The provision of long-term care in post-war England had traditionally rested on in-kind benefits, with Local Authorities (LAs) barred from providing cash payments to disabled people, and a strong emphasis on the role of professionals as gatekeepers to care benefits (Glendinning 2008). Under this institutional arrangement, the state, through the LAs, retained the prominent role as both funder and provider of care services in long-term care, as it did in other areas of social policy (Stevens et al. 2011; Means 2012).
In the early 1980s, however, this status quo came under increasing pressure. Public expenditure on institutional care was soaring as a result of funding rules that allowed low income people to choose a private nursing or care home and claim all expenses from the social security budget (Lewis & Glennerster 1996). A report by the Audit Commission (1986) exposed the costs incurred with what was in fact a voucher system and its contradiction with the government’s stated aim of enabling people to be cared for in their homes.
The remedy came in the form of a series of proposals contained in the denominated Griffiths Report (1988). The Griffiths Report called for halting the social security payments for institutional care, and for the creation of quasi-markets in long-term care, with a prominent role to be played by community care (i.e. non-institutional care) and the denominated independent sector (i.e. non-public formal providers). The recommendations contained in the Griffiths Report reflected the mood of the times. During the Thatcher governments, NPM ideas based on contractual transparency, monitoring and performance indicators, competition and incentives had gained prominence, and became the advocated basis for the process of reform of public social services that were deemed both unresponsive to users’
needs and inefficient and costly to the public purse (Le Grand & Bartlett 1993). Introducing choice and competition would make services more responsive to users’ preferences and raise quality while reducing costs, as echoed in the Griffiths Report (1988).
The 1990 National Health Service (NHS) and Community Care Act was the embodiment of this rationale. When it came into effect in 1993, it established quasi-markets for long-term care, as well as for health care, that sought to expose public providers to competition from private providers, also denominated independent providers (for-profit and non-profit). The aim was
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also to restrict public expenditure on institutional care whilst channelling public expenditure to develop home care (Glendinning 2012).
The social security payments for board and lodging had fostered the creation of multiple small scale private providers of residential care, which the Thatcher government sought to protect. For this purpose it stipulated that 85 per cent of the community care special grant diverted from the social assistance budget to LAs to develop quasi-markets was to be spent on the independent sector (Lewis & Glennerster 1996, p.9). Nonetheless, up until the creation of quasi-markets, independent providers of domiciliary and community care services had historically played a more subsidiary role in England than in countries such as Austria or Germany. It was only in institutional care that independent providers had some clout. This meant that in many regions the mixed economy of care – i.e. competition on the same footing between different types of formal providers that was central to the introduction of quasi-markets – had to be promoted, particularly in community care (Hardy & Wistow 1998).
In line with NPM theories, purchasing and provider functions that until then had both been held by LAs, were separated, and public services had to compete with private formal provider organisations for the provision of care services commissioned by LAs. LAs were therefore to change their role from “provider” to “enabler” of care by becoming commissioners and purchasers of care (Hardy & Wistow 1998).
At the same time, care managers15 employed by LAs were entrusted with assessing needs and eligibility for care services, as well as assembling and purchasing a care package from the formal provider organisations contracted by the LA. In acting like gatekeepers to access care16, care managers were thus essential to optimise the use of services and to bring about the efficiency gains that were at the heart of the aims of the reform. This reflected earlier experiments with case management in the Thanet area in Kent that had proven successful in retaining older people in their homes by coordinating community care services (Challis &
Davies 1986).
With the 1993 reforms, although care managers were entrusted with purchasing care on behalf of users, they seldom held devolved budgets – unlike the earlier case management experience described above. Instead the reform emphasised their gate-keeping role in
15 The generic term “care manager” is used as a convenience to cover an array of job titles in LAs that dealt with assessing both eligibility and commissioning care services.
16 Previously, users had only been able to enter institutional care on the basis of their low income.
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limiting access if not demand and thus costs (Lewis & Glennerster 1996; Jacobs et al. 2009).
LAs thus became monopsonic buyers of care which gave them a fairly large degree of market power in determining prices. Further efficiency gains were expected from care managers possessing a good knowledge of local markets that would enable them to coordinate and put together tailor-made and value for money care packages (Glendinning 2008). Although the introduction of quasi-markets assigned lead responsibility for community care services to LAs, it did not change the means-tested nature of the English long-term care system, nor did it change the fact that cost-containment in relation to spending on institutional care was one of the main aims of the reform (Lewis & Glennerster 1996).
The creation of quasi-markets in long-term care had a profound impact on how care was provided and on users’ experiences with care. Each of these transformations is now described in turn, starting with the former.
Senior responsible officers from the LAs initially voiced concerns about the different nature of long-term care and their suspicions about the adequacy of market mechanisms to supply care, as well as the ability of for-profit providers to supply quality care (Hardy & Wistow 1998).
Despite these reservations, within the home care sector the LAs steadily and increasingly contracted services from independent formal provider organisations, albeit at a slower pace than in residential care where a more sizeable private market had already been in place prior to the 1990 NHS and Community Care Act. Just before the implementation of quasi-markets, only 5% of care (hours) provided at home was delivered by the independent sector, while in 2012-13 the figure was 91% - Figure 3.1.
