Social enterprises can provide best of both

The world of social care is changing. Picture: Getty
The world of social care is changing. Picture: Getty
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Ethos can be both business and charitable, says Edel Harris

The world of social care is changing and we must prepare to change with it. As CEO of Cornerstone, a leading social care social enterprise in Scotland, I have pondered on what these changes will mean for those in need of support services and for the future of social care services across the country.

The introduction of the Social Care (Self-directed Support) (Scotland) Act 2013 will result in a shift away from traditional contracts with local authorities and NHS Boards to independent providers engaging in consumer contracts with individuals and their families. At the same time, the sector is reeling from the recession and the cuts to public finances which have resulted in many years of standstill funding at a time when costs and inflation continue to rise.

As a result, some private sector care providers have had their business models tested to the limit, with the inevitable news of closure from organisations such as Choices Care, Southern Cross and others. Southern Cross Healthcare (Group plc) was a private provider of health and social care services, predominantly through the provision of care centres for the elderly and some younger people. It was the largest provider of care homes and long-term care beds in the UK, operating more than 750 care homes, 37,000+ beds and employing around 41,000 staff until its sudden demise in 2011.

Social enterprises such as Cornerstone have also had their business models tested, but without the pressure of an expectation of year-on-year profits and the resulting cashflow challenges.

According to the Scottish Council of Voluntary Organisations (SCVO) State of the Sector Report (2013), 34 per cent of all voluntary organisations in Scotland are involved in social care and, between them, are responsible for 25 per cent of the sector’s income. Coalition of Care and Support Providers membership extends to 75 of the leading third sector national care providers, who have a combined total income of more than £1.3bn, an average of 78 per cent of which per organisation relates to public funding for care service delivery. These organisations employ roughly 43,000 staff and provide support to approximately 350,000 people/families in Scotland. Care is big business.

The social enterprise model combines a social mission (in some cases described as a charitable objective) with a strong, sustainable business ethos; often thought of as two competing forces. For a care provider to be in a position to offer a high-quality, flexible service and to grow and develop their business subject to market demands, they require a sound financial base and an efficient delivery model. This can be achieved without losing sight of the social mission.

At Cornerstone we have five strategic objectives: not to compromise on quality; to be a good and fair employer; to be financially sustainable; to grow our core business; and to generate unrestricted funds. None of these exist in isolation and it is a constant challenge to ensure each objective is met. The social enterprise model ensures that continuing to provide a quality service and being a good and fair employer carry additional weight when making important business decisions.

People are at the centre of all we do. Our largest overhead by far is our staffing costs, with more than £26.2 million of Cornerstone’s annual spend (approximately 84 per cent) going on wages, staff training, pensions and other associated staff costs. Where margins and profitability are tight, it’s inevitable that the private sector providers will concern themselves with ways to reduce their staff costs and public sector delivery will struggle to operate efficient and “best value for the taxpayer” solutions. Within the social enterprise community we can focus on balancing the costs of achieving our mission with the requirement to operate as efficiently as we can.

And of course the social enterprise/third sector’s track record of quality in key areas of adult care surpasses that of either the public or the private sector, according to Care Commission information published in 2011.

As the need for care increases and consumer choice starts to dominate the market, all care providers will need to demonstrate good value for money and expand the range of services they currently offer.

• Edel Harris is chief executive of Cornerstone. This article was supplied through Social Enterprise Scotland


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