cost model webinar

Cost Model WebinarAccommodation Solutions Team

Introduction

This webinar covers the input sheet for the residential care cost model for care receivers with learning difficulties, physical disabilities and mental health issues.

The introduction includes a brief explanation to what a cost model is, the process for reviewing these costs and the key differences from the previous cost model.

This is followed by a detailed guide on how to fill in the input sheet.

What is a cost model?

A cost model is a tool which compares a pre-defined set of costs against those submitted by providers.

The costs used for comparison in this model are based on national benchmarks and previously submitted costs from all providers within Kent.

Some of the values in the model vary depending on the location of the home, number of beds, and the type and level of care offered by the home.

This webinar explains the provider input side of the tool and how it should be filled in.

What is the Process for Reviewing Costs?Once the input sheet is complete the total cost of the package can be compared against the baseline costs within the model.

Each individual cost can also be compared to identify any values which are much higher or lower than the modelled costs.

The purpose of the model is to create a baseline and a structure to have discussions around the final cost for a package of care for each home.

Key Differences

There are two key differences within the new cost model:

1) The care staff to care receiver ratio for shared hours of care (as assessed in the care matrix) are now fixed depending on the level of care provided. This will help create a fairer and more even level of care between homes.

2) ‘Core hours’ for care have been removed from the core costs and all care hours are now paid based on an equivalent 1:1 hourly cost for each resident. The core cost is now made up exclusively of hotel and management costs.

Core H&M Costs

Cost per Hour of

Care

No of Care Hours

Required

H&M Care

£ Total

Using the Input Sheet

The following sections explains how to fill in the input sheet of the cost model.

Each tab is reviewed in order they appear in the workbook. Feel free to pause and replay sections at any point.

Instructions

The instructions tab is designed to be used in conjunction with this webinar as a quick-reference guide.

Instructions

The key points to remember about the sheet as a whole are listed at the top with descriptions of each tab given underneath.

Provider Front Sheet

The front sheet holds the key identifier information about the home.

Provider Front Sheet

Please select the locality where the home is based and the primary specialty of the home from the drop down list. These are used to tailor some of the values used in the cost model to the type of care offered by the home.

Please enter the name of the home and address in the free text boxes, and select the total number of beds available using the drop down list.

Hourly Care Input Sheet

As discussed in the introduction, all care is now covered by an equivalent 1:1 hourly rate.

This tab is used both to calculate the value of care and help manage the number of care staff to achieve the right ratio of shared care


The first section on this sheet is the Care receiver hours input box

This section is designed to record the amount of care specified for each resident, as defined by the care matrix.

Care Receiver Hours Input

This list will expand depending on the total number of beds entered on the Provider Front Sheet tab.

Please state if the bed is occupied or empty using the drop down options. To help us understand the current provider market we would appreciate it if you would indicate if the placement is privately funded, funded by a different authority or funded by KCC.


The ratios given are in the form of carer : care receiver for 3:1 and 2:1 care. There are also options for 1:1 care, shared care, no care (where applicable) and waking night. Sleep hours are calculated by taking the total number of hours in a week (168) and subtracting the care hours defined on the left. Generally, sleep hours account for 63 hours per week (including waking night).

If the amount of care required for a resident is not known, it is assumed that the current level of care is sufficient until a proper care assessment can be made. Please take the current total of care staff hours per week and divide by the number of residents. Enter this number into the 1:1 care column and ensure the remaining columns are 0 (except sleep).

Example: Say there are a total of 150 hours of staffing hours available per week and 5 residents, this equates to 30 hours per resident.

Enter this number into the 1:1 column and 0 everywhere else. Sleep hours will be automatically calculated as 168-30 = 138.

Although the resident will benefit from shared hours, for the purposes of the calculation it is assumed that all hours are 1:1. Please make a note in the bed ref column to indicate that this has been done (e.g. “Hours estimated”).


The grid at the top shows the total number of hours for each type of care.


The first box on the right covers the shared care staffing metrics


Shared Care Staffing Metrics

The purpose of this section is to assist in ensuring the staffing hours match the number of care hours required, and that the shared care staff : care receiver ratio is correct for shared hours.


The shared care ratio is calculated by taking the total number of staff care hours available and subtracting any 1:1, 2:1 and 3:1 hours (note that 3:1 care hours take up 3 hours of staff time for every 1 hour of care time). Any remaining staff time is then divided by the total shared care hours to give the shared care ratio.

Example: Say a home employs 260 hours of staff time per week, and the residents require a total of 40 hours 2:1, 80 hours 1:1 and 300 hours of shared care.

First subtract the 2:1 hours (40 hours x 2 staff) and the 1:1 hours (80 hours x 1 staff) from the 260 to give 100 hours of remaining staff time. We need 300 hours of shared care, split over these 100 hours.

