Scales and size-quality outcomes in adult learning disability residential care: evidence from the UK

Residential care services are under increasing pressure to lower service provision costs while maintaining quality of care. Using a translog cost function, this paper examines the relationship between cost, quality and output in England’s learning disability (LD) residential care sector. It finds genuine but diminishing economies of scale in LD residential care services vis-à-vis output (i.e., care weeks). However, some variation exists: higher-quality LD residential care homes appear to have larger economies of scale than lower-quality ones. Supplementary regression analysis, examining quality-size, further finds quality (a) is negatively associated with LD care homes of six or fewer beds; (b) shows no association with homes of more than six beds. These findings enhance residential care literature and raise the possibility that, by promoting the establishment of larger high-quality care homes, cost savings may be achieved without sacrificing quality.