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Residential Care for the Elderly - UK - October 2015

“There appears to be a three‑tier system in residential care in the UK that looks set to become a two‑tier system in the near future. The first tier ‘luxury market’ care homes are marketed like ‘five-star’ hotels and are targeting self-funding residents ahead of those funded by local authorities.”

– Lewis Cone, B2B Analyst

This report will explore the following key issues regarding the residential care industry in the UK:

  • What are the key determinants driving the residential care industry?
  • Was the market affected by the financial crisis and how has it recovered since? Has there been any structural changes as a consequence?
  • How has the government influenced and shaped the development of care homes?
  • What are the key issues the industry needs to address to fully benefit from any favourable market conditions and future trends?
  • Has the industry reacted to the care home scandals?
  • What does the future hold for the UK's residential care industry

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Table of contents

  1. Executive Summary

      • Market size
        • Figure 1: UK residential care market, by value, 2011-15 (£ million)
        • Figure 2: UK residential care market, by number of registered care homes and number of care home places, 2011-15 (Homes in units and places in 000s)
      • Market trends
        • Care home fees continue to be squeezed
          • Ageing population continues to offer growth potential
            • Occupancy rates in residential care homes rise above nursing homes
              • Demand for specialist care homes increases due to rise in illnesses that require greater and specific care requirements
                • The rise of self-funders in the traditional care home market may be somewhat derailed by fee information becoming public
                  • Regional analysis
                    • Figure 3: Local authority-supported adults in residential and nursing care, by region, 2009/10 and 2013/14 (Number of people)
                  • Market factors
                    • Demographic trends will provide constant demand for residential care services
                      • Staff cost differentials apparent despite restrictive financial situation in the industry
                        • Continued local government budgetary restrictions will place a burden on service provision
                          • Care home property market offers opportunities, but also challenges
                            • Companies
                              • Forecast
                                • The value of the UK resident care for the elderly market is forecast to increase by a total of 6% by 2020
                                  • Figure 4: Forecast segmentation of the UK residential and nursing care market, by type of purchaser, 2016-20 (£ million)
                                • Sheltered housing, including extra care housing, expected to become more popular over the next five years
                                  • Figure 5: Forecast UK sheltered housing units, 2016-20 (000)
                                • What we think
                                • Key Insights

                                    • What has been the impact of public spending cuts on care home fees and industry activity?
                                      • Can supported housing, including housing with extra care, offer a suitable alternative to traditional care homes?
                                        • Will the industry’s workforce cope with future care demands?
                                        • Introduction

                                            • Definitions
                                              • Methodology
                                                • Abbreviations
                                                  • Market positioning
                                                      • Figure 6: Elderly (65+) population in the UK, by country, 1995, 2005 and 2014 (000 people)
                                                      • Figure 7: Elderly population in the UK, 1995, 2005 and 2014 (000 people)
                                                  • UK Economy

                                                    • Key points
                                                      • Overview
                                                        • Figure 8: UK GDP, 2004-15 (% quarterly growth and gdp in £ billion)
                                                        • Figure 9: Quarters after GDP peak, 1979, 1990 and 2008 (Number of quarters and GDP as % of pre-downturn peak)
                                                      • Inflation
                                                        • Interest rates
                                                          • House prices
                                                            • Consumer spending
                                                              • Manufacturing
                                                                • Business investment
                                                                  • Figure 10: UK GFCF 2003-15 (£ million)
                                                                • Imports
                                                                  • Exports
                                                                  • Market Factors

                                                                    • Key points
                                                                      • Public sector expenditure restrictions
                                                                        • Demographics and social trends
                                                                          • Economic
                                                                            • Employment trends
                                                                              • Supported housing
                                                                                • Legislation
                                                                                  • Care Standards Act
                                                                                    • Regulation and Inspection Bill (Wales)
                                                                                      • The Care Act 2014 and Better Care Fund
                                                                                        • CQC and market oversight
                                                                                          • Care Certificate
                                                                                            • Pensions Act
                                                                                              • The Carers’ Strategy
                                                                                                • Other legislation
                                                                                                • Market Size and Trends

