Minister For Older People, Mary Butler earlier this year, called out private corporate home care providers for the low pay and poor employment conditions they offer carers. With regard the capacity issues the sector faces, she rightly pointed out that there is no shortage of carers, just a shortage of carers who want to work for the minimum wage.
In response, corporate providers claimed that the issue was more complex than just a question of pay and that there were many other issues involved. They felt what was needed was a workforce taskforce to tackle issues. While the issue is complex, their stance betrays the immediacy of the pay issue at hand and somewhat obscures the importance of pay.
While a workforce taskforce could certainly play a role in addressing issues where the input of various stakeholders is needed and in trying to put the sector on a sustainable footing going forward, the fact is the significant issue of pay can be addressed rapidly without the need to wait for a taskforce.
Presently, approved corporate providers make very attractive margins from the provision of home care to both the State and private funders. They have ample room to significantly improve pay rates as well as put carers on normal guaranteed hour contracts in the morning. The problem is the will or the incentive isn’t there to forego profit margins in order improve conditions for carers. The result of private providers opting to maintain their considerable margins, is a sector that faces severe capacity issues which in turn has a huge effect on the quality of provision through a high turnover in carers.
The chart below illustrates just how lucrative home care provision can be in Ireland presently and how little of those funds reach carers pockets. The figures are based on research done on the publicly available filed accounts of a selection of corporate providers in recent years as well as first hand knowledge of running a traditional home care provider. Pay figures are based on provider representative organisations figure of average carer pay being €12.50
One figure that jumps out is the level of corporate overheads. In defence of corporate homecare providers, their level of overheads is driven to a large extent by the requirements of the HSE set out in their tenders. More overheads, mean less money going to carers. The hope would be that when regulation comes in, it will be smart regulation and not a one size fits all system that existing tenders promote.
By insisting on the same level of regulation for an older person with dementia and with no family support as for an older person with full mental capacity and proactive family support, we increase the overhead burden and decrease the amount of funds that go to where they can have a real effect on the quality of provision, to carers. Regulation needs to be appropriate and proportional to the actual care situation, as well as the type of provider.
Also, under overheads, it’s important to note, the amount of money that leaks to non-care activities such as franchise payments to non-Irish interests. Some of the largest private providers of home care in Ireland are franchises and in 2020 according to the HSE Annual Report, they received a total of €124,000,000 of public funds for the delivery of home care. Generally, franchise fees are 6-8% of turnover which means that between €7,500,000 and €10,000,000 of funds meant for home care delivery, just leave the country.
However, the figure that stands out most in the graph, is the level of owner’s compensation. A large number of home care companies are owner managed (very often husband and wife) and the concept of owner’s compensation looks at the total returns to the owners of these companies and takes into account, their salaries, pension contributions, dividends and also profit margins.
If you take an average corporate provider who might have a turnover between €3,000,000 and €4,000,000, those figures would suggest an owner’s compensation between €600,000 and €800,000! Private providers absolutely need to make a profit but perhaps not at these levels. The fact is, starving carers of funds has a hugely detrimental impact on the quality and sustainability of home care provision as well as the sector’s ability to meet growing demand.
It is clear that the economics of the sector allow for significantly better pay for carers but the main reason why it isn’t happening, is that these corporate providers have a monopoly on State funding for home care, which means families and carers have no choice but to work through and with them.
Widening the ecosystem of providers and giving both carers and families a wider choice in how and by whom their care and support needs are provided, is the key to breaking this monopoly and ensuring a better use of scarce funds. Carer co-operatives, local community organisations and local micro-providers, are some alternatives that could provide this choice.
The best way to achieve this increased choice and better use of funds, is devolve control and selected responsibility to families, through personal budgets. The commencement of the Assisted Decision Making Act in June of 2022 will hopefully foster the roll out of personal budgets. The choice within personal budgets can’t be restricted to a limited list of approved corporate providers. This latter point is also important if we are to make headway in addressing the severe capacity issues the sector is facing. Real choice, drives quality, fairness and efficiencies.
The other major concern with a workforce taskforce, is the importance of ensuring carers are actually at the table and not just represented by their employers. Employer organisations talk about their commitment to improving carer employment conditions but it would be wrong to allow them to set the agenda on what those improvements might look like. The enunciation of needed improvements needs to come from carers themselves. Carers need to be equal partners at the table with employers and the HSE.
Undoubtedly, the home care sector needs to be restructured and improvements made. Upcoming regulation is a real opportunity to do that. Regulation in the UK, Australia and Canada points to less top-down dictums and more trust, proportionality and choice. Regulation in Ireland needs to ensure it is appropriate, fosters choice and innovation and that it concentrates on outputs not inputs. The interests and wishes of carers and families must be at the centre of any future changes.