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Residential Care for the Elderly - UK - September 2016

“The challenges of providing high-quality elderly residential care in a country with an ageing population and stagnating spending levels means that an innovative and long-term response is needed. Despite substantial investment in new and refurbished capacity in the independent sector over the last two decades, a considerable amount of existing care home stock is still classed as ‘sub-standard’. Further substantial investment in capacity will be required going forward as demand for care homes continues to rise in line with estimated rises in the elderly population and the number of those requiring specialist care for conditions such as dementia. Nursing and dementia care homes for residents with high dependency needs are expected to be a particular growth area for the sector.”
Lewis Cone, B2B Analyst

This report looks att he following areas:

  • Does the sector still require a 'cost cap'?
  • Will the 2% council tax precept be enough to fill the care funding gap?
  • With the number of traditional care homes on the decline, can extra care housing facilities support the growing number of people in need?
  • Can care home operators adapt their service provision to accommodate the growing number of people suffering from dementia?
  • What does the future hold for the residential care market?

A number of sub sectors of the residential care for the elderly market are covered in this report:

  • Homes with nursing (previously known as dual registered homes) are defined as accommodation registered to provide residential care and nursing care.
  • Local authority residential homes are also known as Part III homes under the National Assistance Act of 1948. Places are allocated through social workers/social services departments.
  • Nursing homes, which are registered with the District Health Authority, offer full-time nursing facilities. Government statistics no longer draw any distinction between nursing homes, which offer nursing care for all patients; and homes with nursing, which may not.
  • Private residential homes are operated by private individuals and companies. Those providing accommodation for four or more people are registered with the local authority under the Registered Homes Act of 1984. Those premises caring for fewer people are registered with the local authority under the Registered Homes (Amendment) Act of 1991.
  • Sheltered housing typically comprises self contained accommodation specifically designed to cater for the needs of the elderly. Many schemes have a resident warden, while others utilise alarm facilities. Houses are either purchased or rented by occupiers.
  • Voluntary residential homes are operated by charities and religious organisations and are registered with a local authority.

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Table of contents

  1. Executive Summary

      • Market size
        • Figure 1: UK residential care market, by value, 2012-16
        • Figure 2: UK residential care market, by number of registered care homes and number of care home places, 2012-16
      • Market trends
        • Old age support ratio projected to fall
          • Staffing pressures continue to emerge
            • Figure 3: Annual workforce turnover rates in the adult residential care sector, England, 2016, by employee position
          • CQC inspections find vast range in quality of service provision
            • Occupancy rates in residential care homes remain above nursing homes
              • Regional analysis
                • Figure 4: Local authority-supported adults in residential and nursing care, by region, 2011/12 and 2015/16
              • Market factors
                • Ageing population and pension changes will increase strain on service provision and care affordability
                  • Care fee and cost funding gap has widened due to implementation of higher minimum and living wages
                    • Brexit could lead to further staff turnover pressures
                      • The consumer
                        • Close to three-quarters of people have not thought about how they would pay for care
                          • Performance ratings and proximity of care homes influence choice
                            • Care village demand grows with age
                              • Companies
                                • Forecast
                                  • The value of the UK residential care for the elderly market is forecast to increase by 7% by 2021
                                    • Figure 5: Forecast segmentation of the UK residential and nursing care market, by type of purchaser, 2017-21
                                  • Sheltered housing, including extra care housing, is expected to experience stable growth as it becomes preferred to traditional care homes
                                    • Figure 6: Forecast UK sheltered housing units, 2017-21
                                  • What we think
                                  • Key Insights

                                      • Does the sector still require a ‘cost cap’?
                                        • Will the 2% council tax precept be enough to fill the care funding gap?
                                          • With the number of traditional care homes on the decline, can extra care housing facilities support the growing number of people in need?
                                            • Can care home operators adapt their service provision to accommodate the growing number of people suffering from dementia?
                                              • What does the future hold for the residential care market?
                                              • Introduction

                                                  • Definitions
                                                    • Methodology
                                                      • Abbreviations
                                                        • Market positioning
                                                            • Figure 7: Elderly (65+) population in the UK, by country, 1995, 2005 and 2015
                                                            • Figure 8: Elderly population in the UK, 1995, 2005 and 2015
                                                        • UK Economy

                                                          • Key points
                                                            • Overview
                                                              • Figure 9: UK GDP, 2006-16
                                                              • Figure 10: UK Output, by industry, 2008-16
                                                              • Figure 11: Quarters after GDP peak, 1979, 1990 and 2008
                                                            • Inflation
                                                              • Interest rates
                                                                • House prices
                                                                  • Figure 12: UK house price changes, 2006-16
                                                                • Consumer spending
                                                                  • Manufacturing
                                                                    • Figure 13: UK manufacturing, 2014-16
                                                                  • Business investment
                                                                    • Figure 14: UK GFCF 2005-16
                                                                  • Imports
                                                                    • Exports
                                                                    • Market Factors

