Where is the Provision of Social Care Heading?

  • By Phil Talbot ACA
  • 28 Mar, 2018

The Residential Market might just give some clues as to where Social Care is going.

In 1990 as a newly qualified Chartered Accountant I walked out of the world of Public Practice into the world of “Commerce”. I had no idea what lay ahead, but I had just got a new job as the Management Accountant with the UK’s largest Nursing Home provider.  Career progress indeed.

Now this career progress must be put into context as it wasn’t quite as grand as it might first appear. The company was Takare plc, and it was the largest privately-owned Nursing Home Group in the UK. However, at that point the company had a mere 11 Nursing Homes with about 1,200 beds, and whilst I did head up the accounting team, it was made up of 1 Sales Ledger Clerk, two Payroll Clerks and myself.

Add to this, occupancy rates were in excess of 98%, regulation was almost non-existent, recruiting Nurses and Carers was not a problem and the use of Agency staff did not exist. These facts alone highlight how the market in Nursing and Residential care of the elderly has changed in the last 25 years or so.

The office, based at Telford was to be the source of key personnel for many of the main operators and Industry commentators in the years to come, but none of them could have foreseen what the future would bring. Over 10 years up until the year 2000, the development of the market had come a long way as the first signs of recognising the forthcoming ageing population problem was beginning to be reflected in both the nature of provision, as well as the funding model and the introduction of the first real signs of regulation.

Takare were the first company to design and build ground floor, single room accommodation for elderly residents on a large scale. It was a model, whilst not universally liked, gave a modern facility for a growing problem which was at the time both economically sustainable and at a cost seen as affordable. The business model evolved and as with many things money was the driver. Investors looking to maintain or improve their stakeholding as the funding of care changed, (primarily the introduction of the Community Care Act in 1993) had to find a new solution. The whole funding model changed, and this saw the inevitable consolidation of provision as the answer. As times got tougher businesses sought efficiencies, and for efficiencies economies of scale meant that business profitability could be maintained.

In 2000, after extensive investment as well as several mergers and takeovers I left the business, as the finance function was being re-located to Leeds. By this time the Takare portfolio had become the largest part of BUPA’s Care Home division, which by now had some 14,000 beds. Having been in senior positions throughout the 10 years I had developed a good feel for change management and knew what it looked like.

Following on from this I took up the role of Finance Director in another care business, this time not Residential care but Domiciliary care. Businesses so often linked, and yet so different.

After an initial period of introduction, I was hit by a sense of deja-vous, the world of domiciliary care in 2001 felt somewhat similar to the residential care market some 10 years earlier. Regulation was almost non-existent, and up until that point a majority of care had been delivered by Local Authorities and their own in-house teams, and was still referred to by many as “Home Help”. Councils had only recently gone down the outsourcing route, becoming a purchaser rather than a provider. It was all new to the purchasers, as they had not done that role before, and it was all new to the providers, as most were fledgling businesses. The financial savings for Local Authorities were significant and their exposure to risk somewhat reduced and for the new providers there was opportunity.

In these times providers were operating in a new business environment, where, like the Residential care sector before, the rules were yet to develop. However today, austerity, the higher public profile of the sector and the increasing demands of the service and a modern regulation regime, make the job of a modern day Domiciliary care provider unrecognisable from 16 years ago.

Once again, I had seen growth and changes which could not have been foreseen even by the most optimistic. In addition to the market changes, I had been the Finance Director of a business which had grown from 2 offices to over 50. Growth, development and change just seemed to be all in a days work.

In many ways the parallels of the two sectors and their evolvement, as society has attempted to address the ageing population, are quite strikingly similar. If that is the case, “What next for Domiciliary care?”


Interestingly as the debate regarding the funding of Social Care continues the residential sector appears to have seen a growth in privately only funded businesses. The patience of some care groups seems to have been exhausted as they refuse to take on publicly funded residents, which were, in many cases, being subsidised by the privately funded residents. Instead they are developing quality brands and targeting those with the ability to pay. The result of this, if reasonable occupancy rates are maintained, is that they are able to run a successful sustainable business where they have the ability to better control quality and manage income levels to support the business properly.

Will the Social Care market follow a similar route?

 

As a business specialising in supporting businesses in the Health and social Care Sector we believe that the market for domiciliary care will continue to consolidate and business intelligence does support this.

We have business interests that are actively looking to buy good quality domiciliary care businesses which are focussed on the provision of privately funded care.

If you have a business that is in this category and are potentially interested in the selling of your business, then please feel free to contact us and we will be happy to have a no obligation discussion. We can help in both the preparation of your business for sale, as well as helping and guiding you through the transaction.

 

PJT Consultancy Services Ltd is based in Shrewsbury and run by Phil Talbot ACA, a Chartered Accountant and Glenn Foster ACMA, a Chartered Management Accountant. Both specialise in the provision of business advice with regards to the Health and Social Care Sector.
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