Securing fee uplifts with commissioners: an uphill battle for private healthcare providers

Increased cost inflation in the delivery of nursing and care accommodation and support services has negatively impacted private healthcare providers. This disproportionately affects private providers who take publicly funded placements from commissioners such as local authorities (LAs) or NHS integrated care boards (ICBs).

We have seen an increase in contentious scenarios arising out of the failure to agree annual uplifts between private providers and commissioners. Scenarios can include the following:

• Publicly funded placements provided by a provider at exceptionally low rates, below the increased cost of providing the service
• The provider and the commissioner being unable to agree an uplift to cover increased inflationary costs year on year
• Either the provider or the commissioner serving notice to terminate the agreement. A contract no longer governs the relationship between the parties for the care and accommodation services
• The commissioner then being unable to place the service user in another service due to placement scarcity, or an unwillingness to place at current market rates
• In the meantime, this continuing for months, or even years, after contract termination, with the private provider having no option but to provide care and support services without contractual certainty, protections or any uplifts.

Why is this happening to private providers?

The current social healthcare market is, and has been, characterised by three distinct factors that are bringing fee disputes to a head:

1. Gross current expenditure (GCE) on adult social care by LAs was £29.4bn in 2024 to 2025. This was £2.3bn (9%) higher than the previous year in cash terms, and commissioners are struggling to stretch their budgets to allocate for these year-on-year increases
2. Sharp and sustained cost inflation in the delivery of nursing, healthcare and personal services is impacting providers. The average cost of a week of residential or nursing care increased by 7% in 2024/2025, and commissioners are unable to offer 7% annual uplifts year on year to providers to match this increased cost of providing the service, thereby expecting private providers to absorb this
3. Placement scarcity and an ageing population, with increased demand, further compounded by issues one and two outlined above in the care sector for publicly funded placements.

What can private providers do to prevent this?

The combination of these market factors has undoubtedly put private providers in a tough position. Furthermore, the scarcity of public funding and the presence of actual and perceived inequality of bargaining power have left many service users with stagnant weekly fees and stalled negotiations.

In light of this, we set out what care service providers should know about negotiating their weekly rates with commissioners and, critically, what to do legally should the negotiations fail.

The starting point – negotiation tips

As a private provider providing a contractually agreed service, each year there is an annual uplift negotiation with your commissioner. This is precisely what it is: a negotiation between two parties on an equal footing. Commissioners often make this feel like an ultimatum.

Providers should notify commissioners early of their intention to increase their fees. When increasing fees, providers are encouraged to have evidence to support this, alongside a care benchmarking tool such as CareCubed, which would act as a useful guide for both parties in providing a transparent basis for charges. Although this might not always be useful for acute or complex cases of care. Use the collated evidence to support your logic and rationale, justifying the level of increase you are requesting.

Legal entitlements

If providers are unable to negotiate and agree a fee for providing a service with their commissioners, consider serving notice and terminating the agreement. Providers are not forced to enter or continue contracts that are unviable and not profitable. It needs to be mutually agreed or, in the absence of this, terminated.

This allows the care provider to put in place a current objective market rate for out-of-contract care and accommodation services provided to the placement. This will often be higher than the previous contractually agreed rates and will allow the care provider to pursue an unjust enrichment legal claim if the commissioner fails to pay this.

This also allows the provider to charge a current rate, reflective of the current market cost inflation, and will prevent them from absorbing losses on placements. However, this must be reasonable and justified by current market rates, and not an arbitrary punitive rate designed to punish the commissioner.

Commercial considerations

Many providers often feel ill-equipped to challenge commissioners who justify unviable annual increases with squeezed budgets and opaque internal fee review processes. However, the position of service providers is often stronger than it initially seems.

When serving notice on a placement, consider whether the respective commissioner provides only a small proportion of service users, for example two out of 25 service users, and whether their fees account for only a small percentage of revenues, or whether it’s your largest commissioner, accounting for, say, 20 out of 25 service users. This will impact how you negotiate and terminate, if necessary, as it could damage commercial relations.

Further, the rating of the service you provide will set you in good stead among competitors, particularly for ‘Outstanding’ or ‘Good’ providers and, where complex care is being provided, consideration should be given to whether there are similar services of similar quality nearby or whether the commissioners will have to place outside the borough. All of these factors should be taken into account to ensure proposed rates reflect the value of the service being provided to the commissioner.

Case law in social care

Recent landmark social care cases, both worked by the HCR Healthcare team, have established and endorsed the approach of care providers claiming unjust enrichment. These include:

• The Julie Richardson Ltd & Anor v Oxfordshire County Council [2024]
• Fairmont v North Central London ICB [2026].

Restitution claims and unjust enrichment are legal doctrines that have become relevant to social care in recent years to assist providers with the emerging problem of establishing market-rate annual uplifts and protecting themselves from unscrupulous behaviour from commissioners.

The courts have demonstrated a willingness to find in favour of private providers who are providing the care and accommodation services with no other option. It’s not as if providers can evict these vulnerable and complex service users. This is particularly the case where an individual suffers from complex or severe disabilities, lacks capacity and/or is autistic.

Courts have sympathised with providers delivering care in the absence of a contract at below-market rates, without any contractual certainty. We have seen precedents against both LAs or ICBs in favour of providers. Providers often have no option but to continue providing care and accommodation, even in the absence of an agreed contractual rate.

We advise opening discussions with commissioners regarding fee increases as early as November and, in any event, well in advance of the new financial year. Don’t leave this as late as February or March.