There is a contract between the owner and either the resident or their representative(s) (or both) (for simplicity, the 'resident'). The resident is normally acting in their personal capacity and not in the context of any business, so they are a consumer. The nature of the contract is therefore a consumer agreement covering the supply of residential care services, supply, loan or use of goods and equipment, and a right to occupy part of a property. In other words, it’s not simple.
One of the purposes of a business agreement is to allocate responsibility for making sure important things happen or do not happen and placing liability with a party, or splitting liability fairly between the parties, if they fail in that responsibility. In care home terms, that type of shifting is not as appropriate and not as easy (legally speaking), meaning that a careful and subtle approach is required.
It is fair to say that there are some loud grumblings about the cost of residential care, and if you add the intense emotions involved, particularly around end-of-life situations, then disputes can be very difficult to resolve and take significant amounts of time and energy. The contract can help with this. Often contracts are only pulled out of the deep and dark space they inhabit at the bottom of the drawer if a dispute arises, so make it easy for residents to see what to do next. Building a reassuring and objective process, with the offer of appropriate discussions and some language about both sides being reasonable, might just take enough heat out of the discussion to allow for quick resolution.
A private sector care home is a business. It should be profitable. Even if profit is not the motive, a care home still needs to break even. So the contract ought to take a robust approach to charging fees, passing on costs and collecting money owed. Payment in advance is great but there are likely to be additional costs that can’t be predicted, so how will residents pay for those costs? And, if a resident is ultimately not paying, what happens next? The contract terms should deal with all these issues with enough tact and flexibility to protect the care home in a strict but fair manner.
In a recent investigation by the Local Government and Social Care ombudsman, it was made clear to owners that resident contracts should cover the topic of funded nursing care payments to avoid incidences of financial injustice. This is a good example of the kind of fairness that owners should be writing into their agreements.
Care homes are regulated by the Care Quality Commission (CQC). As such, providers are required to meet the fundamental standards as set out in the Health and Social Care Act 2008 (Regulated Activities) Regulations 2014 (Regulations). The Regulations include provision for standards of care and service to be met. Each provider will have an implied duty under contract to carry out services with reasonable care and skill. Therefore, should a provider be deemed to be operating below the expected standard of care, for example where they are rated inadequate, this may open them up to risk of a breach of contract claim in addition to regulatory action by the CQC as well as even the Competition Markets Authority or their local Trading Standards Services.
As suggested by the name 'care home', residents may want to have some home comforts and items of importance with them. At face value, this is a kind and fair thing to allow. But when a new resident brings her favourite Picasso painting and a family member brings a hammer and a big nail to fix it to the wall…you get the idea. The contract should include clear restrictions on what can be brought to the property and what alterations a resident can make. And if that Picasso is damaged or lost, the owners or their insurers are unlikely to want to pay for a replacement.
Possessions also come with safety risks. That alarm clock that has been waking the resident for the last 20 years might not be in the best of shape and the contract should require electrical items to be submitted to checks before use on the property.
During the COVID-19 pandemic, we saw distressing scenes at care homes. Those scenes highlighted the need for care homes to implement rigid rules for the benefit of all, while being sensitive to the desire of residents and families to be free to meet and socialise. For owners, the terms of the contract should cover key infection control responsibilities and restrictions (including visiting limits) that apply normally and might be applied in infection scenarios.
In an ideal world, residents and visitors would go to a care home and seek permission in advance for taking any kind of videos, pictures and sound recordings while on site at the home. But, that is not the world we live in. Therefore, it makes a lot of sense to think about what is allowed and how you communicate and enforce the rules. The contract should refer to a separate policy on this topic. And that policy may need to change as issues arise and practices change, so make sure a contract variation is not required to achieve that.
While owners make plans for 2025, it is worth putting a review of the main contract on the to do list. Contract terms are likely to come under increasing scrutiny by the regulators and residents and it is much better to get ahead of the questions that might be asked. Also, the contract should be viewed as a key instrument of risk management. You don’t have to love contract drafting (like me!), but a good contract will serve you well.