The share ratio in this case is 100/300 or 1 : 3 (i.e. each member of staff is looking after 3 patients at a time during these share care hours)

The target shared care ratio is shown on the left, and differs depending on whether the home offers mid, high and specialist level of care.

The box to the right is the current share ratio based on the numbers for staffing hours and care required. If it is under the limit, the text on the right will indicate how many staff hours are required per week to bring it to the required level.


These figures will change as more staff are added to the grid below in the Care Staffing Hours Input Section


The graph below shows the required shared care ratio and the current ratio given the current staffing levels. Please note, part of the payment for care is based on these share care ratios, so it is important that they are matched as closely as possible.


The second box on the right covers the number of staffing hours and rates of pay for carers.


Care Staffing Hours Input

This section is where care staffing hours should be entered.

Please note this is for staff providing direct care only. Management, admin and maintenance staffing hours are covered on the H&M Input tab.


Staff have been split into 5 different levels to reflect difference in pay and benefits (these would equate to the NVQ1, NVQ2 and NVQ3 equivalents for anyone familiar with the previous KCC cost model).


It is highly likely that not all staff of a particular band are on exactly the same salary, so please take an average to account for this, and convert any annual salaries to a per hour equivalent and enter into the boxes under ‘Basic Hourly Salary’.

Please note, while a line has been included for volunteers, as unpaid members of staff they have not been included in any of the calculations, and it is assumed they are not paid a wage.


Overheads have been included to cover the total cost to the business for employing the individual.

NI contributions and pension are both standard uplifts to the salary to cover employer costs not included in the salary.

Unplanned absence is also included and is designed to cover the cost of bringing in agency staff to cover a shift.

In addition, training and holiday days are also included to account for the additional staff required to cover the shift while either of these events are happening (i.e. if a member of staff is on paid holiday or training, their shift will need to be covered by another member of staff. This allowance is designed to cover this double payment).


Day and night shift hours are entered into the box on the left. It is assumed that only day shift hours are used when calculating the correct level of care, any waking night hours should be checked to ensure they cover the required amount of care.

The day shift hours are indicted in yellow along the top bar of the staffing hours grid


The grids below should be filled in with the number of staff at each level for each hour of the day. If any of the staff work until half past the hour, please enter this as multiples of 0.5.

At the lower right-hand corner of the sheet is the calculation for the cost of an hours care.


Care Staffing Hours & Ratios Output

The staffing distribution across the day according to the above grid is shown here, along with the ratio of each level of staffing.

As staffing hours are added to the grid above, the tables will update to give the staffing profile and banding ratio.

The total cost of an hour of care is calculated below, using the base salary multiplied by the uplift to give a total hourly rate for each band, and taking a weighted average depending on the staff banding ratio to give a total hourly rate.

This average cost for a 1:1 hour of care total is used to calculate the cost of care for each resident, depending on their level of need.

Care Staffing Hours & Ratios Output

H&M Input Sheet

The hotel and management costs make up the core fee for all residents in the home.

H&M Input Sheet

This tab is used to calculate these costs based on the total spend in each area combined with the occupancy percentage and number of beds to give a cost per resident.

Costs are split into variable and fixed costs on the left hand side (the difference between the two will be covered later) and management and admin staff costs on the right.

The first section covers an allowance for profit along with the occupancy rating and details around the property.

H&M Input Sheet

Profit has been requested as a cost per resident per week, (similar to the previous cost model) and is treated like the variable costs requested in the box below for the cost model calculations

Please enter the allowance for profit into the box indicated on the left.

Profit, Occupancy and Property

The occupancy modifier is used when converting the total weekly cost for the fixed costs into a cost per resident, to account for the fact the home is not necessarily full 100% of the time.


Note that the higher the occupancy percentage, the more the fixed costs for each resident are reduced.


Please enter the percentage occupancy of the home as an average over time rather than a snap shot of the number of currently occupied beds (see example below).

Example: To calculate the occupancy percentage, consider a theoretical home with 100 rooms. If we assume there is an occupancy rating of 90%, there are 3 possible ways this could happen:• 90 beds are always full with 10 left permanently empty• 100 of the beds are full for 328.5 days per year• A combination of the above (i.e. some beds are constantly occupied, others are occupied less than 90% of

the time)In reality this can be calculated by checking the duration of stay for each resident over the last few years compared to the number of bed days available over that time period. For new homes an appropriate estimate should be made.


The property section covers the council tax banding and an indication of whether the home is owned with a mortgage, owned without a mortgage or rented.

The council tax band input is used to calculate the amount paid for council tax per resident per week based on the values set by the Kent County Council this year.

The ownership status of the property is used for market data gathering only and does not affect any of the costs in the model. We would appreciate it if you would indicate if the home is owned or rented using the drop down list.

