................... 2 What are the different kinds of outsourcing? .............................................................................. 2 Business modelling for ‘spin outs’ ..................................................................................................... 3 Steps in tendering processes ........................................................................................................ 4 After a contract has been awarded ................................................................................................... 4 What are the pros and cons of outsourcing? .............................................................................. 5 The opportunities and risks of being independent ..................................................................... 5 Who should be involved in decisions? ......................................................................................... 6 Involving people who use services and their families ....................................................................... 6 Involving Shared Lives carers ........................................................................................................... 6 Involving the Shared Lives staff team ............................................................................................... 7 Key stages at which to involve Shared Lives carers, service users and families.............................. 8

What should council-run Shared Lives scheme managers do?................................................. 8 Raise your profile and build relationships ......................................................................................... 8 Build your business case .................................................................................................................. 9 Appendix A: Finding your unit costs .......................................................................................... 11 Appendix B: Analyse your unit costs ......................................................................................... 14 Are you competitive with other forms of care? ................................................................................ 14 Are some of your services more sustainable than others? ............................................................. 14 What would happen to your unit costs if you want to grow? ........................................................... 15 Will costs go up or down if you are outsourced? ............................................................................ 15 What will your cashflow be? ............................................................................................................ 15 Appendix C: EU procurement law ............................................................................................... 16




Introduction

Shared Lives has been recognised by governments across the UK as crucial to the future of

personalised care and support systems. Most Shared Lives schemes are currently delivered in-house by councils. Many will continue to be.

Outsourcing, however, is becoming more common, particularly in England, where the proposedright to challenge would make it much harder for councils to keep services in-house, if a voluntaryorganisation expressed an interest in running that service. In addition, the new right to providerequires local authorities to respond positively to requests from staff members to take servicesoutside the authority. English councils are expected to increase personal budget uptake with mostpeople to be enabled to take their personal budgets as a Direct Payment, which cannot be spenton an in-house council service (whereas in Scotland, it can be). The policy direction for Wales andScotland is less explicit on these issues but in all nations, outsourcing can be seen as a way ofintroducing new providers and competition into previously closed markets. Some schemes have inthe past driven the move to independence themselves, seeing it as a positive opportunity.

All of this makes outsourcing increasingly common and a prospect that it is wise to have preparedfor. In one area, the Shared Lives scheme found out that it was being put out to tender days beforethe Invitation to Tender (ITT) was issued, giving the scheme little chance to influence the process.This guidance suggests steps which we think it will be useful for schemes to take, regardless ofwhether the current scheme’s goal is to remain in-house, or to prepare for outsourcing.

This guidance does not intend to encourage outsourcing, nor discourage it. Shared Lives Plus isneutral on that issue: we see examples of strong Shared Lives schemes delivered by councils andby independent schemes and there is evidence of significant investment in both kinds of scheme in

some areas, as local authorities are becoming more aware of the savings and improved outcomeswhich high quality Shared Lives can deliver.

But Shared Lives is distinct from other forms of care and support. Without those differences andvalues being understood, there is a real risk that the gains in outcomes and reductions in costsbeing achieved by good Shared Lives schemes will be lost through poorly planned outsourcingprocesses. In particular, this guide aims to encourage the involvement of Shared Lives carers,service users and their families at every stage in decision making. Whatever model of delivery ischosen for your Shared Lives scheme, real engagement with Shared Lives carers and the peoplethey support will be the best way to ensure that the unique partnership between the Shared Livesscheme, self-employed Shared Lives carers and the people who use the service continues to helppeople to find the family and community life of their choice.

What are the different kinds of outsourcing?

If a council decides to outsource a service, this can be done in a number of different ways:

• The council can create a charity or social enterprise specifically to deliver the outsourcedservice. SWAPS in Devon and ASA in Lincolnshire are very successful examples of what areincreasingly being referred to as “spin outs” from statutory services. Sometimes this processis driven by a council manager or team. The Localism Bill aims to introduce to England a“community right to challenge” which would give community and voluntary bodies, parishcouncils and local authority employees the right to bid to take over the running of services.

• The council can write a tender specification and issue an open invitation to tender, to whichany organisation can respond.




• Some councils have outsourced all of their services in one go, creating a large independent(or semi-independent) social enterprise to deliver them. Essex Cares is an example of thisand Community Care reported in February 2011 that 20 local authorities had similar plans.

