Provider Failure and other Service Interruptions: Responsibilities to Work Collaboratively

1. Introduction

The possibility of interruptions to care and support services causes uncertainty and anxiety for people receiving services, their carers, family and friends. Interruptions can arise for a number of different reasons, for example when a provider of services faces commercial difficulties that puts the continuation of their business under threat. Both large national and small local providers can experience commercial issues which cause uncertainty for people receiving care and support.

This chapter outlines the responsibilities of the local authority in relation to market shaping and commissioning. It contains information for service staff involved in contracting and commissioning arrangements with local authorities.

The local authority has an important role in situations where a provider is unable to continue to supply services because of business failure. There are numerous other situations that can cause disruption to care and support services. Some may impact on the whole business – for example a provider decides to close the business down, while others impact on a particular service – for example a meningitis outbreak at a care home. The local authority should use their powers to act in such cases, as set out below.

2. Service Interruptions because of Business Failure

Business failure of a major provider is a rare and extreme event and does not automatically equate to closure of a service. It may have no impact on the people who use the services. However, if a provider is unable to continue because of business failure, the duties on the local authority are as follows.

2.1 Temporary duty

The local authority is under a temporary duty to meet people’s needs when a provider is unable to continue to carry on the relevant activity in question because of business failure.

2.2 Meeting needs

The authority must take all reasonable steps to agree how needs should be met with the adult concerned. It should seek to minimise disruption for people receiving care, in line with the wellbeing principle (see Promoting Wellbeing) and, although authorities have discretion about how to meet needs, the aim should be to provide a service as similar as possible to the previous one.

The needs that must be met are those that were being met by the provider immediately before the provider became unable to carry on the activity. The local authority must ensure the needs are met but how that is done is for the local authority to decide, and there is significant flexibility in determining how to do so. It is not necessary to meet those needs through exactly the same combination of services that were previously supplied.

When deciding how needs will be met, the local authority must:

• involve the adult concerned, any carer that the person has, or anyone whom the person asks the authority to involve (see Care and Support Plans);
• where the adult lacks capacity to ask the authority to do that, the local authority must involve anyone who appears to the local authority to be interested in their welfare;
• where a carer’s service is involved, the local authority must involve the carer and anyone the carer asks the authority to involve.

2.3 Restrictions: NHS services

The Care Act imposes certain restrictions on the provision of health services by the local authority and these apply to meeting needs in provider failure cases. A local authority may not meet needs in provider failure cases by, for example, providing NHS Continuing Healthcare (see Continuing Healthcare NHS chapter) . Where the failed provider’s clientèle consists of persons in receipt of NHS CHC, it would be reasonable for the local authority to conclude that it was not necessary to do anything to meet those needs. This is because the duty to provide NHS CHC falls on the NHS and the local authority cannot provide it.

3. Business Failure involving a Provider in the Care Quality Commission Oversight Regime

3.1 Financial health

The financial ‘health’ of certain care and support providers is subject to monitoring by the Care Quality Commission (CQC). The Care and Support (Market Oversight Criteria) Regulations 2014 set out the entry criteria for a provider to fall within the regime.

These are intended to be providers which, because of their size, geographic concentration or other factors, would be difficult for one or more the local authority to replace, and therefore where national oversight is required.

The CQC will determine which providers satisfy the criteria using data available to it. It will notify the providers which meet the entry criteria.

The CQC must then assess the financial sustainability of the provider’s business. If it assesses there is a significant risk to the financial sustainability of the provider’s business, there are certain actions the CQC may take with that provider (none of which involve the local authority).

3.2 Local authority duty

Where the CQC is satisfied that a provider in the regime is likely to become unable to continue with their activity because of business failure, it is required to tell the local authority which it thinks will be required to carry out the temporary duty, so that it can prepare for the local consequences of the business failure.

The CQC will inform the local authority once it is satisfied the provider is unlikely to be able to carry on because of business failure.

