Research and analysis

Evidence on costs associated with NHS-funded nursing care in 2023

Published 21 November 2024

Applies to England

Introduction 

In October 2023, the Department of Health and Social Care (DHSC) launched a cost collection survey to gather evidence on the cost to care homes of providing NHS-funded nursing care (FNC) in 2023. The evidence gathered was used to inform the setting of the 2024 to 2025 FNC rate. 

This paper sets out the approach to data collection and analysis and provides a breakdown of the costs to care homes of providing FNC in April and October 2023.

Methodology 

Scope of cost collection exercise 

The FNC rate is the contribution provided by the NHS to care homes with nursing to support the provision of nursing care by a registered nurse. 

As set out in the 2017 Supreme Court judgment (R v Cardiff and Vale University Health Board), ‘nursing care by a registered nurse’ covers: 

• time spent on nursing care, in the sense of care which can only be provided by a registered nurse, including both direct and indirect nursing time (for example, management of medicines, overall care planning and hygiene standards)
• paid breaks
• time receiving supervision
• standby time
• time spent on providing, planning, supervising or delegating the provision of other types of care which in all the circumstances ought to be provided by a registered nurse because they are ancillary to or closely connected with or part and parcel of the nursing care which they have to provide

Further information on FNC is available in the: 

• National framework for NHS continuing healthcare and NHS-funded nursing care
• NHS-funded nursing care practice guidance 

Research approach 

The cost collection exercise sought data on the below costs: 

• gross registered nurse pay, including any additional allowances, bonuses, incentives, introduction payments, overtime, holiday, sickness and maternity pay, backfill for holidays, sickness absence and training, relocation, redundancy and compromise agreement payments and any under or over payments applied in the period
• ‘on-costs’, including employers’ National Insurance and employers’ pension contributions and any other relevant payroll on-costs relating to registered nurses

The cost collection exercise did not seek data on costs that are not considered relevant to the FNC definition of ‘nursing care by a registered nurse’, including: 

• non-pay training costs
• nursing equipment, including personal protective equipment (PPE)
• recruitment expenses and professional nurse registration fees

The survey also asked additional questions on how pay decisions are made. This does not impact the setting of the rate and therefore is not included in this report.

Data collection 

The department issued the cost collection survey to 4,392 nursing homes across England in October 2023. Information on the research was also shared through sector newsletters and networks. The survey was issued via Capacity Tracker (CT) on 25 October 2023 and closed on 23 November 2023.

The survey was designed with the help of feedback from care home providers and sector stakeholders, and asked respondents to submit the following information: 

• name and Care Quality Commission (CQC) ID - already held in CT
• funding classification and number of current residents
• payroll costs for April 2023 and October 2023 for employed registered nurses, agency registered nurses, managers (where they are registered nurses and undertake nursing activities)
• payroll hours for the above staff types for the relevant payroll period that aligns with the payroll costs submitted
• estimates of the proportion of manager time spent on nursing tasks

Data was collected for April 2023 and October 2023 to reflect changes in costs throughout the year. Providers were asked to provide data on their own payroll periods near those months.   

Response 

The department received 1,128 responses. Following data cleaning and validation checks of these responses, 725 were used in the final analysis for April 2023 and 750 for October 2023. 

Responses which did not pass the following data cleaning checks were deemed invalid and removed before analysis. The data cleaning checks removed: 

• dates that were not in 2023
• negative values
• obvious text items from entries, for example ‘12,345 pounds’ or ‘£’ symbols to enable fields to be used
• non-numeric values from numeric fields
• percentages larger than 100%
• sites not in England

Responses which did not pass the following validation checks were deemed invalid and removed before analysis because: 

• all data requested for set time dates, such as April and October 2023, should cover the set time periods
• dates covered should be entered in a logical order
• information about registered nursing payroll costs should be entered
• responses from non-nursing providers (that is, residential homes) were not required for this exercise
• responses for nursing providers that did not have FNC residents were not required for this exercise
• data on the number of beds should have been entered
• on-cost values were no more than 50% of the total cost of pay entered

The tables below show the breakdown of valid responses by operator size and region. 

