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Social Welfare Programs; An Internal Market In Community Care Services

Updated on June 22, 2011

This is part of my series of social welfare programs. The intention of these are to inform and provide information on health and social welfare issues in order to help others be empowered on the background to the system in the UK. This article is focusing on community care services. It is a critical overview and anaylsis on the problems associated with internal market forces of care provision. We will look at the historical perspective of the change in health and social welfare practices and creation of the National Health Service and Community Care Act 1990.

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The Advantages and Disadvantages of Introducing an Internal Market into The Provision of Community Care Services

So, what is an internal market? This traditionally is a market within the domestic affairs of a nation. An internal market in relation to the provision of community care services are trades and dealings between purchasers and sellers of care provision. Just like anything to do with competitive market forces, there is competition in who can provide the best quality care at the cheapest cost. This comes in the form of tendering or contracts with bidding power, providing supply with demand.

Courtesy of East Lothian Community Care Forum
Courtesy of East Lothian Community Care Forum

Why Introduce an Internal Market in Community Care Services?

The public sector, for which community care services and health services form a part of, was seen as wasteful, bureaucratic, ineffective, economically wasteful and unresponsive to users. The internal market was a way of reducing administration and the controlling effects of 'the professionals'. It was with the community care act 1990 that the internal market and systems to empower users were put in place.

The UK conservative government was concerned with the cost of welfare, inherited from the labour government, as a result of economic historical events; for instance, the International economy recession (1979). Primarily this was caused by inflated oil prices, whereupon the International Monetary Fund had to plough billions into the British economy to uphold it. In doing so public spending had to be controlled - starting with the welfare state.

With an expansion of the elderly population, their elderly care needs, and the burden of institutional budgets dominated health and social services resources (Grey, et al., 1988). Many campaigned for deinstitutionalization and the basic human rights of people incarcerated in warden controlled establishments. Examples of these were people with learning disabilities and those with mental health issues. It was generally felt, therefore, that society of today found this unacceptable and expensive.

Following the next few years - up to 1997 - community care policy was developed and implemented in the form of the National Health Service and Community Care Act 1990 and the controversy surrounding it.

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What is Residualisation?

Walker 'Community Care Policy: From Consensus to Conflict' outlines the policy of residualisation as follows:

  • Fragmentation - breaking up of community care services as ran by local authorities.
  • Market Forces - Introducing this in social care whereby, local authorities become purchasers of care from other providers within the private and voluntary sectors.
  • Decentralisation - Administration and operations of care are decentralised and redirected to the sources of care organisation i.e. social service department and individual care managers.
  • Centralisation - Where the control over resources is located and budgets are made, at central government. Budgets are then sent to local authorities who are accountable to central government.

Leavesden Hospital - A tyoical institution For the 'Insane'.  Now these 'Insane' people are customers of care and have been integrated into the community.  Leavesden Hospital no longer exists.
Leavesden Hospital - A tyoical institution For the 'Insane'. Now these 'Insane' people are customers of care and have been integrated into the community. Leavesden Hospital no longer exists.

An Internal Market in Community Care Services and Controversy

Preceding the NHSCC Act 1990 was 'Caring for People: Community Care in the Next Decade and Beyond'. This provided the foundations for the 1990 Act.

The overall aim was to introduce a quasi (meaning imitation) market for care provision; whereby services could be purchased from a mixed economy of care, competing with one another. This was hoped to improve quality, efficiency, control and choice to the 'consumers of care', thereby promoting individual independence, empowerment and cost containment.

This new mixed economy, emphasised the privatisation of services and forced minimisation of state services. Walker (1983), critically outlines three main dimensions of its transition.

  1. The promotion of growth of the private sector by reducing local authority service funding in the area of care and by increasing private sector subsidies, thereby manipulating and creating competing markets.
  2. Deinstitutionalization programmes, aiming primarily to cut costs. Walker points out that as an effective alternative, community care is viewed secondary to this point and has been underfunded. He suggests that in effect people are leaving large institutions to smaller ones.
  3. Residualising local authority social services (see box).

Many saw the introduction of market principals, residualisation and client orientated tendering as a way of enabling people to choose appropriate services; thereby extending choice and independence. However, Walker suggests that contrary to this point, rapid expansion of the independent sector, does not necessarily mean more choice; because profitable services are concentrated within residential and nursing homes, thereby restricting choice because of the lack of alternative in community support services. Often, therefore, statutory services are not on offer.

