A Brief Guide To Setting Individual Service Fund Management Fees

Individual Service Funds (ISFs) continue to emerge and grow as a key option for people looking for more personalised support, enabling citizens to tailor their service to their own unique set of needs and goals, effectively transforming the role of care providers towards facilitators of outcomes. Central to this transformation and underpinned by the Care Act, is the role of local authorities in market shaping. As a social care commissioner, you’re tasked not only with promoting a diverse and high-quality market but also with ensuring the economic sustainability of these services. One aspect that significantly impacts both providers and service users is the management fees for ISFs. Understanding and strategically setting these fees is pivotal for successful market shaping.

Understanding ISFs and the Care Act

Individual Service Funds are an important and growing element the personalisation agenda within social care, giving individuals more control over the funds allocated for their care. At the heart of the Care Act is the obligation for local authorities to facilitate diverse, vibrant, and sustainable markets for care. It’s not simply about commissioning services; it’s about understanding and shaping the market to ensure that citizens have a plethora of good support options that can meet their current and future needs and outcomes.

For commissioners in social care, this means engaging in a delicate dance of negotiation with service providers, balancing commissioner’s affordability goals with the need to ensure that providers can deliver quality services and are motivated to work differently. The management fees for ISFs are, therefore, a fundamental part of this equation, influencing service provider viability and the quality-of-care outcomes.

Management Fees Insight from Recent Polls

A recent poll of ISF service providers on their preferred rates for managing ISFs reveals high degrees of variation around what constitutes a fair reward and return. With votes split across a range of weekly fees — from no charge up to negotiated bespoke rates that vary by person — the poll underscores a variable approach to ISF management charges. The most votes were received for a £10 weekly fee, reflecting perhaps a middle ground that acknowledges the slightly higher transaction costs of managing ISFs while still aiming for accessibility in pricing.

This variance in preferred fees poses important questions for market shaping. How do we align the apparent diversity in fee preferences with the Care Act’s objectives for a sustainable market? How might these preferences impact the long-term quality and viability of care services? These are questions that require careful consideration, as the answers will directly influence citizens’ experiences and providers’ overarching business models.

Strategic Considerations for Commissioners

As commissioners, it is essential to recognise that management fees are more than just numbers; they reflect the value placed on managing ISFs effectively. Setting these fees too low could impact upon services innovation, long-term sustainability and alienate elements of the market. Conversely, ISF fees that are set too high might unduly burden the local authority’s budget, affecting the affordability for citizens and making ISFs seem more expensive pro rata when compared to traditionally commissioned care and support services.

Strategic market shaping demands that commissioners engage with the ISF service provider market directly, sharing these insights ideally to establish fee structures that support a resilient and positive provider marketplace. By considering the broader implications of management fees, you’re not only ensuring fair compensation for providers but also promoting a sustainable and responsive care market that will work as a partner in helping people creatively maximise the use of their personal budgets.

Conclusion

The poll results provide an understanding of current sentiments around management fee structures for ISFs. For local authorities, the challenge lies in taking these insights and weaving them into a market-shaping strategy that embodies the principles of the Care Act. By doing so, you will be at the forefront of building a social care ecosystem that is increasingly innovative, high-quality and economically viable, ready to meet the evolving needs of communities.

Chris Watson
Chris Watson is the founder of Self Directed Futures and the Chair of SDS Network England. With extensive experience in strategic commissioning and change management, Chris advocates for innovative, community-led approaches to adult social care.

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