                                                                                                  • Key points
                                                                                                    • Market size
                                                                                                        • Figure 11: The UK residential care market, by value, 2011-15 (£ million)
                                                                                                        • Figure 12: The UK residential care market graph, by value, 2011-15 (£ million)
                                                                                                        • Figure 13: The UK residential care market, by number of registered care homes, 2011-15 (Units)
                                                                                                        • Figure 14: The UK residential care market graph, by number of registered care homes, 2011-15 (Units)
                                                                                                        • Figure 15: The UK residential care market, by number of registered places, 2011-15 (000)
                                                                                                        • Figure 16: Average number of places, revenue per care home and revenue per place, UK, 2011-15 (Average number of places, revenue in £000)
                                                                                                        • Figure 17: Revenue per care home and per place, UK, 2011-15 (Revenue per place in £ and per care home in £000)
                                                                                                      • Market segmentation
                                                                                                        • Overview
                                                                                                          • Figure 18: Segmentation of the UK residential care market, by type of accommodation, 2011-15 (Number of homes, sheltered housing in 000 units)
                                                                                                          • Figure 19: Segmentation of the UK residential care market, by type of purchaser, 2011-15 (£ million)
                                                                                                          • Figure 20: Segmentation of the UK residential care market, by type of purchaser, 2011 and 2015 (£ million)
                                                                                                          • Figure 21: Segmentation of the UK residential care market, by type of provider, 2011-15 (£ million)
                                                                                                          • Figure 22: Segmentation of the UK residential care market, by type of provider graph, 2011-15 (£ million)
                                                                                                        • Local authority commissioned care
                                                                                                            • Figure 23: Number of local authority funded adults in care homes, by type of provider, 2010-14 (Number of residents)
                                                                                                            • Figure 24: Number of local authority-funded adults in care homes, by independent provider, 2010-14 (Number of residents)
                                                                                                            • Figure 25: Segmentation of local authority-commissioned residential and nursing care expenditure, by provider and client type, 2011-15 (£ million)
                                                                                                            • Figure 26: Segmentation of local authority-commissioned residential and nursing care expenditure, by provider and client type, 2011-15 (£ million)
                                                                                                          • Older people (65+)
                                                                                                            • Figure 27: Segmentation of local authority expenditure on residential care services for older people (65+), by service type, 2011-15 (£ million)
                                                                                                            • Figure 28: Segmentation of local authority expenditure on residential care services for older people (65+) graph, by service type, 2011-15 (£ million)
                                                                                                          • Adults aged 18-64
                                                                                                            • Figure 29: Segmentation of local authority expenditure on residential care services for adults aged 18-64, by service type, 2011-15 (£ million)
                                                                                                            • Figure 30: Segmentation of local authority expenditure on residential care services for adults aged 18-64, by care need type, 2011-15 (£ million)
                                                                                                          • NHS care
                                                                                                              • Figure 31: Segmentation of NHS expenditure on residential and nursing care, by provider type, 2011-15 (£ million)
                                                                                                              • Figure 32: Segmentation of NHS expenditure on residential and nursing care graph, by provider type, 2011-15 (£ million)
                                                                                                            • Private care purchasers
                                                                                                                • Figure 33: Private expenditure on residential and nursing care, 2011-15 (£ million and % market share)
                                                                                                                • Figure 34: Private expenditure on residential and nursing care graph, 2011-15 (£ million)
                                                                                                              • Sheltered housing
                                                                                                                  • Figure 35: The development of sheltered housing in the UK, 2011-15 (000 units and % change)
                                                                                                                  • Figure 36: The development of sheltered housing in the UK graph, 2011-15 (000 units)
                                                                                                                  • Figure 37: Segmentation of sheltered housing in the UK, by sector and region, 2015 (000 units)
                                                                                                                • Extra care housing
                                                                                                                    • Figure 38: Segmentation of extra care housing in england, by purchasing type and region, 2015 (Units)
                                                                                                                    • Figure 39: Segmentation of extra care housing in England graph, by purchasing type and region, 2015 (Units)
                                                                                                                  • Market trends
                                                                                                                    • Care home fees continue to be squeezed
                                                                                                                      • Ageing population continues to offer growth potential
                                                                                                                        • Occupancy rates in residential care homes rise above nursing homes
                                                                                                                          • Demand for specialist care homes increases due to rise in illnesses that require greater and specific care requirements
                                                                                                                            • Staff cost differentials apparent despite restrictive financial situation in the industry
                                                                                                                              • Regional analysis
                                                                                                                                • Figure 40: Local authority-supported adults in residential and nursing care, by region, 2009/10-2013/14 (Number of people)
                                                                                                                                • Figure 41: Local authority-supported adults in residential and nursing care graph, by region, 2009/10 and 2013/14 (Number of people)
                                                                                                                                • Figure 42: Local authority-supported adults in independent sector residential care, by region, 2009/10-2013/14 (Number of people)
                                                                                                                                • Figure 43: Local authority-supported adults in independent sector residential care graph, by region, 2009/10 and 2013/14 (Number of people)
                                                                                                                                • Figure 44: Local authority-supported adults in LA-staffed residential care, by region, 2009/10-2013/14 (Number of people)
                                                                                                                                • Figure 45: Local authority-supported adults in LA-staffed residential care graph, by region, 2009/10 and 2013/14 (Number of people)
                                                                                                                                • Figure 46: Local authority-supported adults in nursing care, by region, 2009/10-2013/14 (Number of people)
                                                                                                                                • Figure 47: Local authority-supported adults in nursing care graph, by region, 2009/10 and 2013/14 (Number of people)
                                                                                                                            • Supplier Opportunities