Table 1: nursing home responses in the respondent sample and the total number of nursing homes in England, broken down by operator size 

Operator size	Percentage of survey responses	Percentage of nursing homes in England	Number of survey responses	Number of nursing homes in England
Large corporate (40 or more nursing homes)	46%	20%	348	834
Medium group (10 to 39 nursing homes)	15%	19%	116	800
Small group or independent (fewer than 10 nursing homes)	38%	62%	286	2,629
All operator categories	100%	100%	750	4,263

Source: CQC Care Directory, November 2023. 

Table 2: nursing home responses in the respondent sample and the total number of nursing homes in England, broken down by region 

NHS region	Percentage of survey responses	Percentage of nursing homes in England	Number of survey responses	Number of nursing homes in England
North East and Yorkshire	13%	15%	101	650
North West	14%	14%	102	616
East of England	11%	9%	83	383
Midlands	20%	20%	149	870
South East	21%	20%	158	859
South West	12%	12%	93	515
Greater London	9%	9%	64	363
Unspecified	0%	0%	0	7
All regions	100%	100%	750	4,263

Please note there are 7 homes with an unspecified region. 

Analysis 

To calculate the cost to nursing homes of providing FNC in April 2023 and October 2023 (per FNC-eligible resident per week), the following equation was used:    

The ‘total registered nurse costs’ divided by the ‘number of residents with nursing needs’. The outcome is then multiplied by the ‘FNC weighting factor’.

The result was then weighted by provider size and region. 

The terms in this equation were calculated as follows: 

• total registered nurse costs: the total payroll costs for the relevant staff type^{[footnote 1]} in the reference period, normalised to one week. For registered managers (employed or agency), this figure was adjusted to reflect the fact that not all time for these roles was spent delivering registered nursing care. The cost collection exercise asked respondents to estimate the proportion of time registered managers spent on registered nursing tasks

• for registered managers, the average proportion of time spent on registered nursing tasks given was 18.7%. The costs used in the equation were adjusted accordingly
• number of residents with nursing needs: the number of residents with nursing needs in the reference week submitted by the survey respondent
• FNC weighting factor: not all registered nursing tasks were eligible to be counted towards the FNC rate. The per-resident cost of providing nursing care therefore needed to be adjusted to reach the cost of providing FNC per FNC-eligible resident per week

This adjustment was made using an ‘FNC weighting factor’ of 0.85 determined by the 2018 to 2019 report Review of the NHS-funded Nursing Care Rate in England (PDF, 2.2MB), by LaingBuisson. Given burdens on providers during October and November 2023, and the complexity of collecting accurate time and activity data, it was not appropriate to collect new data on nurse activity. Therefore, the assumption was made that while the overall amount of time needed to deliver FNC may have changed since 2018 to 2019, the proportion of time (relative to other nursing tasks) remained the same. 

Weighting by provider size and region smoothed out any response bias in the survey to account for variability in cost between provider sizes and region. 

Cost of providing FNC in April and October 2023 (unweighted)

The equation above was used to calculate the costs of providing FNC (per FNC-eligible resident per week) for each staff type in each operator type, with extreme outliers removed using the Tukey method. According to this method, extreme outliers were defined as any values which were: 

• greater than the third quartile value plus 3 times the inter-quartile (first and third) range or
• less than the first quartile value minus 3 times the inter-quartile range

Fourteen records were removed for extreme outliers.  

Table 3: qualifying registered nurse unweighted costs per NHS FNC-eligible resident per week April 2023 by for large providers by region 

NHS region	Validated responses	Registered nurse costs per FNC resident	Agency nurse costs per FNC resident	Manager costs per FNC resident	Region and provider size weighting
North West	53	£161.47	£60.63	£9.11	3%
North East and Yorkshire	51	£200.47	£57.31	£10.50	4%
East of England	39	£251.86	£18.91	£12.97	3%
Midlands	61	£210.36	£51.92	£12.91	4%
London	42	£245.86	£10.40	£9.55	4%
South East	72	£228.26	£27.61	£13.77	6%
South West	30	£250.15	£30.44	£18.46	2%

Table 4: qualifying registered nurse unweighted costs per NHS FNC-eligible resident per week April 2023 for medium providers by region  

NHS region	Validated responses	Registered nurse costs per FNC resident	Agency nurse costs per FNC resident	Manager costs per FNC resident	Region and provider size weighting
North West	c	c	c	c	3%
North East and Yorkshire	11	£94.81	£29.62	£2.06	4%
East of England	17	£166.44	£42.95	£3.54	3%
Midlands	c	c	c	c	3%
London	c	c	c	c	2%
South East	31	£175.28	£12.27	£7.24	4%
South West	19	£228.10	£84.80	£5.60	2%

Table 4 has had suppression applied, denoted by ‘c’.