Where a council takes the tendering routes, there are four main types:

a Open tendering, where a contract is widely advertised and all can apply.b Restricted tendering, where a contract is advertised and a “preferred provider” list made.c Competitive dialogue, where the contractor enters into dialogue with potential bidders from

its preferred provider list, resulting in a number of rounds of bid submissions. After eachround, the terms of the contract are redefined. This is usually only used where the terms of acontract are difficult to work out without consulting with a range of providers.

d Negotiated tendering, where a purchaser may select one or more potential bidders withwhom to negotiate the terms of the contract. This method is usually only acceptable whenthere is only one or two contractors capable of delivering a contract. i

The steps in tendering are set out in the next section.

Whatever the form of outsourcing, it will be crucial to arrive at the best form of contracting orcombination of contracts. Will support be commissioned as a block contract, spot contract, orframework contract, or will funding be entirely personal budget based. Different approaches willhave implications for the choice and control of service users, but also for the risks taken by thescheme, and therefore for the successful delivery of Shared Lives in the area. How will those risksbe shared between the scheme and the commissioning body? The council might wish to putsafeguards against problems occurring in place, particularly in the early stages.

Business modelling for ‘spin outs’The development of a new independent Shared Lives scheme goes through distinct phases:

• setting up and / or transfer;• early development, probably still with close local authority support;• growth;

• full independence as the scheme stand on its own feet and contracts are renegotiated.

There are many unpredictable variables, particularly in the early stages if the scheme is new orstarting from a small scale base. A small independent scheme may not become cost-effective andmay be very vulnerable to fluctuations or challenges until it has grown.




Steps in tendering processes

If a decision is taken to begin procurement through tendering, EU rules about fairness, openness

and transparency apply (see Appendix C). Before that point, however, it is perfectly acceptable forthe statutory body to meet current and potential providers and indeed doing so (in a fair and even-handed way) should be part of commissioners’ efforts to understand met and unmet need and thecurrent and potential capabilities of providers. It is wise, therefore, for Shared Lives schemes tokeep a continual dialogue going with senior managers and commissioners and to ensure thatShared Lives carers and the people who use services and their families have a strong local voice(see What should scheme managers do? ). This will help to shape any tender issued and thetendering process in a way which may not be possible once the decision to outsource has beentaken.

The funding body should be clear when a formal procurement process, as distinct from the widercommissioning process, has begun.

If a council decides to outsource through tendering the process is as follows:

Step 1. Range of outsourcing options considered.Step 2. Outsourcing option chosen.Step 3. Drafting a tender specification.Step 4. Advertising the tender (including a notice inserted in the OJEU for Open

Tenders).

In restricted, negotiated and competitive dialogue tendering the next step would be a pre-qualification process:

Step 5. Potential bidders fill in a prequalification questionnaire (PQQ) to show that theymeet minimum requirements for technical ability and financial security. Onlythose qualifying are invited to tender.

In open tendering, the PQQ would be filled in by all bidders, as part of the next step:

Step 6. Invitation to tender (“ITT”).Step 7. Tenders are returned, clarified and evaluated against each other.Step 8. Contract is awarded (and unsuccessful bidders notified).Step 9. Staff from an existing in-house service may be TUPE’d across.Step 10. Contract ending and being re-tendered.

After a contract has been awarded

Whatever the chosen form of outsourcing, commissioners should be aware that the process maytake months or years from a contract being issued until the new scheme is fully independent. Thiswill require boundaries and expectations to be continually reviewed: simply issuing a contract andseeing the scheme as no longer the councils’ responsibility is likely to result in the early failure ofthe new scheme. So it is important to establish the ongoing relationship between the scheme andthe lead commissioner, with regular meetings about issues and clear boundaries aboutresponsibilities. For example, what will be the council’s responsibility for the well-being of serviceusers using the new scheme?

http://www.ojec.com/

http://www.ojec.com/




What are the pros and cons of outsourcing?

Outsourcing, like any model of provision, can be done well or badly. There are a number of highquality, well-funded independent Shared Lives schemes in the network of Shared Lives Plusmembers, including some who have previously been ‘in-house’ and consider the move to havebeen an extremely positive one. What is certain, is that the biggest risk is to ignore the possibility ofoutsourcing and the need to demonstrate your scheme is continually improving and breaking newground.

The opportunities and risks of being independent

When outsourcing is successful, there can be some opportunities for the independent service:

• Flexibility to anticipate and respond to need.• Much less red tape and bureaucracy.• Ability to fundraise and attract volunteers.• Ability to generate and reinvest a surplus.• Shared Lives carers, people who use the service and families can be involved in governance

and setting the direction of the organisation, or the scheme can even be set up on amutually-owned or co-operative basis.

• It can be easier to raise the scheme’s profile.• Clearer accountability of roles between scheme workers and other professionals.