                                                                                                                              • Key points
                                                                                                                                • Opportunities
                                                                                                                                  • Care home property market
                                                                                                                                    • Purpose-built care homes
                                                                                                                                      • Supply of goods
                                                                                                                                        • Efficiency
                                                                                                                                          • Demography and health trends
                                                                                                                                            • Self-funder market
                                                                                                                                              • Contract/purchasing negotiation
                                                                                                                                              • Industry Structure

                                                                                                                                                • Key points
                                                                                                                                                  • Industry development
                                                                                                                                                      • Figure 48: Analysis of the changes in the structure of the residential nursing care activities industry, 2010-14 (Number of outlets and businesses)
                                                                                                                                                      • Figure 49: Analysis of the changes in the structure of the residential care activities for the elderly and disabled industry, 2010-14 (Number of outlets and businesses)
                                                                                                                                                      • Figure 50: Analysis of the changes in the structure of the hospital activities – Medical nursing home activities industry, 2010-14 (Number of outlets and businesses)
                                                                                                                                                    • Structure by employment
                                                                                                                                                      • Figure 51: Analysis of the employment structure of the residential nursing care activities industry, 2013-14 (Number of outlets and outlet employment size)
                                                                                                                                                      • Figure 52: Analysis of the employment structure of the residential care activities for the elderly and disabled industry, 2013-14 (Number of outlets and outlet employment size)
                                                                                                                                                      • Figure 53: Analysis of the employment structure of the hospital activities – Medical nursing home activities industry, 2013-14 (Number of outlets and outlet employment size)
                                                                                                                                                    • Structure by turnover
                                                                                                                                                      • Figure 54: Analysis of the financial structure of the residential nursing care activities industry, 2013-14 (£ 000 and % of total turnover)
                                                                                                                                                      • Figure 55: Analysis of the financial structure of the residential care activities for the elderly and disabled industry, 2013-14 (£ 000 and % of total turnover)
                                                                                                                                                      • Figure 56: Analysis of the financial structure of the hospital activities – Medical nursing home activities industry, 2013-14 (£ 000 and % of total turnover)
                                                                                                                                                  • Company Profiles