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Figure 3.1 – Evolution of care hours provided, by type of formal provider organisations
Source: Own calculations based on NHS Information Centre (2006; 2009) and Adult Social Care Statistics (2013)
Notes: There is a break in series in 2008/09. Until 2008 data refer to distribution of hours on survey week in September, whilst from 2009 onwards data refer to total number of hours provided.
Although the independent sector grew rapidly – thus fulfilling one of the aims of the 1990 NHS and Community Care Act – Hardy and Wistow (1998) refer to a fragmented community care sector, dominated by small size agencies utterly dependent on LAs for most of their business, facing not only downward price pressures from monopsonic LAs purchasers, but also precarious revenue streams arising from contracting practices from LAs. Spot contracts, which offer no guaranteed price or quantity until the actual time of purchase, or call-off agreements, where price and general conditions are agreed in advance but quantity is not defined, were the preferred form of contracting by LAs in the years immediately following the introduction of quasi-markets (Hardy & Wistow 1998; Knapp et al. 2001; Ware et al. 2001).
At the same time, however, spot contracts were also more likely to allow for the kind of free choice of home care agencies that had been at the heart of the new legislation (Mannion &
Smith 1997). With time, and continuing tightening of budgets, LAs’ contracting practices in community care evolved to offer greater stability at lower costs. One example is through the use of block contracts that guaranteed (discount) prices and quantities of care to be
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purchased. Another is zoning practices, which gave some home care agencies preference within a given geographical area and thus helped to increase efficiency in the delivery of care by reducing travel costs (Ware et al. 2001; Forder et al. 2004; Baxter et al. 2011).
As early as 2000, there were emerging signs that the independent sector was becoming more concentrated through a series of mergers of small home care agencies (Ware et al. 2001).
Here, it is worth briefly contrasting the reality of the home care market, with that of residential care. The latter eventually evolved to become more concentrated and less reliant on LAs for funding, in part given the higher share of users self-funding their care (Baxter et al.
2011).
From the user’s viewpoint, the NHS and Community Care Act 1990 and accompanying guidelines for implementation, stipulated that users would be assessed, a care package would then be assembled, after which the user could eventually express preference for a given formal provider (i.e. a home care agency). The institutional consumerism rationale, however, placed the purchasing choice very much in the hands of care managers. The actual involvement of users in the whole choice process, namely in assessing their needs, can best be summarised instead by the finding that “users and carers (…) tended to think they had been ‘consulted’ rather than ‘involved’ in decision making” (Hardy et al. 1999, p.487), which was hardly an isolated case found in the literature on the topic (cf. Smith et al. 1995 ; as cited by Hardy et al. 1999, p.487; Knapp et al. 2001; Jacobs et al. 2009). Reasons for this were complex, ranging from over-zealous care managers concerned with the vulnerability of old-age users and their ability to act as consumers of care (Hardy & Wistow 1998), to lack of information and real empowerment. The conjugation of these elements only reinforced passive attitudes of users and relatives that were either happy to have others making the decisions for them – an example of Thaler’s (1980) cost of regret trumping choice – or just glad to receive something (Hardy et al. 1999; Ware et al. 2003).
Commissioning practices also had an impact on choice experienced by users. As cost constraints faced by LAs grew, these not only tightened eligibility to increasingly frail older people, but gradually came to fund only personal care. Downward pressure on prices paid by LAs, reliance on spot contracting, and the fact that LAs did not pay for travel costs, impacted the workforce by making it more difficult to assure a steady workflow of staff. It also proved difficult to guarantee continuity of care due to staff turnover (Hardy & Wistow 1998; Hardy et al. 1999; Ware et al. 2003; Wilberforce et al. 2011). Hinting at the importance of the relational aspects of care, older people often expressed stronger views not so much over the choice (or lack) of formal provider organisations (i.e. home care agency), but over the identity of their
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carer(s) (Smith et al. 1995; Hardy et al. 1999). Finally, care managers were often too prescriptive regarding the contents of the care package and even small changes would require renegotiations between home care agencies and care managers.
In conclusion, profound changes were triggered by the introduction of quasi-markets, not least the introduction of competition and choice (Le Grand 1991a; Le Grand & Bartlett 1993).
Regarding the latter however, the reforms introduced in 1993 placed the decision to choose in the hands of LA care managers, with users only nominally entitled to express their preferences. The reforms introduced in 1993 can be credited with increasing competition in the care sector as well as creating a mixed economy of care provision; however, the outcomes in terms of greater choice for the user (i.e. user choice) were decisively contentious. A greater emphasis was placed on competition rather than on empowering users with choice. User choice, particularly over other dimensions such as what, when and from whom (identity of the carer) was either limited or non-existent. It is perhaps important to go back to the previously referred Klein and Millar’s (1995) concepts of choice that is allowed, capacities for choice and choice set and Le Grand’s (2007) dimensions of choice (see section 2.3.1) to place choice under quasi-markets into perspective. At best, it can be argued that through competition, quasi-markets allowed users a wider choice set, i.e. more formal provider organisations from which to choose from. However even this is contentious as users remained at arm’s length in the process of choosing home care agencies and choices were limited to only one of the dimensions of care depicted in Table 2.1 in Chapter 2. As described above, allowed choice remained limited only to formal provider organisations that had contracts with the LA and as selected by care managers - this did not include choice over tasks or times for care. By not empowering users with agency, the capacity to choose was also curtailed and left firmly in the hands of care managers.