None of these advantages are a given: they will require a well-planned organisation with strongmanagement and good governance from a board of Trustees or non-executive Directors.

There are also risks to independence:

• The scheme may have less access to training and workforce infrastructure.• The scheme may have a lower profile or less support within the council, on whom it may rely

for referrals.• It could be easier for the council to cut funding or negotiate hard on price.• Workers may have poorer pension provision, or the new service might be saddled with

pension responsibilities it struggles to afford.• The scheme’s freedom could lead to ‘mission drift’.

A different set of skills are likely to be needed within the team, including:

• entrepreneurial and marketing skills;• influencing and lobbying skills;• fundraising;• strong business and financial management skills;• a good understanding of governance responsibilities.

Managers of in-house services sometimes express fears about the impact on quality of anyoutsourcing decision. It is Shared Lives Plus’ view that quality is not guaranteed by any particularmodel of delivery. There are examples of high quality services in both the council-run andindependent sector and both are subject to the same inspection regime. In-house servicesconcerned about the impact of outsourcing on quality, may wish to consider:

• What is currently in place in terms of Quality Assurance?




• What evidence do you have of the impact of this?• How can commissioners be educated about the value of your current QA measures?

In addition to inspection and other quality measures, many small and medium not for profits usePQASSO or a similar QA tool to monitor and improve the quality of their structures, functions,finances and governance. The risks above point to a need for strong governance, with anestablished, formal role for Shared Lives carers, service users, families and other stakeholders toplay in direction-setting.

Who should be involved in decisions?

There are no rules about who can and cannot be involved in planning decisions including thosearound outsourcing. Councils are however, expected to involve local people in major decisions.

Involving people who use services and their familiesCouncils who are considering outsourcing, should consider the rights of people using Shared Livesservices and their families to be involved in decisions about their lives. People in long term SharedLives arrangements are often regarded as ‘settled’ and can lack ongoing access to advocacy, so itmay be necessary to work with a local advocacy organisation to get a clear sense of service users’and families’ views on Shared Lives provision now and for the future. Decisions which affect theability of people who use Shared Lives to continue to live in what they have come to regard as theirfamily home are open to challenge under Human Rights legislation.

People who use Shared Lives and their families should be supported to form an independentconsultative group, or have a strong presence within other local advocacy groups.

Involving Shared Lives carers

Shared Lives is a partnership between the Shared Lives carers and the scheme’s workers andheavily dependent upon the quality of the relationship between the scheme and carers. Councilsthat decide to transfer the Shared Lives service to a new scheme, or made drastic changes to theexisting scheme, should take account of the impact of these decisions on Shared Lives carers.Carers are self employed and in the past, where these changes have been badly handled, havenot always decided to continue their involvement in the service. This is a huge loss of value to thearea and very disruptive for service users’ living, breaks or day care arrangements.

One Shared Lives scheme was cost-effective and carers and family members very complimentaryabout the support they received. Its manager received a phone call inviting them to a meeting afew days later, at which they were told their scheme would be outsourced. There had been noconsultation with Shared Lives carers or service users. Senior managers involved a parent of aservice user in interviews with tendering organisations, but did not feel that Shared Lives carersshould be involved, as they felt this was a conflict of interest. There is no basis for that concern.

A strong, independent group for Shared Lives carers are an important part of achieving a higherprofile. An independent group will have the freedom to lobby on behalf of the Scheme and thosewho use it, at crucial junctures. We recommend strengthening existing carer groups, particularlyones which look to the scheme for leadership. A local voluntary sector organisation might be ableto assist your group to become more led by its members. In West Wales, Shared Lives carers elect

representatives onto a consultative group to ensure the group is accountable and represents theirviews. Shared Lives Plus would be happy to advise on strengthening your group.

http://www.ces-vol.org.uk/index.cfm?pg=42

http://www.ces-vol.org.uk/index.cfm?pg=42




In one London Borough, the well-established Shared Lives carers group insisted on a meeting withthe Director of Adult Services. They raised concerns and it was agreed that two representativescould represent carers’ views at tendering meetings and during the decision-making process. The

Shared Lives carers felt able to ensure that standards of support which were essential to thesustainability and quality of their work would be maintained, with bidding organisations assessedon the relevant aspects of their bids. The scheme was put out to tender and two representativesstill meet on the quarterly contract monitoring meetings with the council and the charity who wonthe contract. This involvement was made possible because the Shared Lives carer group, whichheld regular support groups and Quality Days, was well-established and assertive.

Shared Lives Plus’ Shared Lives carer members have highlighted the elements of a successfulscheme:

• Systems to ensure full information about service users’ needs is given to prospective SharedLives carers, including any needs which could have safeguarding implications.