                                                                                                                                                    • Abbeyfield Society

                                                                                                                                                          • Figure 57: Financial analysis of Abbeyfield Society, 2010-14 (£000)
                                                                                                                                                        • Company outlook
                                                                                                                                                        • Anchor Trust

                                                                                                                                                              • Figure 58: Financial analysis of Anchor Trust, 2010-14 (£ million)
                                                                                                                                                            • Company outlook
                                                                                                                                                            • Avante Care and Support (formerly Avante Partnership)

                                                                                                                                                                  • Figure 59: Financial analysis of Avante Care & Support, 2010-14 (£ million)
                                                                                                                                                                • Company outlook
                                                                                                                                                                • Barchester Healthcare

                                                                                                                                                                      • Figure 60: Financial analysis of Barchester Healthcare, 2010-14 (£ 000)
                                                                                                                                                                    • Company outlook
                                                                                                                                                                    • Bupa

                                                                                                                                                                          • Figure 61: Financial analysis of Bupa, 2010-14 (£ million)
                                                                                                                                                                          • Figure 62: Divisional analysis of Bupa, 2011-14 (£ million)
                                                                                                                                                                        • Company outlook
                                                                                                                                                                        • Bupa Care Homes (ANS)

                                                                                                                                                                            • Figure 63: Financial analysis of Bupa Care Homes (ANS), 2010-14 (£ million)
                                                                                                                                                                        • Bupa Care Homes (CFG)

                                                                                                                                                                              • Figure 64: Financial analysis of Bupa Care Homes (CFG), 2009-13 (£ million)
                                                                                                                                                                          • Care UK

                                                                                                                                                                                • Figure 65: Financial analysis of Care UK, 2010-14 (£ million)
                                                                                                                                                                                • Figure 66: Revenue breakdown of Care UK, by division, 2013-14 (£ million)
                                                                                                                                                                              • Company outlook
                                                                                                                                                                              • Embrace

                                                                                                                                                                                    • Figure 67: Financial analysis of Embrace, 2014 (£ 000)
                                                                                                                                                                                  • Company outlook
                                                                                                                                                                                  • Four Seasons Health Care

                                                                                                                                                                                        • Figure 68: Financial analysis of Four Seasons Health Care, 2010-14 (£ million)
                                                                                                                                                                                      • Company outlook
                                                                                                                                                                                      • HC-One

                                                                                                                                                                                            • Figure 69: Financial analysis of HC-One, 2012-14 (£ million)
                                                                                                                                                                                          • Company outlook
                                                                                                                                                                                          • Housing & Care 21

                                                                                                                                                                                                • Figure 70: Financial analysis of Housing & Care 21 (formerly Housing 21), 2010-14 (£ million)
                                                                                                                                                                                              • Company outlook
                                                                                                                                                                                              • Methodist Homes

                                                                                                                                                                                                    • Figure 71: Financial analysis of Methodist Homes, 2010-14 (£ million)
                                                                                                                                                                                                  • Company outlook
                                                                                                                                                                                                  • Minster Care Group

                                                                                                                                                                                                        • Figure 72: Financial analysis of Minster Care Group, 2010-14 (£ 000)
                                                                                                                                                                                                      • Company Outlook
                                                                                                                                                                                                      • Priory Group

                                                                                                                                                                                                            • Figure 73: Financial analysis of the Priory Group, 2010-14 (£ million)
                                                                                                                                                                                                            • Figure 74: Financial analysis of the Priory Education Services, 2010-14 (£ 000)
                                                                                                                                                                                                          • Group outlook
                                                                                                                                                                                                          • Sanctuary Care

