It’s been an incredibly tough year for the care home industry. Over the past twelve months, more than 30,000 residents of UK care homes died within 28 days of contracting COVID-19, which accounts for one in every 14 residents. Care home operators and staff are shaken, sad, and in many cases, angry about the government policies that they claim put these lives at risk unnecessarily.
The industry has been battered and bruised but is showing impressive levels of resilience. For smaller operators who are looking to exit the market, there are investors ready to pounce. This is because, despite the harrowing past year, the healthcare industry has long been seen as a safe haven for investors during tumultuous times.
Could lives have been saved?
This is a question many have been asking and the answer, according to care staff and the National Care Association, is yes. The Chairman of the Association, Nadra Ahmed, explained, “The policy was, let’s get the beds emptied in hospitals so the NHS could function, and of course that brought the infection into care homes. That was one of the pathways to disaster.”
This is the issue at the heart of the care industry’s main complaint about how the early weeks of the pandemic were handled. They claim that care homes were sacrificed in order to save the NHS. That hospital beds were emptied and patients sent out to care homes without being tested. Then care staff would work in more than one care home, spreading the disease swiftly and effectively.
Shadow health secretary, Jonathan Ashworth, claims: “They made it their priority to make sure the NHS didn’t keel over, but the only reason the NHS didn’t keel over was because they shunted people into care homes, putting them massively at risk.”
The government has since said that it failed to understand asymptomatic transmission and that, in hindsight, it would have done things very differently back in February and March 2020. However, many within the care home industry insist that they warned the government about the risks involved with their policy, but were ignored.
Resilience pays off
Despite all the heartache, the care home industry has shown remarkable levels of resilience. A number of larger operators are now looking to buy up individual care homes and add them to their roster. Indeed, a new PricewaterhouseCoopers report, entitled “Global M&A Industry Trends in Health Industries” has predicted further consolidation within the elderly care sector across Europe, partly through the integration of single players and small groups into larger provider groups.
We are already seeing examples of this in the M&A arena in the UK. Newcastle-based Aurora Care Group, for example, has announced plans to snap up more care homes to add to its portfolio. Before the pandemic it had acquired a large care home, Langley House, that it was planning to expand and invest in. However, acquiring smaller homes and growing through acquisition is its latest plan. It has sold Langley House and is now looking for deals.
Aurora Group’s founder, Elaine Reay, explained: “We have a successful, hands-on formula for running our care homes and know we will be able to replicate it in other locations around the region when the right acquisition opportunities come along.”
She added that the COVID crisis has actually added to the demand for quality domiciliary care for the elderly and that the business’s acquisition strategy will help it to employ and train new staff.
Meanwhile, European care and support service group Korian, released its Q4 result for 2020, including and 7.2 per cent growth in revenues for the period. Part of the business strategy going into 2021 is to add high-end care homes to its offering in the UK specifically. Korian’s Q4 report stated: ‘The Group has added c. 6,000 beds to its portfolio in 2020 and 107 additional facilities, reaching 88,651 beds and 1,000 facilities in operation at the end of the year.’ It added that recent acquisitions made by the group have had a positive contribution to revenues over the period.
One care home group that is busy selling some of its portfolio of premises is HC-One, which is based in the North East of England. The group runs in excess of 320 care homes, and has 52 of these up for sale, accounting for 16 per cent of its portfolio. The business says it is looking for a buyer who can offer a more local service for the residents in these care homes and will redirect investment in refurbishment of its other establishments.
HC-One’s CEO James Tugendhat, alluded to problems facing care home operators in trying to care for staff in regions where there is little cooperation with other social care services. He said: “We are putting 52 of our homes up for sale in areas where we feel our communities would be better served by a local operator in conjunction with other local services. We are also proposing to close 4 homes. In both cases, we will work closely with our local partners and commissioners.”
This decision to sell off a large number of care facilities during the pandemic has set some alarm bells ringing and has exposed cracks in the social care system, according to the GMB Union. Referring to HC-One’s sale, GMB officer Rachel Harrison explains: “The appalling lack of Government strategy has led to thousands more staff and residents facing another crisis, with their futures uncertain while providers try and move the deck chairs and paper over the cracks in the absence of a plan.”
What does the future bring for care home operators?
As we put the worst of the pandemic behind us and finally vaccinate the most vulnerable, many of whom are care home residents, the industry can start to get back to some form of normality.
Visitors can return and the elderly can start to come out of their rooms and enjoy some sense of freedom without the fear of COVID once again. However, the pandemic has exposed the fact that the social care industry needs some serious attention in the coming years.
The National Care Association is calling for more government support for an industry that operates very differently from the NHS, but one that is just as vital. With care homes run by small and large businesses, as well as with private and public money, it’s not an easy industry for the government to even understand, let alone control. However, a greater level of effective communication, cohesion and cooperation will make everyone’s life easier in the care homes industry and better protect care home providers and their residents.
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