Good practice in contracts, communications and staff training

Here, we set out the advantages of adopting a sound framework for the recovery of fees for every room, in every service, whether provided long-term or temporarily, to a local authority, an NHS commissioner, an individual or a person acting on their behalf. 

The sustainability of services is coming under increasing pressure and many organisations have issues with achieving full recovery of fees, particularly where contractual arrangements involve several competing interests. The Care Quality Commission’s (CQC's) registration requirements require providers to issue a contract, but few providers take advantage of exploring how this obligation can be used to their best advantage.

The range of issues that typically have to be addressed in looking at the contractual matrix is large, encompassing such issues as:

  • the 12-week disregard;
  • how to complete private contracts where the resident lacks capacity;
  • inadequate rates of Continuing Healthcare (CHC) funding;
  • managing the possibility of a resident running out of funds and becoming state funded;
  • top-ups, when they are allowed and how to recover them;
  • re-ablement or respite beds and the consequences of the resident’s status changing;
  • deferred payment arrangements; and
  • local authorities making private placements. 

The legal framework is complex and care providers risk being left unpaid for the services they provide due to commissioners and families (not necessarily deliberately) using the complexity to avoid their obligations.  It may be felt, with some justification, that it is unreasonable to expect managers responsible for the process to have a good understanding of numerous inter-related pieces of legislation including the Care Act 2014, the Mental Capacity Act 2005, the Enduring Powers of Attorney Act 1985 and the Consumer Contracts Regulations 2014, to name but a few, but this is what is required to enable them to be confident in their dealings with customers of all descriptions.

There are three key elements that providers must address to create a good framework for managers to work within.  By adopting this approach, recovery of fees at the right rates can be much improved.

  • clarity of communication about the arrangements being made and the consequences for all parties;
  • clear and enforceable contractual provisions;
  • a culture that enables confident managers or administrators to assert the provider’s rights and interests.

Under each of these headings it is possible to develop ways of working that deliver better outcomes and avoid time-consuming disputes.  In each area the provider will need to decide who in the organisation is responsible and what support is necessary for the function to work well.  This is true whether you have an approach that is centralised or delegated on a home-by-home basis.

The following summary highlights the key ingredients of a set of contract policies and procedures to deliver improved recovery.  As will be apparent, other aspects, such as establishing floors or ceilings on fee rates, involve commercial and financial considerations. All elements must be considered to ensure the overall sustainability of the business.  Whatever framework each home or overall business operates in, the assumption should be that 100% of fees due will be recovered and the purpose of this briefing is to help providers to achieve that outcome.

Clarity of communication

Much attention is given to handling potential residents and their families with sensitivity.  This is quite appropriate but should not be allowed to create an atmosphere in which financial arrangements are not established in a business-like manner.  It is notable how little information about fee rates is made available on providers’ websites.  This is understandable given the wish to avoid publishing rates to competitors and commissioners, but fees are amongst the matters that will be most important to any prospective customer and the financial commitment is comparable, in many cases, to buying a small house or flat, so finance is going to be central in agreeing any placement.

Although there is little prospect, in most circumstances, of obtaining a clear and balanced contractual arrangement with a public-sector commissioner, it is still possible, through unilateral actions and assertive approaches, to obtain much of the necessary clarity for each arrangement.  The purpose of such communications is to avoid later disputes when circumstances and personnel have changed.  The deficit in public-sector commissioners’ knowledge and understanding often needs to be supplemented by the provider explaining the position to the resident and commissioner.

If a public body has commissioned the service it can be helpful to set out, in writing, the understanding you have reached, together with reminders to them of the consequences of the placement.  The following are examples of where such clarity is needed:

  • the status of the placement (e.g. CHC, nursing care, respite (temporary), private, deferred payment etc.);
  • the impact of the 12-week disregard on the placement;
  • whether a top-up arrangement is permitted in the particular circumstances;
  • the responsibility for the recovery or payment of any top-up or additional fees; and
  • the consequences of any change in things such as care needs or finances.

Although arrangements with the public sector rarely result in proper, signed contracts there is no reason why a contemporaneous note setting out your understanding of the placement cannot provide useful evidence of the intentions and therefore the obligations of the parties.  Where such arrangements involve top-ups it can be helpful to record the arrangement in a formal document, which the payer has to sign.

While much that needs to be made clear will be found in a well-drawn up and accurately completed contract for private payers, there are many messages that need to be communicated unambiguously from the very start of your engagement with a new resident and their family.  These need to be considered in the context of your website and brochures and the Manager’s Checklist used for new residents. 