                                                                                                                                                                                                                • Figure 75: Financial analysis of Sanctuary Care, 2011-15 (£ 000)
                                                                                                                                                                                                              • Company outlook
                                                                                                                                                                                                                • Figure 76: Profiled companies’ turnover, 2010-14 (£ million)
                                                                                                                                                                                                            • Forecast

                                                                                                                                                                                                              • Key points
                                                                                                                                                                                                                • The market
                                                                                                                                                                                                                  • Demographic trends
                                                                                                                                                                                                                    • Challenges posed by domiciliary care market
                                                                                                                                                                                                                      • Care home fees
                                                                                                                                                                                                                        • Care home property market
                                                                                                                                                                                                                          • Self-funders
                                                                                                                                                                                                                            • Care providers
                                                                                                                                                                                                                              • Government and regulatory action
                                                                                                                                                                                                                                • Market forecast
                                                                                                                                                                                                                                  • Figure 77: Forecast segmentation of the UK residential and nursing care market, by type of purchaser, 2016-20 (£ million)
                                                                                                                                                                                                                                  • Figure 78: Forecast segmentation of the UK residential and nursing care market graph, by type of purchaser, 2016-20 (£ million)
                                                                                                                                                                                                                                  • Figure 79: Forecast UK residential and nursing care, by number of registered places, 2016-20 (000 places)
                                                                                                                                                                                                                                  • Figure 80: Forecast UK residential and nursing care, by number of places graph, 2016-20 (000 places)
                                                                                                                                                                                                                                  • Figure 81: Forecast UK residential and nursing care, by number of homes, 2016-20 (Number of homes)
                                                                                                                                                                                                                                  • Figure 82: Forecast UK residential and nursing care graph, by number of homes, 2016-20 (Number of homes)
                                                                                                                                                                                                                                • Sheltered housing
                                                                                                                                                                                                                                  • Figure 83: Forecast UK sheltered housing units, 2016-20 (000)
                                                                                                                                                                                                                                  • Figure 84: Forecast UK sheltered housing units graph, 2016-20 (000)
                                                                                                                                                                                                                                • Household support
                                                                                                                                                                                                                                  • Difficulties in expanding care home workforce
                                                                                                                                                                                                                                    • Technology
                                                                                                                                                                                                                                    • Further Sources and Contacts

                                                                                                                                                                                                                                      • Trade associations and organisations
                                                                                                                                                                                                                                        • Age UK
                                                                                                                                                                                                                                          • Carers UK
                                                                                                                                                                                                                                            • Care England (formerly English Community Care Association)
                                                                                                                                                                                                                                              • National Care Association
                                                                                                                                                                                                                                                • National Care Forum
                                                                                                                                                                                                                                                  • Trade magazines
                                                                                                                                                                                                                                                    • Care Management Matters
                                                                                                                                                                                                                                                      • Care Talk
                                                                                                                                                                                                                                                        • Caring Times
                                                                                                                                                                                                                                                          • Caring UK
                                                                                                                                                                                                                                                            • Community Care
                                                                                                                                                                                                                                                              • Trade exhibitions
                                                                                                                                                                                                                                                                • Care England 2015
                                                                                                                                                                                                                                                                  • Care and Dementia Show 2015
                                                                                                                                                                                                                                                                    • Health + Care 2016
                                                                                                                                                                                                                                                                      • NAIDEX 2016
                                                                                                                                                                                                                                                                        • Nursing in Practice 2015
                                                                                                                                                                                                                                                                          • Primary Care and Public Health 2016

                                                                                                                                                                                                                                                                          Companies Covered

                                                                                                                                                                                                                                                                          To learn more about the companies covered in this report please contact us.

                                                                                                                                                                                                                                                                          Residential Care for the Elderly - UK - October 2015

                                                                                                                                                                                                                                                                          £995.00 (Excl.Tax)