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Market dynamics in home care

2022 Conference Presentation

9 September 2022

Market dynamics in home care

Stephen Allan, University of Kent, United Kingdom


The market for home care has increased markedly internationally in recent years. For example, in England in 2020 there were over 10,000 providers of home care employing over half a million people. However, despite this, little research exists as to the drivers of home care supply which is important to ensure fair access to care and care continuity. This study quantitatively analysed the drivers of supply at small area level and the factors which determined the likelihood of closure of a home care provider.

We used data on home care providers in England registered with Care Quality Commission (CQC), the national health and care regulator. The measure of supply utilised in the analysis was the count of the number of providers registered and did not include certain providers of home care that do not have to legally register with the CQC to provide care, e.g. personal assistants. Nonetheless, this measure was highly representative of supply overall given it was highly correlated with both LTC expenditure and social care workforce estimates at a local level.

From theoretical models of supply and probability of closure, we developed the following hypotheses to analyse using quantitative methods: 1) that the bigger the market the more the number of firms; 2) that the higher the costs the fewer the number of firms; 3) the higher the quality of a provider the lower the likelihood of closure; and 4) the greater the level of home care competition faced by a provider the greater the likelihood of closure.

From 2014-2018 there was a 15.6% rise in the number of providers, from 7,852 to 9,079. Despite this large level of growth there was still a lot of turnover of firms. We found that demand (e.g. population) and supply factors (rurality) significantly influenced supply, confirming hypotheses 1 and 2. These findings were robust to the inclusion of additional variables (level of informal care, LA unit cost of home care provision) and to controlling for the simultaneity between supply in the small market and nearby using instrument variables (IV) methods. Results from the closure analysis confirmed hypotheses 3 and 4: home care providers with higher quality are significantly less likely to close and those facing higher levels of competition significantly more likely to close.

Access to LTC and continuity of care are important issues internationally. In England, despite good access to home care supply for much of the country, there are areas where there is a lack of choice of provider. The findings of this study are important for policymakers to consider how to ensure access and choice of care in parts of the country where there is low demand. The study findings also have implications for staffing as high levels of competition in the supply of home care will put pressure on the supply of social care workforce. Ultimately, the analysis confirms the difficulty in using market forces in the delivery of LTC, highlighting the juxtaposition between continued improvement via Schumpeterian creative destruction and high quality, continuous, care.