A “communications plan” should cover such things as:

  • who are you communicating with – the resident, their representative, a person making a top-up payment or the commissioner who has placed them;
  • how will you verify the person has the means to pay the fee or a top-up for a reasonable period;
  • what is your policy when the money runs out and how is this made clear;
  • whether the person has access to good advice on their financial options and their right to public funding benefits (CHC, etc); and
  • how will you address the resident losing capacity in the future?

Giving managers or administrators access to template letters to support your policies on such matters can ease the burden of having to remember all of these things.  They can also serve as the script for conversations with new residents and their families.

Enforceable contracts

This section relates specifically to private paying customers where providers are obliged to ensure that there is a properly executed contract in place for each resident, whenever possible. Special consideration has to be given to the resident who has no legal representative and no capacity to sign the contract, as this gives rise to practical problems for providers in complying with CQC regulations and receiving payment of their fees, that must be addressed. 

Good practice requires a clear understanding of some basic principles of contract law on the part of the staff with responsibility for getting contracts signed with the organisation supporting such understanding with appropriate checklists and guidance.

The process for getting the contract signed encompasses many aspects but the key issues are:

  • understanding who is the contracting party (if not a resident with capacity);
  • compliance with Consumer Regulations (which provide for cancellation rights); and
  • capturing the necessary factual information and recording everything clearly both at the outset and during the life of the contract.

The areas of the contract that require particular input, from a provider’s commercial perspective, are:

  • everything relating to fees but especially how they are increased and (where relevant) the impact of top-up arrangements;
  • notice provisions, especially the circumstances in which the home can ask the resident to leave;
  • the management of changing care needs and the consequences for the resident and provider.

The way in which contracts are prepared and drafted must also comply with  “consumer rights” regulations.  We have engaged with the Competition and Markets Authority guidance and local trading standards officers regarding what constitutes fair dealing in care contracts.  Well-developed contracts can avoid the risk of general consumer complaints being brought against providers and minimise the risk of consequent reputational damage.

Enabling confident managers

Difficult situations in which providers are seeking to recover outstanding payments for services, teach us much about the traps it is all too easy for providers to fall into.  The following examples indicate the complexity of the situations in which managers find themselves:

  • placements made under the 12-week disregard rules but without adequate arrangements for a top-up to commence after the expiration of the 12-week period;
  • resident losing capacity, payments stopping and no apparent means to get the necessary authority for them to recommence, from anyone;
  • providers seeking to make new direct-fee arrangements with residents or their families where the original placement has been with the local authority and negotiations being hampered by expectations arising from low local authority fee rates;
  • local authorities failing to pay outstanding third party top-up payments to providers and insisting on the provider pursuing the family for payment instead;
  • NHS commissioners failing to refund CHC payments promptly, leaving families to seek refunds from the provider;
  • providers failing to appreciate that once a placement is made by a local authority it may continue, even if the person’s financial circumstances change for the better, at the local authority fee rate, unless, and until, the existing contract is brought to a formal end;
  • local authorities failing to re-assess care needs, leaving providers to meet additional needs without any increase in fees; and
  • managers being under pressure to accept “emergency” placements without adequate checks having been made.

It is often frontline staff, and particularly the home manager, who are faced with having to grasp the issues and apply the organisation’s policies.  It is vital that managers are well informed and empowered to make good judgements but also that fail-safe procedures are put in place, which ensure policies are followed and that proper records are kept of what has been agreed.  Managers move on and the historic, written records are often found wanting when problems arise.

Typical ways of working that should be included in the procedures applicable to any new resident include:

  • robust (obligatory) checklists signed by the manager to ensure all relevant information (both on the care needs and finances) has been brought to the resident’s attention and captured;
  • reference to briefing notes on “difficult” issues when guidance is required from time to time, for example:
  • understanding the legal status of a particular “representative”;
  • dealing with residents who may lose capacity during their stay;
  • assessing capacity to sign the contract;
  • when CHC might be or become available; and
  • the right of a resident to remain in the home (at the private rate) if their money runs out;
  • clear policies which provide a framework for managers to make judgements, particularly around the minimum level of fee it is acceptable to agree in any particular circumstance; and
  • training around policies and procedures, the relevant regulations and legislative framework and dealing with difficult situations, for example through role play and other methods.

The investment of time and advice on these issues is invariably repaid very quickly and many times over. Anthony Collins Solicitors has developed the necessary tools to help clients address such concerns over many years and we would be delighted to help you, should that be of interest. Please contact us.

For more information

Click on the red icon on the right to download the guide, or look at the health and social care section of our website.


Whilst every effort has been made to ensure the accuracy of these materials, advice should be taken before action is implemented or refrained from in specific cases.  No responsibility can be accepted for action taken or refrained from solely by reference to the contents of these materials.