                                                                      • Key points
                                                                        • Ageing population and pension changes will increase strain on service provision and care affordability
                                                                          • Care fee and cost funding gap has widened due to implementation of higher minimum and living wages
                                                                            • Brexit could lead to further staff turnover pressures
                                                                              • CQC regulatory fees
                                                                                • Housing market supply issues affecting care home and other retirement home development
                                                                                  • 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

                                                                                                    • Key points
                                                                                                        • Figure 15: The UK residential care market, by value, 2012-16
                                                                                                        • Figure 16: UK residential care market, by value, 2012-16
                                                                                                        • Figure 17: The UK residential care market, by number of registered care homes, 2012-16
                                                                                                        • Figure 18: UK residential care market, by number of registered care homes, 2012-16
                                                                                                        • Figure 19: The UK residential care market, by number of registered places, 2012-16
                                                                                                        • Figure 20: Average number of places, revenue per care home and revenue per place, UK, 2012-16
                                                                                                        • Figure 21: Revenue per care home and per place, UK, 2012-16
                                                                                                      • Market segmentation
                                                                                                        • Accommodation type
                                                                                                          • Figure 22: Segmentation of the UK residential care market, by type of accommodation, 2012-16
                                                                                                        • Care purchaser
                                                                                                          • Figure 23: Segmentation of the UK residential care market, by type of purchaser, 2012-16
                                                                                                          • Figure 24: Segmentation of the UK residential care market, by type of purchaser, 2012 and 2016
                                                                                                        • Provider type
                                                                                                          • Figure 25: Segmentation of the UK residential care market, by type of provider, 2012-16
                                                                                                          • Figure 26: Segmentation of the UK residential care market, by type of provider, 2012-16
                                                                                                      • Local Authority Commissioned Care

                                                                                                        • Key points
                                                                                                            • Figure 27: Number of local authority funded adults in care homes, by type of provider, 2011-15
                                                                                                            • Figure 28: Number of local authority-funded adults in care homes, by independent provider, 2011-15
                                                                                                          • Government spending pledge may not be sufficient to plug funding gap
                                                                                                            • Local authority expenditure
                                                                                                              • Figure 29: Segmentation of local authority-commissioned residential and nursing care expenditure, by provider and client type, 2012-16
                                                                                                              • Figure 30: Segmentation of local authority commissioned residential and nursing care expenditure, by provider and client type, 2012-16
                                                                                                            • Older people (65+) expenditure
                                                                                                              • Figure 31: Segmentation of local authority expenditure on residential care services for older people (65+), by service type, 2012-16
                                                                                                              • Figure 32: Segmentation of local authority expenditure on residential care services for older people (65+), by service type, 2012-16
                                                                                                            • Adults aged 18-64 expenditure
                                                                                                              • Figure 33: Segmentation of local authority expenditure on residential care services for adults aged 18-64, by service type, 2012-16
                                                                                                              • Figure 34: Segmentation of local authority expenditure on residential care services for adults aged 18-64, by care need type, 2012-16
                                                                                                            • Regional analysis
                                                                                                              • Figure 35: Local authority-supported adults in residential and nursing care, by region, 2011/12-2015/16
                                                                                                              • Figure 36: Local authority-supported adults in residential and nursing care, by region, 2011/12 and 2015/16
                                                                                                              • Figure 37: Local authority-supported adults in independent sector residential care, by region, 2011/12-2015/16
                                                                                                              • Figure 38: Local authority-supported adults in independent sector residential care, by region, 2011/12 and 2015/16
                                                                                                              • Figure 39: Local authority-supported adults in LA-staffed residential care, by region, 2011/12-2015/16
                                                                                                              • Figure 40: Local authority-supported adults in LA-staffed residential care, by region, 2011/12 and 2015/16
                                                                                                              • Figure 41: Local authority-supported adults in nursing care, by region, 2011/12-2015/16
                                                                                                              • Figure 42: Local authority-supported adults in nursing care, by region, 2011/12 and 2015/16
                                                                                                          • NHS Care

                                                                                                            • Key points
                                                                                                              • Personal budgets
                                                                                                                  • Figure 43: Segmentation of NHS expenditure on residential and nursing care, by provider type, 2012-16
                                                                                                                  • Figure 44: Segmentation of NHS expenditure on residential and nursing care, by provider type, 2012-16
                                                                                                              • Private Care Purchasers

                                                                                                                • Key points
                                                                                                                    • Figure 45: Private expenditure on residential and nursing care, 2012-16
                                                                                                                    • Figure 46: Private expenditure on residential and nursing care, 2012-16
                                                                                                                • Sheltered Housing