• Terms and conditions which reflect the value placed upon Shared Lives carers and on whichShared Lives carers have been consulted.

• Clear transparent information about how Shared Lives carer fees are calculated for differentkinds of support and people with different levels of need.

• Simple, proportionate recording systems which avoid unnecessary intrusion into family life.• Staff who understand the particular insurance requirements of Shared Lives carers.• Staff providing carers with the right information, including information about Shared Lives

Plus.• Support for an independent Shared Lives carers group and a commitment to listening to their

collective voice.

• A programme of training and learning opportunities, which are available flexibly.

• A clear procedure for investigating allegations whilst providing service users, families andShared Lives carers themselves support during any investigation.

Involving the Shared Lives staff team

Where the preferred method of outsourcing is a staff team ‘spin out’, this should be staff team-led.This involvement is, however, equally important in tendering processes. As the processes,systems, staffing ratios and values of Shared Lives are significantly different from those of otherforms of regulated care, the existing staff team of any scheme hold a great deal of the value of thescheme and have a lot to contribute to any decision making process. The relationship between thescheme workers and carers are vital to the effectiveness of the Shared Lives service, so anyoutsourcing process should include both to maintain quality and productivity. The cultural shift toworking in a charity with a board of trustees should also not be underestimated for staff who haveworked for a council for a long time.

The Shared Lives team will have insight into:

• The culture and practice of Shared Lives and how they differ from those of other services;• Handling the relationship between self-employed Shared Lives scheme and the scheme;• The breaks and respite requirements of Shared Lives carers;• The regulation regime as it applies to Shared Lives schemes. In England, CQC has bought

Shared Lives Plus’ good practice guidance for its inspectors to use in inspections. TheShared Lives Plus/ CQC joint statement on Shared Lives, Scottish National Care Standards,

National Minimum Standards in Wales and Regulations in Northern Ireland are all informedby Shared Lives Plus and its members’ work.




• The recruitment, assessment, approval and support of Shared Lives carers and the time andcosts involved in the matching process.

“Our scheme is going to be outsourced. So far the independent consultants have asked me for abattery of facts and figures but have yet to meet with me, my team, Shared Lives carers or serviceusers. I know nothing of the process and feel things are about to be 'done to' our service.”

Senior managers are more likely to engage with staff teams who are visible, vocal and proactive inraising awareness of the unique value of Shared Lives schemes. Potential advocates who shouldbe engaged with the scheme, include elected members, organisations who refer to the scheme,advocacy and independent living organisations and the local media.

Key stages at which to involve Shared Lives carers, service users andfamilies

Shared Lives carers, service users and their families should be involved in decisions about:

• whether to outsource a service;• the process for outsourcing – ‘spin outs’ or tender;• the design and establishment of the new ‘spin out’ or...• what form of tendering to use and how tenders will be assessed;• what the tender specification will look for, including:

o good recruitment, approval, matching and support for Shared Lives carers;o good referral, matching and settling-in support for people using Shared Lives;o training, respite and payment of Shared Lives carers;o advocacy and offering choice to service users and their families;o expectations of the service being led or shaped by Shared Lives carers, service users

and families;• which user groups should be the focus of development of the new Shared Lives scheme;• assessing the bids and awarding the contract;• monitoring the contract.

What should council-run Shared Lives scheme managers do?

Raise your profile and build relationships

The most important thing to realise is that early action is vital. Whether you love or loathe the idea

of being outsourced, it is essential that your scheme has a high profile in the council and the widersector, with vocal supporters within and outside of the council. If you achieve this you are morelikely to be involved in decisions and those decisions will be taken more carefully, at a more seniorlevel and by people who are better-informed about the particular values, strengths and needs of aShared Lives scheme, such as:

• The key Shared Lives processes such as Shared Lives carer assessment and approval; theuse of panels; matching and involving families; friends and the wider community in care.

• The importance of being able to engage local self-employed Shared Lives carers and anunderstanding of the difference between their needs and those of an employed paidworkforce.

• The need to build a strong, clear relationship between Shared Lives carer, scheme worker,care manager and service user (and their advocates), and of how this can be maintained associal care provision moves towards personal budget approaches.




A good understanding of these processes lessens the risk that a very generic contract will beadvertised, which would not draw out the qualities required of successful Shared Lives schemes.