The CQC’s trigger to contact the local authority is that it believes the whole of the regulated activity in respect of which the provider is registered is likely to fail, not parts of it.

It is not required to make contact with authorities if, for example, a single home owned by the provider in the regime is likely to fail because it is unprofitable and the CQC is not satisfied that this will lead to the whole of the provider’s relevant regulated activity becoming unable to continue.

In these circumstances, it is the provider’s responsibility to wind down and close the service in line with its contractual obligations and it is expected that providers would do so in a planned way that does not interrupt people’s care.

4. Business Failure involving a Provider not in the Care Quality Commission Oversight Regime

Regulations set out the criteria for the CQC regime. It will be for the CQC to apply those regulations and decide which providers are included. The providers outside the regime will in the main be those with small and medium size businesses.

The temporary duty on the local authority to meet needs in the case of business failure applies regardless of whether the provider is in the market oversight regime.

Despite the CQC having a market oversight responsibility, the local authority has responsibility to ensure continuity of care in respect of business failure of all registered providers.

5. Service Interruptions other than Business Failure

5.1 Urgent needs

A local authority must meet a person’s eligible needs. This duty applies whether or not business failure is at issue. The Care Act covers the circumstances where care and support needs may be met, that is circumstances where no duties arise, but the local authority may nevertheless meet an adult’s needs.

In particular, it permits a local authority to meet needs which appear to it to be urgent. In this context, ‘urgent’ takes its everyday meaning, subject to interpretation by the courts, and may be related to, for example, time, severity etc.

5.2 Power to act by the local authority

In relation to service interruption, circumstances that might lead to the exercise of the power include where the continued provision of care and support to those receiving services is in imminent jeopardy and there is no likelihood of returning to a ‘business as usual’ situation in the immediate future, leading to urgent needs.

Not all situations where a service has been interrupted or closed will merit local authority involvement because not all cases will result in adults having urgent needs. For example, if a care home closes and residents have agreed to the provider’s plans to move the residents to a nearby care home that the provider also owns, the local authority will not necessarily have to become actively involved as urgent needs might not arise. On the other hand, the local authority might wish to be satisfied that the alternative home can adequately meet the urgent needs.

5.3 Provider responsibility

If a provider has not failed, it is primarily the provider’s responsibility to meet the needs of individuals receiving care in accordance with its contractual liabilities. The local authority may wish to be involved to help with this. The power provides an ultimate backstop for use where the provider cannot or will not meet its responsibilities, and where the authority judges that the needs of individuals are urgent (and where the local authority is not already under a duty to meet the adult’s needs).

5.4 Service closure: Short and long term

When considering action in relation to service interruption or closure, there is a balance to be struck. On the one hand, if the local authority knows there is a serious risk to the continued provision of a service, it may consider not using that service temporarily or reassigning people using that service to an alternative service. On the other hand, it may be possible and justifiable for the local authority to act in a way that maximises the provider’s chances of continuing to provide the service and avoiding a business failure. The local authority should weigh the consequences of its actions before deciding how to respond, in particular, how its actions might impact on the likelihood of the service continuing. Certain actions may increase the risk of precipitating the business failure.

A service closure may be temporary or permanent. Similarly, an emergency closure or planned closure may be involved. What matters in deciding whether to meet needs is whether the needs of the people affected appear to be urgent. For example, the sale of a provider’s business may be a positive development for residents, service users and commissioners alike and may not lead to urgent needs. These powers are not intended to inhibit the effective operation of a market in improving choice, quality and investment.

6. Contingency Planning

As part of contingency planning, the authority should discuss with local providers which services it would be willing and able to provide if the need arose because another local provider had failed. This should help to facilitate a prompt response that would help to maintain continuity of care for the people affected. Through its market shaping activities, the authority should encourage trust between the parties so that effective relationships exist where urgent needs are to be met.

7. Media

Service interruptions are often the cause of much anxiety and media attention. The provider should have the capacity to react quickly to any media reporting of service interruptions, whether large scale or small, if uncertainty and anxiety are to be minimised.