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Caring For People: Community Care In The Next Decade and Beyond

This was promoting community care as the best form of care available, than the past, with emphasis on better quality and choice. Furthermore, it advocated people to an 'ordinary life' within their own homes and local community; providing the appropriate amount of care or support, in enabling maximum independence to the service user and/or their carer.

The document emphasised the right for service users to have a say in their lives, so as to help them help themselves to lead an 'ordinary life'. Furthermore, it is promised that services would respond with flexibility and sensitivity to the needs of the individuals and their carers, thereby broadening the range of options for consumers and concentrating on those with greatest need (i.e. prioritising).

The government's key objectives in achieving good quality service delivery was by:

  1. Promoting the development of domiciliary, day and respite services which would enable people to live in their own homes wherever possible.
  2. Ensure service providers make practicla support for carers a high priority.
  3. Make proper assessment of need and good case management the cornerstone of high quality care.
  4. Promote the development of the independent sector, alongside good quality public care services.
  5. Clarify the responsibilities of service providers, local authorities and make them accountable.
  6. Secure better value for taxpayers money by introducing the new funding structure for social care.

MacIntyre Care Homes - Swapping A Large Institution for a small one?  Just food for thought.
MacIntyre Care Homes - Swapping A Large Institution for a small one? Just food for thought.

This is a great example of the intentions of the NHSCC Act 1990 but in practice! Take a look at independent living within a community.

Promote Independent Living - Care In The Home

Nevertheless, the emphasis in 'Caring for People' (point 1 in the Government's key objectives - See Box), is to enable 'clients' to remain within their own homes, living independently.

  • There does appear to be contradiction here, and Walker may be justified in this point.

Bradshaw (1988) was also critical of the promise of choice by the private sector, because 'residential care need' invariably comes from a care crisis; leaving little time to search for best deals and care quality.

Shopping for care deals and quality, during prioritised crisis interventions may be diverse and conflicting in nature. This is especially the case when Care Managers have other considerations, like location, waiting lists, contractual obligations and funding, to think about. However, the government promoted that the fundamental role of the state was to support, develop and assist private and voluntary services as a way of increasing choice and efficiency.

Who is responsible for charges within the context of health and social welfare for an individual? Social Services or Health? Perhaps it is the individual or the combination of the three? It would not be a surprise, therefore, when each department attempts to pass the buck in an effort to save their budgets from being used to pay for certain care packages.

Local authorities developed their regulating, monitoring and funding procedures on such services. This focused on new management techniques to social services; cost efficiency and flexibility in its' organisation, thereby reducing labour costs and ensuring consumer-orientation.

The effects of this, therefore, contradicts living an ordinary life (see box) because many homes have to run like sterile small institutions, concentrating on stringent health and safety procedures, inspections and bureaucratic client reviews (point 2 of Walker's view). To be fair, however, it may be necessary for such procedures. Often, where money is to be made, care quality may be skimped to further profitability; furthermore, low paid, unsupported, inexperienced staff, is another way of cutting costs.

Many are left to work on their own, unprepared for unpredictable situations. Experience suggests that many lack the coping mechanisms, or skills, to support, provide domiciliary care, rehabilitate and teach vulnerable or frail people, life skills for independent living. Unfortunately many managers, and the companies they work for, expect staff to perform miracles within the limited resources available. This, no doubt, leaves most staff feeling demoralised and undervalued.

What is An Ordinary Life?

John O'Brien developed the principles of an 'ordinary life', along side Wolfensberger's 'Social Role Valorisation' or 'Normalisation'.

The policy of deinstitutionalisation stems from these thoughts and is the basis of community care policy. Briefly it promotes:

  • People to lead an ordinary life in the community.
  • Prevention of admission into institutions.
  • Institutional discharge.

O'Brien's principals emphasises:

  • Relationships built on closeness, warmth and equality
  • Real Choice - The right to personal belief, to be respected, broaden experience and to do what will with own money
  • Real mixing - The right ot community provision and integrated living.
  • Participation - Easy access to information, the right to decide for oneself, and advocacy (tp assist in a right to have a say and be heard).
  • Personal development - The right to be valued and respected as an individual in his/her own right. The right to privacy.

