Homecare Fee Structures Explained: Why Hourly Rates Alone Do Not Protect Quality or Sustainability
Homecare commissioning still relies heavily on hourly rates, despite widespread acknowledgement that they do not reflect delivery reality. Understanding this limitation is central to homecare commissioning and contract management and must align with viable service models and pathways that protect quality.
Why hourly rates dominate commissioning
Hourly rates persist because they are simple to procure, easy to audit and politically defensible. They allow commissioners to forecast spend and compare providers quickly.
However, simplicity comes at a cost: hourly rates ignore travel time, call pattern constraints and complexity variation.
Commissioner expectation (explicit)
Commissioner expectation: providers should evidence how fee structures impact delivery risk and outcomes, not simply state that rates are “too low.”
Regulator / inspector expectation (explicit)
Regulator / Inspector expectation (CQC): providers must ensure staffing levels and deployment remain safe regardless of fee arrangements.
The hidden cost drivers hourly rates ignore
Key drivers include:
- travel time between isolated visits
- double-up requirements
- short-call inefficiency
- complexity escalation over time
Operational example 1: Short-call saturation risk
Context: A provider delivers high volumes of 15-minute calls.
Support approach: The provider models effective hourly yield.
Day-to-day delivery detail: Actual paid care time versus commissioned hours is tracked.
How effectiveness is evidenced: Commissioners accept longer minimum calls for specific pathways.
Fee structures and workforce stability
Low or poorly structured fees directly impact pay, travel reimbursement and rota stability. This creates turnover, which in turn drives quality risk.
Operational example 2: Linking fees to retention metrics
Context: High turnover threatens continuity.
Support approach: Workforce data is linked to fee pressure.
Day-to-day delivery detail: Exit interviews and rota gaps are analysed.
How effectiveness is evidenced: Commissioners approve targeted uplifts for continuity-critical packages.
Complexity-blind pricing creates safeguarding risk
Flat rates do not reflect dementia, behaviours of concern or delegated healthcare tasks.
Operational example 3: Complexity-based fee negotiation
Context: Increased medication incidents.
Support approach: Complexity scoring informs pricing discussion.
Day-to-day delivery detail: Higher-risk packages are flagged.
How effectiveness is evidenced: Reduced incidents following pricing adjustment.
Governance: making the fee conversation credible
Providers who link fee structure evidence to outcomes, incidents and workforce data are far more persuasive than those relying on generic cost arguments.