Table 5: qualifying registered nurse unweighted costs per NHS FNC-eligible resident per week April 2023 for small or independent providers by region

NHS region	Validated responses	Registered nurse costs per FNC resident	Agency nurse costs per FNC resident	Manager costs per FNC resident	Region and provider size weighting
North West	42	£182.68	£25.40	£5.11	8%
North East and Yorkshire	39	£180.17	£39.76	£5.13	7%
East of England	22	£170.65	£22.54	£6.16	5%
Midlands	77	£138.02	£23.64	£3.05	12%
London	15	£161.28	£16.64	£3.16	4%
South East	41	£175.25	£19.11	£5.11	11%
South West	41	£139.76	£25.34	£3.60	7%

Table 6: qualifying registered nurse unweighted costs per NHS FNC-eligible resident per week October 2023 for large providers by region

NHS region	Validated responses	Registered nurse costs per FNC resident	Agency nurse costs per FNC resident	Manager costs per FNC resident	Region and provider size weighting
North West	52	£181.65	£52.43	£6.26	3%
North East and Yorkshire	48	£222.33	£56.13	£6.48	4%
East of England	40	£293.01	£23.65	£6.01	3%
Midlands	62	£241.76	£64.90	£5.22	4%
London	43	£276.66	£17.37	£4.26	4%
South East	75	£275.16	£36.17	£4.96	6%
South West	28	£332.43	£29.31	£3.54	2%

Table 7: qualifying registered nurse unweighted costs per NHS FNC-eligible resident per week October 2023 for medium providers by region

NHS region	Validated responses	Registered nurse costs per FNC resident	Agency nurse costs per FNC resident	Manager costs per FNC resident	Region and provider size weighting
North West	c	c	c	c	3%
North East and Yorkshire	13	£113.69	£32.34	£1.45	4%
East of England	18	£178.81	£64.05	£5.09	3%
Midlands	10	£194.83	£11.33	£2.86	3%
London	c	c	c	c	2%
South East	41	£212.06	£13.03	£1.74	4%
South West	19	£245.51	£41.40	£5.95	2%

Table 7 has had suppression applied, denoted by ‘c’.

Table 8: qualifying registered nurse unweighted costs per NHS FNC-eligible resident per week October 2023 for small or independent providers by region  

NHS region	Validated responses	Registered nurse costs per FNC resident	Agency nurse costs per FNC resident	Manager costs per FNC resident	Region and provider size weighting
North West	41	£190.10	£23.76	£5.95	8%
North East and Yorkshire	40	£158.42	£21.71	£4.57	7%
East of England	25	£177.57	£20.67	£5.59	5%
Midlands	77	£154.74	£26.26	£3.30	12%
London	15	£178.29	£18.64	£3.05	4%
South East	42	£174.51	£12.49	£4.49	11%
South West	46	£187.88	£20.37	£3.92	7%

Results 

The raw costs above were weighted to account for variation across operator sizes and region and summed to give the total cost to nursing homes of providing FNC. 

Table 9: qualifying registered nurse costs per NHS FNC-eligible resident per week in April 2023 

Staff type	Cost of providing FNC per eligible resident per week	Proportion of total cost of providing FNC
Registered nurses	£173.99	83%
Agency nurses	£29.43	14%
Manager	£6.16	3%
Total	£209.59	100%

Table 10: qualifying registered nurse costs per NHS FNC-eligible resident per week in October 2023 

Staff type	Cost of providing FNC per eligible resident per week	Proportion of total cost of providing FNC
Registered nurses	£193.12	86%
Agency nurses	£27.34	12%
Manager	£4.26	2%
Total	£224.72	100%

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1. Respondents were asked to provide payroll data for employed registered nurses, agency registered nurses, employed registered managers (where they were registered nurses and undertook nursing activities). ↩