The Independent Sector as Part of a Mixed and Internal Market - Economy of Care

Primarily this internal market consists of two sectors - the private or 'for profit' and the voluntary or 'not for profit' sectors.

These sectors, although not new to welfare provision, was encouraged to greatly expand, following the implementation of the NHSCC 1990 Act.  Government provided financial incentirves to help create a demand, whereupon there was a need to supply, forcing the public sector to tender spot (individual) and block contracts; thereby creating competition.

The basic concern of the private sector is of financial viability.  It is not surprising, therefore, that it prefers to cater for older people in residential homes (Laing, 1995).  Here, the emphasis is on establishments that cater for large numbers of people, balancing care with cost.

It seems that the expansion to the private sector, is concentrated only in existing private companies.  For instance, 1988 saw 16 corporate companies holding an average of 277 beds each.  By 1993, the same 16 had expanded their uptake to an average of 1,639 (Laing, 1994); suggesting, a restriction in consumer choice.  Wasn't the provision of care supposed to be an open, free market, not a monopoly?

MacIntyre Care Practices & Are Pioneers In Independent Living

What is Social Role Valorisation or Normalisation?

'Normalisation implies, as much as possible, the use of culturally valued means in order to enable, establish and/or maintain, valued social roles' - Wolfensberger.

This is about being valued and respected as a human being by ways compatible with individual culture. It suggests empowerment of the individual in maintaining and establishing valuable meaningful relationsips within an acccepting society.

Which Service?

The Private Provider Vs the Competitor Within an Internal Market

It is difficult for two sets of competitive providers to work in partnership within an internal market and could conflict.

This may be the case when planning and implementing the needs of service users; for instance, when linking service users within competing providers; many providers may be relunctant to encourage client relationships with consumers from the opposition, because there may exist resentment of past confrontations. Considering further, staff may also be reluctant to communicate with the opposition when linking their users, thereby restricting their rights.

Furthermore, when planning issues with local authorities, all providers must collaborate to enable quality service availability. Introducing competitive market principles makes this difficult because private organisations are reluctant to share commercial expertise.

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What About Small Businesses and Competition?

The smaller the business, the more likely they are to go out of business.  They don't have the same level of funding overflow as big businesses may have.  This is because owner-managers have less of a financial cushion than big corporations; furthermore, local authorities are less inclined to place service users with them, reinforcing the view of small business bankruptcy; even if they offer personalised, quality care.  They are, therefore, deterred before they start, and consumers are denied this option.

Again, this reinforces the previous statement, about the expansion of the private sector, being concentrated within existing provision.

Selling Out to the Highest Bidder
Selling Out to the Highest Bidder

What About the Voluntary Sector?

Most of the points outlined for the private sector hold true for the voluntary sector too.  However, they exist because of the need to fulfill forms of support of a mutual interest.  The emphasis here is that of fundraising, charitable work (including local voluntary initiatives) and specialist groups, that are small, user friendly, and flexible to users needs (Hall, 1989).

However, they tend to be characterised by vulnerability and financial insecurity which is emphasised, the smaller they are. 

Their role may be seen as welfare activators; acting as advocates for the weak and vulnerable, by campaigning for the rights of people they represent.  Unfortunately, because many charities rely on state funding, many are deterred from lobbying.  After all, wouldit be wise to bite the hand that feeds you?

Contractual funding appears to favour larger national charities (encouraging expansion), discouraging the smaller, more specialist, charities.  Hall 1989 syggests that these groups are more innovative, local or representative of minority concerns, so if squeezed to extinction, the justification for broader choice for the consumer is contradicted.

Internal Market Round-Up for the NHS and Community Care Services

In this series of social welfare programs, we have looked at social change as a result of implementing law in the form of the National Health Service and Community Care Act 1990. Community care is about cost containment as well as promoting independence for vulnerable people. An internal market was encouraged as a way of bringing in competitive market forces. This was through either internal systems set up by NHS trusts, outside business and/or voluntary organisations.

It was hoped to bring about choice and quality of care services whilst acquiring these as cheaply as possible. Furthermore the internal market was encouraged to communicate and work in partnership toward a client centred approach. Whether this has worked is still rather contraversial but it formulates the structured for which we, as customers of care, are receiving today.

© This work is covered under Creative Commons License

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