The second box on the left covers all sundries and hotel costs for the home.The values given I the cost model are reviewed periodically to help ensure they reflect the current state of the market.

H&M Input Sheet

Sundries & Hotel Costs

Sundries and hotel costs are divided into 2 sections:• Variable costs• Fixed costs

Variable costs are those which are only paid if there is a resident in the room (i.e. you would not expect to pay for food for an empty room). These have been requested as a cost per resident per week.

Fixed costs apply to the home as a whole and are paid regardless of how many residents are occupying the rooms. For this reason they are requested as a cost for the home per week and converted into cost per resident by dividing by the number of beds and expected occupancy percentage.

The key difference between variable and fixed costs in a residential home context is related to the occupancy.Consider two homes of exactly the same size and location, with occupancies of 50% and 100% respectively.

The weekly cost of food for each should be approximately half as much for the one with 50% occupancy, since they are feeding half the number of residents. However, rent would be the same for both.

This means that if we consider this as a cost per resident, the food cost is the same for both, but the home with 50% occupancy has a much high portion of the rent cost, since it is being split between fewer residents

50% occupied 100% occupied

Foodcost

Rentcost

50% occupied Foodcost

Rentcost

100% occupied

Total

50% occupied

Foodcost

Rentcost

Total

100% occupied

Foodcost

Rentcost


There are four variable costs identified (excluding profit) all related to resident care.

A description of each has been included to the right where necessary. These should be calculated by considering the total amount paid for each over a fixed period divided by the total number of resident-weeks for that period.

Example: If the total cost for food was £4000 over a 52 week period and there were 4 residents who each stayed 40 weeks out of the 15, the cost of food per resident would be £4000 / (40 x 4) = £25 per resident per week.


The fixed costs have been split into 3 different areas:• Cost related to care• Business costs• Building costs

These can be calculated by taking the total amount spent by the home on each area over a fixed period and dividing by the number of weeks.

Example: If the total spent on insurance over the past year was £1040* for a 5 bed home, the total per week would be entered as £1040 / 52 = £20 per week.

If the assumed occupancy level is 90%* the sheet will calculate the cost per resident as £20 / (5 x 90%) = £20 / 4.5 = £4.44 per resident per week.

* Numbers chosen to give round answers, these should not be taken as guideline values for the input sheet.


Rent has been included in the ‘Building costs’ section as a fixed cost.

Please note that this should be considered as a fair cost for the rental of the space for the resident in the home. It can be calculated using mortgage or rental costs, but these are not specifically requested in the model, nor does the fact the home is owned or rented affect the comparison price in the cost model.

The reason for this is to avoid complications around calculating mortgage rates and returns, or profit allowances for a home with no mortgage. However, if the value given is higher than the baseline used in the model we may ask you to justify this figure by reviewing the accounts in more detail.


The total per resident per weekfor the sundries and hotel costs based on the values entered into the model is given at the bottom of the sheet.

Management and admin staffing costs are input in the white box to the top right of the sheet. These cover staffing hours not related to staff care.

H&M Input Sheet

Non-Care Staff Hours Input

Non-care staffing hours are entered in here in the same way as the care staff hours were completed in the previous section.


Please enter the basic hourly wage for each level of employee in the box above. Again, where there are staff at a similar level but on a different salary, it may be necessary to take an average and convert this to an hourly basic rate.

Please also enter overheads as described in the previous care staff calculation section.

Catering, cleaning, caretaking and gardening, etc. have been grouped into one category as ‘Domestic/grounds staff’.

The box in the lower right corner of the sheet gives the management and admin staffing profile along with the calculation for non-care staffing costs per resident per week.

H&M Input Sheet


Staffing profiles for non-care staff are shown here for weekdays and during the weekend. These will self populate as staffing hours are added to the grid above


The total cost per resident per week for non-care staff is calculated in the table below.

The base salary for each job title is uplifted by the overhead percentage and multiplied by the number of hours worked per week* to give a total for each level.

* Values for hours used are indicative only to show the effect on the staffing profiles and should not be used as guidelines for the cost model.

These are then divided by the number of beds and occupancy percentage to give a weekly cost per resident.

The combined total per resident for all non-care staff is given below.

Comment on Values

The comment sheet has been included if you feel certain values entered in the previous tabs need further justification.

Comment on Values

Please enter the name of the variable in the column on the left and a comment or description on the right.

Please note this is completely optional, but may act as a reminder on certain costs during the negotiation process.

This is the end of the webinar.

If you still have questions about using the tool please use the Q&A section below to send a question directly to the Accommodation Solutions team.

We will endeavour to answer your question as quickly as possible, and if it sounds like it may be relevant to other providers we will post it in the FAQ section. Please refer to this section in case the question has already been asked by another provider. Questions specific to you as a provider will be

answered privately via e-mail.

Thank you for watching.