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CHC placements: negotiating fees for a better deal


By Carolyn Wickware
2 July 2017

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The cost of Continuing Healthcare (CHC) packages demands significant amounts from healthcare budgets, and as prices continue to rise, it’s time to get to grips with the level of spend in this area. 

The reorganisation in the NHS market has left some areas of CHC to drift, with providers using these changes to inflate prices charged, particularly on specialist placements.

The cost of Continuing Healthcare (CHC) packages demands significant amounts from healthcare budgets, and as prices continue to rise, it’s time to get to grips with the level of spend in this area. 

The reorganisation in the NHS market has left some areas of CHC to drift, with providers using these changes to inflate prices charged, particularly on specialist placements.

In addition price squeezes in the care market from other purchasers such as councils means that providers are looking more and more towards health purchasers as a major source of profit.

Many CSUs and CCGs are increasingly aware that a smarter approach to procurement is needed, and have therefore tried to develop pricing tools for different service levels, but have struggled to define needs categories.  In turn providers have used this inconsistency to lift prices through additional services.  Providers also typically charge 10 – 15% more for long term placements made by CCGs, than for those made by local authorities for similar comparable inputs.

With some patients who have complex needs requiring funding for many years, and costing thousands of pounds per week, any discussion on buying care with a provider could end up committing the NHS to hundreds of thousands, or indeed millions of pounds of spend.  Therefore working out a better deal on the prices quoted could actually create much-needed, sustainable savings.

Using negotiation techniques to reduce spend is increasingly popular, and a successful and effective route to secure savings, yet for some CCGs it’s not front of mind.  Some organisations find their teams are apprehensive to use it in practice, generally due to the concern of not knowing how to approach the process or how to manage responses from providers.  

The message for CCGs to communicate to their teams is that negotiating is not as difficult as it may seem.  In reality, the majority of people have negotiated at some point in their lives.  One of the best examples to cite here is the consumer world, which presents many opportunities to save.  In recent years the drive to secure a bargain has never been greater, nobody wants to pay full price, and today there are countless television and radio programmes, websites, books and various other advice channels that guide would-be savers through a variety of money-saving techniques.  The purchase of a new car for instance is a time when many brush up on negotiating skills in the hope of shaving pounds or even thousands of pounds of the price. 

These core skills and techniques, used commonly in a consumer setting, are now successfully being transferred to the health and social care environment.  What’s interesting is that providers are more accepting of negotiating prices within case reviews, and particularly for new placements.  Commissioners therefore often find that the best discount is received in the early stages of the procurement process, when buying a new placement with a provider.  This is because it places the buyer in a stronger position, however, with a little more effort, it is also possible to negotiate existing contracts. 

Here are some tips and tactics to encourage commissioning teams to negotiate: 

·      Know the price range

The first step is to have a basic understanding of what constitutes a reasonable price range for the level of care required.

Although the costs that make up the care packages can be complex, it is useful to have an understanding about what this entails.  A range of different underlying costs cover the care needs of each individual, from the basic cost of the care home building and facilities, to any additional services that the patient may require.  Therefore organisations should develop an insight into the cost components that make up the price.  For instance how many staff, and at what grade, are on shift, and what is the likely hourly rate for each staff type. CCGs that have robust models and banding levels for determining rates for services, which also reflect the needs of the patients, will have an advantage here.

Some CCGs find it useful to create framework agreements to inform providers of the value for money price they would expect to pay for a service. There are also many tools and models that have been developed to create an activity based cost for individual packages, and these enable commissioners to ‘price check’ and compare quotes against national averages. If the rate is identified as too high, it is time to negotiate; remember the best time to negotiate is before the placement is accepted.

·      Know what you want

Trying to get a better deal is impossible unless commissioners actually know what they want.  It may sound obvious, but encourage teams to determine the exact needs, and to communicate these requirements to the provider.  This way, both the care provider, and the commissioner know where to start from.

Commissioners should also be clear in terms of the level and type of care, the location and the facilities required.  Any additional services that may be needed should also be taken into account.

Do ensure that the services commissioned meet the patients’ needs rather than those offered by the provider.  Similar to any other market, people may try to sell packages that fit their needs better than those of the patient; there isn’t a one price fits all!

·      Double check the small print

Some care homes may offer clear information on charges, others may reserve details for the small print.  This is an issue which has resurfaced, as it has recently been announced that care homes are to be investigated by the Competition and Markets Authority (CMA) to find out whether residents are being treated fairly.  This is as a result of reports on unfair practices and contract terms including hidden charges, and unexpected fee increases.  The investigation focuses on whether there are any breaches of consumer law, however the results will of course be of interest to purchasers in healthcare.

To protect against unforeseen price hikes, ensure that purchasers specify all the requirements, including price, within the contract, and that the price agreed has set mechanisms for calculating inflation and future increases in need.

Nobody wants any surprises, so ask teams to double check the small print as this has always been an area of contention.

·      Pin down the right person

Speaking money with the wrong person could be a waste of everyone’s time, so ensure that whoever is responsible for this element within the buying team engages in dialogue with the person at the care providers who has responsibility for cost-related decisions.  Sometimes the care homes manager may be the right people to speak to, or it may be the owner of the care group. Quite often it is handled by head office, either by regional managers or specialist commercial employees.

·      Keep calm and friendly

Encourage teams to be calm, confident and focused on the level of care needed, and the budget they have to work with.  Remember they can adoptthe same approach used for any other negotiation. 

Understanding the provider/purchaser relationship is also important.  As the buyer of the service, the care home provider would normally want to secure the placement with that person.  Direct those responsible for buying to build rapport with the person they negotiate with, and remember it’s not a battle, both parties need to feel the outcome is acceptable.  

·      Keep options open

Reiterate to teams that it is not necessary to commit too early to a placement, make sure the alternatives have also been considered; it is much easier to negotiate with leverage, and the knowledge another provider can be approached.

Training

For staff with purchasing responsibilities in the team, who are not natural at bargaining, specialist training courses are becoming an attractive option to equip the workforce with the practical skills required for assessing CHC placements and achieving value for money.  These type of workshops often cover all aspects of care purchasing, negotiation and reviewing, and therefore provide purchases with a useful insight into how it all works in practice.

For teams that find negotiation tough, and prefer to assign the task to a professional, care fees specialists are another option.  The best specialists offer a range of tools, both computer based and with human support, to guide commissioners through the complication of the costings and take the worst aspects of the negotiation process away.

Better, more efficient processes

By encouraging commissioning teams to adopt money-saving techniques such as negotiating, it up-skills the workforce and enables better management and control of future spending.  For those with purchasing power, it encourages greater price awareness and understanding which leads to good, informed decisions to help manage budgets.

CCGs are under pressure to reduce expenditure without reducing the standard of patient care, and negotiating CHC fees is one way of the most effective ways to get the purchasing process into better shape. Keep in mind that good negotiators can expect to save typically 10 to 15% against a quoted care package; this is a much-needed step forward for the sector, an opportunity to put tried and tested methods into practice that make a real difference to efficiencies.

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