As noted in the previous section, a strong, independent group for Shared Lives carers and a similargroup for people who use Shared Lives and their families are an important part of achieving thisunderstanding and profile. They should have the ear of the key stakeholders noted in that section.It is worth considering which voluntary organisations in your region you would see as the most andleast appropriate agencies to deliver Shared Lives, should you be outsourced. It could be wise todevelop close links with organisations which you feel would be strong, stable potential tendererswith the right values-base. Avoiding doing this could increase the risk that the successful bidder isan organisation with less understanding of Shared Lives.

Build your business case

A scheme which can clearly demonstrate its costs and outcomes is more likely to be understoodand valued by senior managers. This might mean that they are less likely to outsource it, or takemore care about finding it a really good home if it is outsourced. There is an appendix on costingyour service, below.

Demonstrating the scale and value of your work means being able to talk about:

• Outputs: eg how many people receiving which kinds of support.• Quality: your systems for planning, acting on feedback, safeguarding etc.• Outcomes: the differences made to people’s lives.

Good Shared Lives schemes achieve positive outcomes, in areas such as:

• Mental and physical health• Involvement in employment/ training• Ability to self-care/ independent living skills• Number, quality, strength of unpaid relationships• Self-determination/ efficacy - ability to make and act on choices• Contribution to family and community life• Resilience, ability to cope with crises/ change

To measure outcomes robustly, you first need to gather base line data and then measure howthose outcomes change over time. You may lack formal or academic evidence of outcomes, but

any evidence you can provide will be helpful, including:

• the scheme’s inspection results and safeguarding record;• quotes from service users and their families;• feedback from referrers;• notes taken during placement reviews or needs assessments;• feedback collated from annual satisfaction surveys of users, carers, referrers;• case studies which give examples of positive outcomes;• formal surveys of the outcomes above: eg the number of unpaid relationships an individual

has at referral and six or 12 months later.

Developing your service to reach new communities or service user groups, perhaps forming new

partnerships with NHS and other organisations, will help to build evidence of the value andpotential value of your scheme. You may be reaching new groups or needs, such as:




• older people with dementia;• people with mental health problems;• people with substance misuse problems;

• disabled children in transition to adulthood;• care leavers;• parents with learning disabilities;• day care and breaks as well as long-term arrangements;• the provision of intermediate care (‘re-ablement’) to improve hospital discharge;• arrangements aimed at developing people’s independent living skills which demonstrably

lead on to more independent living arrangements.

The Business Case suggested that large schemes tended to provide greater cost-benefits thansmall ones. Small schemes which are outsourced, are more likely to become only a minor part of alarger independent provider. If your scheme is small, or there are groups of people who you do notserve, it might be a good idea to talk to other schemes in your area or region about joint working or

even merging, to become more sustainable and comprehensive. In-house providers can work aspartnerships, jointly funded by two or more local authorities.




Appendix A

Finding your unit costs

In order to demonstrate that you are cost-effective, you have to know what your cost is! This is notentirely straightforward, but can be done.

The method set out below is to decide what your “unit” of support is going to be, then work out thecost of providing it. There are three elements to that cost:

1. the payment to the Shared Lives carer.2. the full cost of the time your team member(s) spend supporting that carer to deliver support.3. your overheads.

Note that the gross cost of the service is the total payment to the Shared Lives carer, plus thecosts of running the scheme. The net cost to the local authority, will be the gross cost less thecontribution the service user makes through Fairer Charging for their personal care, and also lessany additional payments they make to the Shared Lives carer for rent, food, heating, lighting.

Shared Lives will not necessarily meet all an individual’s support requirements. For instance,where Shared Lives is meeting an individual’s long term support and accommodation needsthrough providing stable family life, that individual should nevertheless have the opportunity to takepart in activities outside of their home during the day.

Working out what your unit(s) of support are

Before considering the three cost elements above, it is necessary to work out what the scheme’sunits of support are, which are going to be costed. You may have several different units of support,such as a week of support and accommodation, a day of day care, or a 48 hour break. The costsof those units might also differ according to the person’s level of support need. It is very helpful tohave a clear, banded system of costs, with, for instance Band A being high need, Band B, mediumneed and Band C, low need. It is likely that an independent scheme would need a system of thiskind, so it may be worthwhile moving to that system ahead of any outsourcing decision. SharedLives Plus have produced a guide to carer payment models for members.

If you don’t have a clear system of this kind, you will need to plug different levels of carer paymentinto the calculations below to produce some illustrative costs, which give a good sense of the costsof intensive support and of lower level support.

Consider each type of support you offer separately and for each type, decide what your unit ofsupport will be:

• eg A week of long-term support at Band A, B or C.• eg A day of day care at Band A, B, or C.• and so on.

1. The payment to the Shared Lives carer

The payment to the Shared Lives carer is made up of several elements:

• The user’s contribution to rent, food, heating and lighting, paid for from the person’s ownmoney and/ or their benefits including Housing Benefit.




