Self Directed Support – Financial Sustainability Modelling
1. Introduction
As part of the conversion of in-house services project, participating local authorities signed up to total transformation wanted to understand the financial effects and implications of changes in purchasing patterns with self directed support. In particular Leeds CC (along with Sheffield, Newcastle and Cambridgeshire) wanted to understand the effects of changes to current patterns of social care expenditure on ‘in-house’ service provision.
This section covers three elements:
i. The iMPOWER/CSIP “Financial Sustainability Model” and its usefulness in practice for Leeds CC.
ii. Considering with Leeds City Council the key variables that should be built in to a simpler, “what if” financial model designed to show the overall financial impacts of the roll out of personal budgets in relation to the pattern of social care expenditure on different types of services and support ‘packages’.
iii. Creating a relatively simple spreadsheet to show the broad, high level impact of these anticipated changes in the pattern of social care expenditure.
The primary focus of this work is on ii) and iii) above, i.e. the financial impacts of the roll out of personal budgets in relation to the pattern of social care expenditure on different types of services and support ‘packages’.
2. iMPOWER/CSIP “Financial Sustainability Model”
A financial sustainability model developed by CSIP and iMPOWER for use by local authorities models at a macro level the difference in costs between the current social care system and a SDS system. It allows local authorities to input their current overall social care expenditure and model the affordability of implementing SDS both in terms of the costs of spending on clients, by client categories, and the costs involved in the transition to a SDS system.
Leeds CC has used the iMPOWER financial sustainability model to assess the overall projected financial impact and cost of implementing a SDS system. The projection was based on 11,702 clients in total (2007/08). The projections are based over a five year period from 2008/09 with the take up by client of personal budgets increasing over time to 70% by 2012/13.
In summary the iMPOWER model indicates that the introduction of a ‘personal budget’ system will result in an overall net saving of £95,827,000 over five years. This reflects variables in the model that allow for savings to occur as a result of ‘prevention and early intervention’ and ‘reablement’.
No feedback has been received from the other Total Transformation sites regarding either their use of the iMPOWER model or its usefulness.
3. Developing a simpler financial model
The iMPOWER model provides financial ‘sustainability modelling’ at a macro level and its use has provided reassurance to Leeds CC in relation to the overall anticipated affordability of shifting to a SDS system including a full roll out of personal budgets.
A different issue is what the effect of the roll out of personal budgets across the total population of adults with social care needs who are currently assessed and funded by Leeds CC is likely to be on the pattern of social care expenditure by type of service/support package, with particular reference to the effect on expenditure on in-house services. The purpose of this work is to develop a simple model that can show the potential shifts in patterns of social care expenditure as adults with social care needs take up personal budget allocations and take decisions about spending those allocations on different types of services/support packages.
To better understand the effects on social care expenditure of implementing a SDS system, to date Leeds CC has undertaken an exercise to model the potential difference in expenditure between the current system and a SDS system. This has been based on a ‘desk top’ exercise involving approximately 220 current clients. These clients were drawn from a mix of ‘client categories’. The analysis is based on assessments by staff rather than self assessments by customers with care managers. The analysis involved:
§ Current expenditure was identified for each of the 220 clients by service/activity type. This also included identifying the current expenditure on direct payments where applicable for these 220 clients.
§ A Self Assessment Questionnaire (SAQ) was used to identify the total ‘points’ for each client.
§ A Resource Allocation System (RAS v5) was applied based on £50 per point from the SAQ for each client to provide a RAS allocation for each client.
§ The cost of the current ‘traditional’ package for each client was compared against the anticipated RAS allocation for each client to show the variance (where applicable).
§ The total variance was identified across all 220 clients between the total expenditure under the current ‘traditional’ system and the total projected expenditure under a SDS system.
In summary this work indicated that:
§ The average ‘points’ per client from the desk top SAQ is 311.
§ The average RAS personal budget allocation based on the desk top SAQ is £16,495 per annum.
§ The variance across all 220 clients between the total expenditure under the current ‘traditional’ system and the total projected expenditure under a SDS system is -£1,212,347; i.e. the exercise indicated that the projected expenditure under a SDS system would be £1.212m less per annum across the sampled 220 clients than under the current system.
Clearly the expenditure projections from this work needed to be treated with some caution because the self assessments are based on a desk top approach (i.e. completed by staff) and not based on actual self assessments by clients. However, this work does provide a reasonable method of testing the projected impact on expenditure of introducing a SDS system and it does provide a level of reassurance to Leeds CC in relation to the overall affordability of rolling out personal budgets across the population of adults with social care needs.
To better understand the financial consequences of implementing a SDS system over the next few years a number of other factors are of interest to Leeds CC including:
§ How to measure the changes in service expenditure from the current pattern to a different pattern of expenditure based on how individuals with personal budgets choose in practice to spend their allocations.
§ What the potential effects are for in-house services.
§ What the potential effects are for current externally commissioned services.
§ What the potential effects are over a 5 year timescale.
The intention is to show as simply as practicable what happens to the current pattern of social care expenditure over the next 5 years as access to a personal budget allocation becomes the norm for individuals who are eligible for social care services funded by the local authority following an assessment process.
Based on discussions with Leeds CC Adult Social Care Finance Managers the components of a simpler financial model need to include:
§ A baseline pattern of expenditure.
§ Breaking down current baseline expenditure by type of service and by client and client group ‘category’.
§ Showing projected future expenditure by type of service (e.g. based on types of expenditure/packages used by individuals with direct payments and/or from experience from Individual Budget pilots).
