Demand in the Residential Care Market – a personal perspective


Brendan Johnston, the Retired
Chief Executive at Northern Ireland Social Care Council and Residential Forum
member asks some questions about the supply and demand for residential care.

At the Residential Forum in May 2017,
we were looking at how we get the best and most appropriate residential care
using the market.  Markets are shaped by
supply and demand, so let’s look at the demand side.

Who shapes demand?

If I buy anything on any type of
market, I am the person who decides on the detail, the quality and the price of
what I’m buying.  The person who uses the
product or service is the person who pays for it.

However, often, this is not the case
in the residential care market.  The vast
majority of residential care beds are paid for by local authorities or, in
Northern Ireland, HSC Trusts.  Deciding
the nature, quality and price of the service (the demand side of the equation),
is therefore split between a number of parties, each of whom may have very
different priorities and concerns.

Specifying the demand involves among


services user and, to a greater or lesser extent, their family; and

care manager or other professional negotiating the placement.

Of course, not all these players have
equal power.  But who should have
sovereignty in the relationship. Putting the user at the centre would certainly
imply that power should be tilted in that direction – that the service user
should be given the money and make the choice.
This, however, is very rarely the case and can produce its own

Informed Demand

Effective markets depend on a well-informed
purchaser.  The service user and their family
may have clear ideas on what they want, but have limited information on the
range of suppliers, the alternatives and what to look for in terms of indicators
of real quality.  How do we ensure that
users are protected from making poor or even risky choices?  

There’s a real challenge here.  We can’t patronise people or treat people as
infants –  incapable of knowing what they
want – we all have the right to make poor choices.  But we need to acknowledge there are issues,
not easily dealt with by regulation.  Regulation may keep bad providers out of the
market, but it doesn’t deal well with the mediocre or ‘good enough.’  Additionally, it has proved very difficult to
provide easily accessible information on the quality of provision that can
prove really useful to users.

A perfect market requires informed
and discerning buyers.  We need to be
honest about this and that means acknowledging that the market mechanism is far
from perfect or straightforward.

How does demand
shape provision?

Market processes involve dialogue and
negotiation.  I may know broadly what I
want, but until I go out shopping, I don’t really know what’s available – and
what’s more, I may find something that I hadn’t been aware of that meets my
needs more effectively or economically.
It’s not the customer who designs the motor car, but that doesn’t mean
they don’t play a central role in shaping the product.  A successful provider will be close to
customer demand and will be able to innovate to get an edge on competitors.

But look at how we commission
residential care.  We develop a specification
and go through a procurement process, the major requirement of which is that it
must be scrupulously fair and transparent (it’s public money).  But the process is also bureaucratic – it
allows little, if any, room for negotiation.
A provider that has something better and cheaper, but not necessarily in
line with the specification, can’t really be considered even if it’s a
legitimate alternative way of meeting need.
At best the process inhibits collaborative service development.  At worst, it stymies innovation and diversity
in provision.

Even at its best, the procurement
process consumes a huge amount of organisational energy and can become a
diversion to the real issue of meeting services user needs.

Is the market
analogy the best way of getting the best services?

A market that effectively meets the
needs of consumers requires several elements.
Choice is at the centre of it, but there are a lot of things that can
inhibit the range of alternatives available.
There may be scope for a lot of choice in a heavily populated city, but
if you’re living in a remote area and you want to stay there, there may not be
a lot on offer.

Effective markets imply that
consumers are well informed and act rationally in negotiating and meeting their
needs.  I’m not convinced that this is
the case – the criteria driving a commissioner may not be the same as that
which drives the end user.  I am far from
convinced that players in the market work to a shared, rational approach.

Where does this take

This is not a treatise – it’s just a
blog.  It’s not the purpose of this paper
to advocate a way forward.  Its purpose
is to raise questions and challenge thinking.

It’s a long time since we moved to a
mixed economy of care and I’m not advocating any return to the old status
quo.  However, in securing publicly
funded residential care, we find ourselves in a model which is dominated by a
market paradigm.  The market provides a
reasonable analogy, but its only an analogy.
It has driven a lot of improvement, but we need to consider its
limitation.  Does it facilitate planning,
leadership, collaboration, innovation, diversity?  These are issues we need to think about.

Further information

As I said, this is just a blog and
responses and comments are welcome.  For
further information, resources and thought-provoking material go to our

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