• The social care-funded element, paid by the council to the carer, or paid to the individual as apersonal budget, which they then pay to the carer via the Shared Lives scheme. Under FairerCharging rules, the service user’s ability to contribute to this will be assessed and they may

be charged for part or all of this cost.• Anything else the scheme pays to the carer, to cover:

o any training or supervision they are paid to attend;o travel expenses for attending meetings;o covering when they are sick;o their respite;o their insurance;o CRB checkso their Shared Lives Plus membership.

The user’s contribution from charging and what level of benefits they attract will vary from personto person. So you could work out the costs for a small number of individuals who you consider to

be ‘typical’ of the support which you offer, perhaps picking people who are good examples ofindividuals with low, medium and high levels of need. You could decide to ignore this element tostart with, because what you are most interested in is the (net) unit cost to the council, not the total(gross) unit cost to the public purse.

Within an area, the cost of individual carers will also vary. For instance, some may attend moretraining or use more sickness cover. If you know your total expenditure for training, sickness coveretc, you could simply take that, divide it by the number of carers you have and use that as a roughestimate per carer. See also the Shared Lives Plus Support Profiling Tool.

Remember that all of these figures will necessarily be estimates and averages, with a considerablemargin of error, so overly detailed calculations of current and potential unit costs are likely to bemisleading and counter-productive.

2. The full cost of the time your team member(s) spend supporting each unitof support.

You started by deciding what you were going to consider a “unit” of support. Consider each type ofsupport you offer separately and look at a large number of units:

• eg If last year 41 people received a year of long term support at Band A, you provided 2120units of long term care at Band A.

• eg Or last year you might have provided your 25 individuals with a total of 154 days of Band

B day care: this is 154 units of Band B day care.

How many full time equivalent (FTE) staff members were needed to deliver the total number ofunits in each category of support you offer? This is easy if you happen to have one staff memberwho only works on a particular kind of care, but if you don’t, simply estimate roughly how much ofeach staff member’s time was spent supporting each category of care. Use a staff ratio which isefficient, realistic and sustainable: Shared Lives Plus have produced guidance on calculatingoptimum staff workloads. So if one full time staff member supported the whole of your day careoperation, but they had to go off sick because that was far too much, you might want to assumethat it is more realistic for 1.5 FTEs to sustain that total number of day care units.

Then divide the full cost of those staff members (or proportions of staff members) by the total unitsof support. It is important that you work out the full cost of those staff members, not just theirsalary.




The full cost of a staff member includes their salary plus:

• On costs (pension, NI)

• Pro rata costs for training, travel, computer, phone, stationery costs.• A proportion of your office costs (rent, heat, IT etc).

o eg if you have a team of five workers, each worker costs 1/6 of the office costs.• The worker’s line management costs:

o eg in the example above, each worker costs 1/5 of the cost of that manager.

The training, travel etc costs of staff members varies, so take an estimate by dividing your totaltraining, travel etc budgets by the total number of FTEs you have.

If you are putting a case together to become an independent scheme, note that council pensions,which are usually more generous than those in the independent sector, are not always fullyTUPE’d when an organisation outsourced. During a tender process, bidders have a legal right to

information about the costs of staff and all liabilities under TUPE.

Your overheads

In some councils, there is a percentage management cost applied across the board. This meansyou don’t have to do any work to calculate your current nominal overhead, but you would need tobear in mind that that figure is likely to be different if you were outsourced.

If you need to work out your overhead costs, use the “full cost recovery” approach. This meansestimating all of your fixed costs (the costs which are not directly proportionate to the number ofcarers you support) eg marketing, finance team’s time, payroll, proportion of a senior manager,

CQC registration, public liability insurance, Shared Lives Plus membership....

There are different ways to add in your overheads. As long as you don’t miss anything out, orcount anything twice, it doesn’t matter too much which approach you use. So you might decide todivide your overhead costs amongst your staff members and add in the relevant proportion ofoverheads when working out the full cost of each staff member. Or you might decide to divide yourtotal overheads by the number of units of support you provide.

Either way, if you’ve added together the payment to the Shared Lives carer and an appropriateproportion of the full cost of the time your team member(s) spends supporting that carer, and takeninto account a proportion of your overheads, you now know your unit costs!

Remember it’s only an estimate

Unit costing is always an estimate because:

• Some carers / arrangements need more support than others (see Shared Lives Plus SupportProfiling Tool).

• Demand and supply fluctuate but you can’t hire and fire staff to reflect the shifting demandson their time!

