New business models needed in social care

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Alastair Keatinge says social care charities must develop innovative solutions

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21st July 2017 by TFN Guest 0 Comments

In recent months, we’ve seen growing tensions between councils and charities over the cost and provision of care.

In this landscape, third-sector care providers should clue up on their contracts with councils and NHS trusts and take an assertive stance in (re)negotiations.

However, these are short-term tactics. In the longer term, social care charities must develop more innovative solutions.

After all, the Accounts Commission said in a 2016 report that current approaches to providing social care in Scotland are unsustainable.

Alastair Keatinge

Alastair Keatinge

Charities should proactively consider new business models, looking at different structures and partnerships

Solutions will take many forms, including delivery of services in the community and use of digital technology, as well as new business models and funding arrangements.

The third sector is certainly not responsible for coming up with all the solutions itself: commissioners and funders of care services must drive change.

Even so, charities should proactively consider new business models, looking at different structures and partnerships.

Organisations they once viewed as competitors for funding or contracts should be viewed as potential collaborators.

Evidence to a recent House of Lords report (Stronger Charities for a Stronger Society, March 2017) suggested that charities are not as good at collaboration as they ought to be.

But faced with questions around financial sustainability, the sector should review approaches to joint working.

If a charity sees that another organisation can deliver a more sustainable business model in social care, it should be prepared to learn from it, partner with it, or even hand over to it.

Such solutions are not simple. Partnerships and mergers may involve management issues around control, loss of identity, core objectives, culture and the interests of beneficiaries, to name just a few. Contracts and partnership agreements will require experienced input.

With mergers, legal and technical issues also come to the fore, including legacies, constitution, pension liabilities, lease liabilities and redundancies.

However, there are many ways to structure partnerships and mergers, allowing for these issues to be resolved and pitfalls avoided.

For the sector to develop these new business models, several elements will be crucial.

Firstly, trustee training and development is needed. The House of Lords report found poor financial knowledge and management is often a barrier to change.

Secondly, charities – and not just in the social care sector – should undertake regular strategic reviews and horizon-scanning, to establish whether joint working, mergers or even dissolution would better support their beneficiaries and service users. This should be part of their governance agenda.

Thirdly, many mergers or partnerships are scuppered because trustees or executives see them as a rescue remedy only – something to be avoided unless a crisis or funding hole requires it.

Instead, new partnerships should be strategically driven, undertaken at a pace that allows for proper due diligence and consultation of staff, trustees, volunteers and beneficiaries.

These are big issues, requiring new thinking from charities in the care sector.

For those that do this, there’s a huge opportunity to develop a more sustainable system of social care, to help make society stronger.

Alastair Keatinge is a partner and head of charities at Lindsays.