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How To Increase Fee Rates For Your Care Service

  • By Martyn Dawes
  • •  Nov 08, 2021

Reading time:3.5 minutes

A care business operates in the same way as any other

Income - Outgoings = Profit

Therefore to increase profit it makes sense to do one of two things

  1. Increase income
  2. Reduce outgoings

In this article we will be looking at number 1, and in particular, the often overlooked element of increasing income. The murky world of fee rates. Over the past few years I have looked at fee rates for companies, and in one company alone I recovered over £220,000 from just 10 homes in 8 months.

And it was pretty simple.

Here is how I did it.

Maximising your fees

Occupancy, or the number of service users, is the most obvious route most providers choose when looking to increase income, and of course, this is essential to keep any care business afloat. Service users are the life-blood of your care company, for without them there would be no business to operate.

However, what those users pay to access your service can be superseded by a ‘just get them in’ approach in the beginning, especially if occupancy is down against target. We can panic and accept a low rate just to get people in the door. This approach is not a good long-term solution as your beds can quickly fill up with low fee paying occupants.

Once in, we can then rely on increasing income solely through trying to achieve the annual uplift in the longer term.

But things change, the needs of your users change. The annual uplifts can be overlooked during the everyday melee of running a people business. It is essential that at least once a year you carry out a full fee review.

Fee rate reviews

Here are the key elements that need to be examined when conducting your fee reviews

To help you I have put together a simple spreadsheet that you can use to complete your fee review. It will help you make sure you get each piece of information needed, and it automatically tallies all the items so you can keep track. It can be downloaded here https://www.theoverwhelmedmanager.com/mediaandresources

Using the fee framework attached to this link, complete the details for each resident, home by home, (or service user, by each service). Whilst developed specifically for care homes, the same principles apply for DCA.

(Whilst much of this will seem obvious, when you conduct your fee review you may be surprised by the number of anomalies you discover…!)

CcarestockroomHQ

When completing your fee review you will need to pay attention to the following:

Therefore to increase profit it makes sense to do one of two things

  1. Correct rate:

    Is each and every service user on the correct rate. You may be surprised by the number of users that are on an incorrect fee rate.

  2. Last fee uplift:

    When was the last fee uplift each resident had. I have found residents with no uplift for over 12 years! Do take a chance, just conduct a quick check. You have nothing to lose. Your Local Authority may not automatically increase fees, they can be very forgetful…… If you have not had a fee increase then you need to contact the funder ASAP to ask. Check your contract, it will usually have a section on frequency of fee reviews, which is normally annually. Ask for your review

  3. Right service rate:

    Is the service user on the right fee rate for the service. If they have a diagnosis of Dementia, are they on the Dementia rate? This is often higher. By ensuring your residents are in the right service category you can often achieve some quick wins

  4. FNC:

    Do your nursing clients have Funded Nursing Care in place. You may be surprised how many are missed. Have their needs changed recently to nursing care? You will need to apply for this. Don’t hang around, ask for FNC through your local CCG. They will probably come and do a full review, although each CCG may operate differently.

  5. FNC uplift trick:

    Some Local Authorities will incorporate FNC into their fee and pay you in one lump sum. I have found that in some instances the annual uplift actually accounts for the increase in FNC alone, and therefore the Local Authority have not paid any uplift at all. You should obviously challenge this approach.

  6. Dependency / needs change:

    How often do you complete dependency needs reviews. Has a Resident/Service User needs changed? If so ask for a review and uplift to meet the increased need. Show any increase in staff hours caused by the change in dependency.

Be prepared to fight. Local Authorities do not part with their cash easily and are likely to resist any move to increase the rates they pay. Your contract will outline how to complain or solve a dispute. Don’t be afraid of going down this route if you need too. I have found that individual cases are resolved very quickly when a dispute or complaint is raised.

Whilst most LAs operate a set fee rate, there are some that ask you to bid for each care package. I call this approach a ‘race to the bottom’, cheapening social care under the guise of the ‘guardians of the public purse’. There is still value in completing this exercise as many of the points covered will still apply. For instance, if needs change you can still apply for an increased fee.

Average Weekly Fee

Many providers use Average Weekly Fee (AWF) as a Key Performance Indicator. It can be a useful indicator of the performance of your business. However I have found that many managers do not know how AWF is calculated, or understand the effect admitting a resident can have on this target. I have put together a guide and calculator you can use. This can be found by following the link here

If all this sounds like a lot of hassle, consider employing a consultant. While these gains might be small in Year 1, they can easily mount up and carry on producing income year on year.

CcarestockroomHQ

Martyn Dawes is a Senior Social Care professional, author of hugely successful book ‘The Overwhelmed Manager: The Health and Social care Managers Guide to Peaceful Living’, Consultant and Coach. You can get in touch at martyn@martyndawes.co.uk. Website: www.theoverwhelmedmanager.com. Martyn has put together a simple Enquiry Process Self-Assessment. You can find the link here


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