§ Show how the pattern of expenditure shifts away from the baseline year pattern to a different pattern in each subsequent year by different types of service/activity.
§ The ability to model these expenditure shift effects between each consecutive year over a 5 year period.
The intention is that this model:
§ Is designed to be relatively simple and can be used and understood by non Finance Managers and staff.
§ Can be used as a predictive ‘tool’ or model for how patterns of spending may change as personal budgets are rolled out to all clients (based on assumptions about how client will possibly use their allocations).
§ Can be used as a ‘tool’ for measuring how actual spending shifts in reality year-on-year and how the implementation of a SDS system is ‘driving’ the changes in the pattern of expenditure. This makes the model more realistic as it becomes possible to input data based on actual patterns of expenditure year-on-year.
4. A simpler financial model in practice
Based on the requirements of Leeds CC, a simple method for modelling the anticipated and actual changes in the patterns of social care expenditure following the roll out of personal budgets is set out below.
A number of variables are used as part of the model. These are:
§ Adult social care clients. This is shown at the level of individual clients and aggregate, client ‘categories’.
§ The level of need. This comes from the SAQ and is shown as the number of ‘points’ (at the individual client level).
§ The level of personal budget allocations. This comes from the RAS and is shown at the individual client level as an individual allocation and at the client category level as aggregated allocations (e.g. adults with learning disabilities receiving a personal budget allocation within a given year).
§ Type of service/support package. This is simplified and shown for the purposes of the model as three categories; in-house services, external services, and ‘bespoke’ individual support packages/arrangements.
The model is intended to show:
§ The potential impact of the roll out of personal budgets on patterns of expenditure on defined types of services/support packages; in particular the effect on potential expenditure on in-house services. This involves making assumptions about how individuals with personal budgets will spend them in practice.
§ The impact in practice, year-on-year, once data is collected on how individuals with personal budgets have actually used them in terms of expenditure on defined types of services/support packages.
The model in summary is intended to be used in the following ways.
§ For use as a predictive model for how patterns of expenditure may change as personal budgets are rolled out to clients. It is necessary to input known or predicted SAQ and RAS data where clients or categories of clients are receiving personal budgets. It is then necessary to make assumptions/predictions about the pattern of expenditure i.e. how clients with personal budget allocations will use that funding to purchase in-house services, external services or ‘bespoke’ packages or a mix of these options. Initially it is suggested that this is based on evidence from the individual budget pilots and how individuals with Direct Payments in Leeds have been spending/using their allocations. Evidence from the individual budget evaluations suggests that it is likely that more than 50% of expenditure may be on ‘non traditional’ types of services, i.e. within the ‘bespoke’ individual support packages/arrangements as set out in the model.
§ For use as a model for measuring how expenditure shifts in reality year-on-year and how the change to a SDS system is ‘driving’ the changes in the pattern of expenditure, it is necessary to use data on the actual pattern of expenditure from a previous year to alter earlier predictions/assumptions about the pattern of expenditure in future years. In this way as actual data is compiled on how individuals are choosing to spend their personal budget allocations in practice, the predicted patterns of expenditure in subsequent years will become more accurate.
The attached spreadsheets show how the model works in practice.
§ The starting point for the model is a baseline based on current ‘traditional’ expenditure.
§ Expenditure is modelled at the level of individual clients and aggregate client categories. Average and total level of expenditure are shown at both client and client category levels.
§ Baseline expenditure is broken down into expenditure on in-house services (covering residential care, domiciliary care and day services), externally commissioned services, and current Direct Payments.
§ For expenditure in subsequent years, the following is shown:
o The level of need as defined by the SAQ points (at the level of an individual client).
o The personal budget allocation as defined by the RAS, either for an individual client or as an aggregated sum for a client group category.
o The value of a ‘traditional’ care package (for clients yet to take up a personal budget).
o Expenditure is broken down by in-house services (covering residential care, domiciliary care and day services), externally commissioned services, and ‘bespoke’ individual support packages/arrangements.
o Total expenditure.
o Variance – changes in expenditure against the baseline or previous year on in-house services.
The following assumptions have been used:
§ The baseline for existing adult social care expenditure is 2008/09.
§ The client categories used are learning disabilities, physical disabilities, mental health, older persons, and other.
§ The roll out of personal budgets by Leeds CC will take place over five years. The take up is assumed to be 2008/09 5%, 2009/10 15%, 2010/11 35%, 2011/12 60% and 2012/13 70%.
§ Figures used for funding and expenditure are assumed to be net of any client contributions.
§ As personal budgets will be rolled incrementally over 5 years it is necessary to show the value of ‘traditional’ care packages for clients or categories of clients who are yet to receive or take up a personal budget. The pattern of this expenditure would typically be based on current spending by type of service. As the percentage of clients receiving a personal budget increases year-on-year the significance of the value of ‘traditional’ care packages to influence the pattern of expenditure would be expected to diminish.
The spreadsheet model operates in the following way:
§ The model uses two spreadsheets; one that operates at the individual client level and one that operates at the client category level.
§ Each spreadsheet has three worksheets:
o Actual data.
o Predictive data.
o Assumptions.
§ The model is based on known expenditure in a baseline year. Changes to the baseline pattern of expenditure are shown across five subsequent years.
§ The model shows expenditure at both the client level and client category level, broken down by expenditure on in house services (covering residential care, domiciliary care and day services), external services and ‘bespoke’ packages.
§ The worksheets are structured so that only cells that are coloured yellow allow data to be input or changed.