The care market of the future; corner shops or supermarkets

The Institute of Public Care

Leading on the DCMQC programme and led work with the NMDF.

Developed the concept of market facilitation and the use of market position statements.

Work with CQC, with umbrella bodies such as VODG and NCF.

Projects with a wide range of providers and local authorities around the market, including work on pricing, on service development, on outcome based contracting and on quality standards.

Recently published a leading paper on the home care market.

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Corner shops or supermarkets

What does care provision look like now? What shape might care provision take in the

future? Will it be an individualised, small, locally

produced, ‘tailor made’ service or a delivered by a large, interdisciplinary, health housing and care provider?

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What kind of care market do we have?

What kind of care market do we have?

One where the local authority exerts increasingly less control.

A fragmented market. A significant economic force. A continuing level of financial instability where

despite Southern Cross there are still care business buyers.

A large number of frustrated providers.

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Local authority purchasing of care beds by regionRegion Total care beds LA Purchased % purchased

South East 84,000 35,000 41

South West 57,000 24,000 42

Yorks & Humber 49,000 23,000 46

Eastern 51,000 24,000 47

East Midlands 43,000 21,000 48

West Midlands 46,000 23,000 50

North West 63,000 33,000 52

London 39,000 26,000 66

North East 18,000 15,000 83

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Distribution of Care Home Groups (beginning with B)

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BPS Belleview

Bertinaley Mr & Mrs Bhanji

Bindon Bleak House

Burlington Ben

Belong Beritaz

Balcombe Brancaster

Brookdale Brendoncare

Black Swan B&M

Bondcare Barchester

BUPA

A fragmented market

Nearly 12,500 social care providers registered with CQC, of whom just over half are registered care home providers.

13,134 residential care homes with 247,824 beds registered in England, and 4,672 nursing homes with 215,463 beds.

6,830 agencies providing domiciliary care.

----------------------------------------------------------------------- In our sample there were 636 homes of which 508

were owned by just two groups, Barchester and BUPA. The remaining 128 homes were owned by 17 other companies.

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A significant economic force

Last year (2012) local authorities spent over £4.5 billion pounds on older peoples residential care, at an average of £30 million per authority.

1.63 million people work in the care sector. Around two-thirds (65%) of all jobs in adult social

care are in the private and voluntary sectors. For example in Bradford out of a workforce of

around 100,000 in employment, caring and leisure services employs around 18,000 people.

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A significant economic force

Barchester in our example has 11,000 residents and 14,000 staff. It holds assets of around £1bn and a turnover of £413 million (a large company is normally considered to be just under £6 million and over 250 staff). Barchester’s highest paid Director earns £864,000 per annum.

BUPA is a world-wide organisation. 29,000 care home residents, 38,000 employees (27,000 in UK). “In the UK revenues last year were maintained but the surplus was marginally lower as a result of lower occupancy rates (overall occupancy was 87.3% in 2011, compared to 88.0% in 2010). There were increases in employee costs”. 74% of BUPA residents receive some form of state funding.

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Investment and control

Top ten providers control 11% of the care homes but 21% of the beds.

Savills in 2010 were arguing there was still considerable demand for the purchase of care homes. At that time they saw a low tier home (below 30 beds with compliance issues, few en suite facilities, low profitability, little or no room for expansion) as fetching around £30,000 – £40,000 per bed. A high end home (purpose built, high average fees, profitable, located in an area with high barriers to entry and room to expand) fetching around £80- £100 thousand per bed.

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Planning investment

“We’ve got all sorts of computer models and things but just, crudely, there are 10,500 major postcodes in this country and we profile every one of them in terms of wealth, demography, competitors or just the number of care beds. There are probably 200-300 that we’d like to be in that we’re not.

“Another little exercise that we’ve done before: the target market for Barchester is very similar to Waitrose and to Majestic Wine. There are 200 Waitrose locations where there isn’t a Barchester location and an equal number, if not more, of Majestic Wine locations”.

Mike Parsons Chief Exec of Barchester

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Financial instability

Bondcare reported in the Guardian in November 2012. “Bondcare…. could see itself – in part or entirely – transferred to Lloyds. No part of Bondcare is insolvent but this summer Bank of Scotland appointed receivers from Ernst & Young to part of the business.”

Part of Bondcare was transferred to Akari Care in October 2012. Akari is reported as having £12 million in liabilities and £10 million in book value.

NHP registered in the Cayman Islands and the owners of many Four Seasons homes have a debt burden of £1.8 billion as reported in November 2012.

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Financial instability

Barchester it was reported in November last year (2012) had £1bn debt due to mature in October 2013. The company also owes RBS £487m. Barchester’s holding company Grove Ltd is based in Jersey.

Barchester’s Annual report for 2012 states “Barchester Healthcare Limited's main subsidiary is Barchester Healthcare Homes Limited. Barchester Healthcare Homes Limited is an operating company which holds the trade of the group and pays rental to the property company, Bluehood Limited, who own all of the care homes by way of an internal lease arrangement.”

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Frustrated providers

We went to a meeting about the cuts. There were six members of the commissioning team there. One spoke, the other 5 just watched. (Res care provider)

They think things are bad for them but I am on the verge of going under because the price for home care is not at a level where I can provide the kind of service I came into this business to deliver. (Home care provider)

I can’t get out because I owe too much. I can’t continue because I am losing money week on week. (Single home res care provider)

I trained as a nurse, but as a home care provider we now do the things a district nurse used to do, but we don’t get paid for them (Home care provider )

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However providers also said…

We wish Local Authorities would come to us and say this is the scale of budget reductions we need to make over time, how can we work together on this. (Res care provider)

If we are given time we can make changes but you can’t just throw a business into reverse overnight, however if supply is guaranteed it is one way of saving money. (Vol sector provider)

We would welcome opportunities to discuss the future without doing so in the context of a tender process. (Home care provider)

Some of the systems that have been put in, cost more than they save. (Home care provider)

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What might the care market of the future look like?

Context

Less local authority funding available. Small providers struggling and some exiting the

market. Greater use of Direct Payments and Personal

budgets. Greater expectations around delivery. Despite much talk of integration difficulties in

engaging in a joint health and social care dialogue. Still a distance between social care and the planning authority

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Key strategic directions

Greater scrutiny of large providers. A more consumerist view of care. State funding of care more focussed on

outcomes. Tension between fiscal control and user control of

spending. More of an emphasis on a housing approach to

older home owners. Greater emphasis on inner city care

accommodation and targeted at more diverse communities.

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Key strategic directions

In the case of older people three types of residential care: High cost user funded res care (hotel style

care) Alternative health care provision (out of

hospital, end of life care and dementia). Care homes as care hubs which deliver a

range of community funded services.

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So what will a good care market look like?

A different dialogue between LAs and providers, less focussed on price and a master-servant relationship.

Users of services having a much greater say in what type of care is delivered ,when, with greater choice about the types of care provision available.

Care much more evidence based and outcome driven.

‘If you wouldn't like it then don’t fund it or provide it’.

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Contact us

http://ipc.brookes.ac.uk ipc@brookes.ac.uk 01225 484088