• There are economies of scale and also points at which you have to hire a new staff memberto cope with increased workloads.

Working out your unit cost is an informed guess, not a precise science, so it may be a good idea tomake a rough attempt, and then refine your answer as you think of more things to take intoaccount. The next Appendix suggests some questions to ask yourself about your unit costs.




Appendix BAnalyse your unit costs

What do you do with your unit costs when you have worked them out? The Business Case forShared Lives gives good evidence that Shared Lives tends to have a lower unit cost than otherforms of support:

• 10 new long term arrangements generate pa savings of between £23,400 (older people) and£517,400 (learning disabilities).

• A new scheme for 85 people costs £620k over 5 years, generates savings of nearly £13m.

The full range of savings by service type on page 16: www.naaps.co.uk/en/publications/surveys-and-research. However, the actual costs in your area will differ from the costs in the BusinessCase, which was based on care costs in the South East of England at a particular moment in time.

Laing and Buisson estimated that the average residential care home fee was £482 per week inEngland in 2009 (£684 for nursing homes).

Here are some questions about your estimated unit costs you may want to consider:

Are you competitive with other forms of care?

Laing and Buisson estimated that the average residential care home fee was £482 per week inEngland in 2009 (£684 for nursing homes). How does the support you offer compare with typicalcare home, supported living and domiciliary care costs? If it is cheaper, this is something to shoutabout! If it is more expensive, can you justify this through achieving better outcomes, or avoidinghidden costs in other, less effective solutions? Or should you be looking for ways to cut some of

your costs to be more competitive?

‘Alan’ is a 22-year-old young man in South Tyneside with a diagnosis of Asperger’s Syndrome.Following a breakdown within his family home and then in a residential placement, his behaviourdeteriorated and he began to drink to excess despite the best efforts of a number of expensive ‘outof area’ placements. The Care Management team approached South Tyneside Shared Livesscheme. Alan told them, “I hate it here and want to get out”. Some health professionals felt thatAlan’s support needs could not be met in a family home, but potential Shared Lives carers wereidentified and the matching process commenced. This involved a number of social ‘get-togethers’leading to an overnight ‘try out’ stay, ‘weekend stays’, then a week-long stay, until both Alan andthe Shared Lives carers felt the match could be positive.

Alan has now been supported within the scheme for three months without any incidents. He hasstated that he is “very happy and wants to stay with his carers for the rest of his life”. He has begunaccessing community education classes and leisure centres and is also contemplating a workexperience placement. The cost saving to the Local Authority by providing support within theShared Lives Scheme rather than the Residential Care Home is a staggering £49,000 per annum(£965 per week).

Are some of your services more sustainable than others?

Do some of your services cost more to provide than would usually be allocated to someone as apersonal budget? Do some of your services cross-subsidise others?

http://www.naaps.co.uk/en/publications/surveys-and-research







What would happen to your unit costs if you want to grow?

Growing your service could be one way of cutting your unit costs. But of course, there are points ina service’s growth where its costs have to rise sharply: for instance, when you need to take onanother member of staff. An independent scheme has to either build up a surplus, win a grant ortake out a loan in order to do this. An in-house scheme may need to make the case for investmentto senior managers. Schemes in some areas have been successful in doing this, even at a timewhen other services are being cut.

Will costs go up or down if you are outsourced?

Currently, some costs associated with your service may be absorbed by large back-officefunctions. These would need to be considered if you are considering putting the case for becoming

a social enterprise. The costs of an independent organisation include administration staff, financestaff and non-operational managers such as a finance manager and a Chief Executive.

It is important that service users’ benefits are maximised. This will increase the amount they areable to contribute through charging, reducing the cost to the local authority and can increase theamount of disposable income they are left with each week. Benefits maximisation is specialist workand needs to be carried out quickly and efficiently to avoid frustrating and costly delays betweenreferral and the service starting. Some independent schemes have negotiated with their council forthe costs of an in-house benefits expert, whilst others rely on a council benefits team.

As an independent service, you would also need to build in a profit margin, in order to generatefunds to invest and as reserves (the Charity Commission recommends that charities have enough

free reserves to run for six months, although lots of charities have less than that).

How many units would you need to provide in order to stay solvent as an independent service?Would you need to be bigger than you are at present? Think about worst-case scenarios, such asa sudden fall in demand or long term staff illness: would you be able to cope with these withoutbecoming insolvent? Grants are one of the ways in which independent organisations cope with adeficit on their running costs, but there are risks associated with not being able to find or renewgrant funding.

What will your cashflow be?

Of course, every organisation needs its income to exceed its expenditure to be viable. But being

profitable is not enough: if an organisation runs out of cash at any point, particularly if it does nothave much in the way of reserves to fall back on, it will fail. So you need to consider the timing ofincome and expenditure. How will you fund the first few years of the service, when you may bespending more developing the service than you are generating in income. You will need start-upfunding and ideally, the council will agree to pay for services in advance for at least the first threeyears of an independent scheme.




Appendix C

EU procurement law

There is a great deal of government guidance on tendering, commissioning and procurement forlocal authorities (LAs), Primary Care Trusts (PCTs) and other commissioners. Officialinterpretations of the law change: do not take this brief note as a full statement of the law. The Office of Government Commerce has published an introduction to the main parts of the law. ii Allpublic bodies must comply with EU procurement law, which stipulates opening up many fundingarrangements to competition through open tendering. EU procurement law changes: see the latestNAVCA guide for up to date information: http://www.navca.org.uk/publications/maze/Home.htm

However, EU procurement law applies only to contracts over the current threshold (from 2008,service supply contracts totalling £139,893 or more). Furthermore, procurement law has two parts

to it, Part A which imposes strict rules including advertisement of the opportunity across the EUand Part B which imposes a lighter regime. Services including social services are designated asPart B and Shared Lives schemes will fall into this category. Commissioners must adhere to theprinciples of “non-discrimination, equal treatment, transparency, mutual recognition andproportionality,”iii but they have some freedom to use resources to shape the provider marketplace.

For instance, an authority could choose to award grant funding as well as contracts if, for instance,there is a need to develop the current marketplace of providers in order to reach overlookedgroups or communities. Or if an existing voluntary sector Shared Lives scheme could show that itwas the only organisation which was able to engage with a particular group of local Shared Livescarers, it could be justifiable for the local authority to use a closed tendering process to award thatorganisation funding to work with that group. Similarly, the authority might decide to contract a local

user-led organisation through a closed tendering process to provide a voice for users of SharedLives, on the basis that that organisation was the only one of its kind in the area, or using anexception called ‘supported businesses’ (referred to as ‘sheltered workshops’ by the EU ) whichapplies to business with a certain percentage of disabled employees.

Treasury guidance states: “funding bodies need to decide on which form of funding is most likely togenerate the desired outcome” iv. In practice, however, local authorities tend to take a risk-averseapproach to funding and procurement law, and will often decide to go for open tendering as thefunding mechanism least likely to be challenged.

Guidance for statutory funders states they should always attempt to achieve value for money(VFM), but “VFM is not the lowest price – it is defined as the optimum combination of whole life

costs and quality to meet the user’s requirement.”v VFM will only be achieved if any tenderinvitations issued are based on an understanding of the outcomes expected by local service users,families, referrers and the Shared Lives carers whose work will be supported by a scheme.

Commissioners are not allowed to specify that only local organisations can bid, or imply that this isthe case by specifying the need for a local office, or local knowledge. They can, however, specifyevidence that the organisation has a detailed understanding of the needs of the end users and willbe able to engage with them and include them in its work.

It is possible for tender decisions to be challenged, because the process broke EU procurementlaw or unfairly or unreasonably excluded potential bidders. There are limited time windows in whichto do this, and an organisation bringing a challenge does not need to wait until the contract hasbeen awarded.

iPage 6 Introduction to the EU procurement rules : OGC Guidance March 2008

http://www.navca.org.uk/publications/maze/Home.htm

http://www.navca.org.uk/publications/maze/Home.htm



© Shared Lives Plus UK Ltd 2010. www.sharedlivesplus.org.uk www.communitycatalysts.co.uk |17 Registered charity: 1095562 Registered company: 4511426

ii Introduction to the EU procurement rules : OGC Guidance March 2008

iiiIbid: “Even when a tender process is not subject to the Directives, (for example because the estimated value of a

contract falls below the relevant threshold), EU Treaty-based principles of non-discrimination, equal treatment,transparency, mutual recognition and proportionality apply. Some degree of advertising, which is appropriate to the scaleof the contract, is likely to be necessary to demonstrate transparency. This is in line with the UK objective of achievingvalue for money in all public procurement - not just those covered by the EU Procurement Directives.”iv

Guidance to Funders: Improving funding relationships for voluntary and community organisations, HM Treasury 2003updated in 2005 Particularly chapter 4 (Wider Funding Context), http://www.hm-treasury.gov.uk/spend_ccr_guidance.htm v

Ibid

http://www.hm-treasury.gov.uk/spend_ccr_guidance.htm

http://www.hm-treasury.gov.uk/spend_ccr_guidance.htm

outsourcing shared lives workers guide apr 11

Documents