                                                                                                                  • Key points
                                                                                                                    • Government funding
                                                                                                                      • Market size
                                                                                                                          • Figure 47: The development of sheltered housing in the UK, 2012-16
                                                                                                                          • Figure 48: Development of sheltered housing in the UK, 2012-16
                                                                                                                          • Figure 49: Segmentation of sheltered housing in the UK, by sector and region, 2016
                                                                                                                        • Extra care housing
                                                                                                                          • Market development
                                                                                                                            • Market size
                                                                                                                              • Figure 50: Segmentation of extra care housing in England, by purchasing type and region, 2016
                                                                                                                              • Figure 51: Segmentation of extra care housing in England, by purchasing type and region, 2016
                                                                                                                          • Market Trends

                                                                                                                            • Key points
                                                                                                                              • Old age support ratio projected to fall
                                                                                                                                  • Figure 52: UK population projections, by age group, 2016-40
                                                                                                                                  • Figure 53: Estimated and projected age structure of the United Kingdom population, by sex, mid-2016 and mid-2040
                                                                                                                                • Staffing pressures continuing to emerge
                                                                                                                                  • Figure 54: Annual workforce turnover rates in the adult residential care sector, England, 2016, by employee position
                                                                                                                                  • Figure 55: Annual workforce turnover rates in the adult residential care sector, England, 2016, by employee position
                                                                                                                                  • Figure 56: Average annual pay in the adult residential care sector, England, 2016, by employee position
                                                                                                                                  • Figure 57: Average annual pay in the adult residential care sector, England, 2016, by employee position
                                                                                                                                • CQC inspections find vast range in quality of service provision
                                                                                                                                  • Figure 58: CQC inspection outcomes, England, 2016
                                                                                                                                • Recent declines in the number of residential care home places has raised the importance of domiciliary care
                                                                                                                                  • Squeeze on care home fees continues while care costs rise
                                                                                                                                    • Occupancy rates in residential care homes remain above nursing homes
                                                                                                                                      • Demand for specialist care homes increases due to rise in illnesses that require greater and specific care requirements
                                                                                                                                      • Supplier Opportunities

                                                                                                                                        • Key points
                                                                                                                                          • Care home property market
                                                                                                                                            • Purpose-built care homes
                                                                                                                                              • Supply of goods
                                                                                                                                                • Efficiency
                                                                                                                                                  • Demography and health trends
                                                                                                                                                    • Self-funder market
                                                                                                                                                      • Contract/purchasing negotiation
                                                                                                                                                      • The Consumer — Care Payment

                                                                                                                                                        • Key points
                                                                                                                                                          • Close to three-quarters of people have not thought about how they would pay for care
                                                                                                                                                              • Figure 59: Residential care payment plans, June 2016
                                                                                                                                                              • Figure 60: Residential care payment plans, June 2016
                                                                                                                                                            • Young most likely to have not considered financial consequences of care
                                                                                                                                                              • Figure 61: Residential care payment plans, by age and gender, June 2016
                                                                                                                                                            • People expect to use personal savings and pension income to fund care
                                                                                                                                                              • Figure 62: Residential care payment method, June 2016
                                                                                                                                                              • Figure 63: Residential care payment method, June 2016
                                                                                                                                                          • The Consumer - Choosing a Home

                                                                                                                                                            • Key points
                                                                                                                                                              • Performance ratings and proximity of care homes influence choice
                                                                                                                                                                  • Figure 64: Residential care home choice factors, by rank of importance, June 2016
                                                                                                                                                                  • Figure 65: Residential care home choice factors, by most important factor, June 2016
                                                                                                                                                              • The Consumer - Care Home Preference

                                                                                                                                                                • Key points
                                                                                                                                                                  • Smaller homes still in demand despite operators’ drive for larger homes
                                                                                                                                                                      • Figure 66: Residential care home preference, June 2016
                                                                                                                                                                      • Figure 67: Residential care home preference, June 2016
                                                                                                                                                                    • Care village demand grows with age
                                                                                                                                                                      • Figure 68: Residential care home preference, by age and gender, June 2016
                                                                                                                                                                  • The Consumer - Care Information

                                                                                                                                                                    • Key points
                                                                                                                                                                      • Reviews form most useful guide in selecting a home
                                                                                                                                                                          • Figure 69: Residential care home information sources, by rank of importance, June 2016
                                                                                                                                                                          • Figure 70: Residential care home information sources, by most important source, June 2016
                                                                                                                                                                      • Industry Structure

                                                                                                                                                                        • Key points
                                                                                                                                                                          • Industry development
                                                                                                                                                                            • Implementation of the NLW alongside the Care Act has piled financial pressure on the market
                                                                                                                                                                              • Development of a ‘three-tier’ system
                                                                                                                                                                                • M&A activity
                                                                                                                                                                                  • Repeat of Southern Cross collapse on the horizon
                                                                                                                                                                                    • Industry structure
                                                                                                                                                                                      • Figure 71: Analysis of the changes in the structure of the residential nursing care activities industry, 2011-2015
                                                                                                                                                                                      • Figure 72: Analysis of the changes in the structure of the residential care activities for the elderly and disabled industry, 2011-2015
                                                                                                                                                                                      • Figure 73: Analysis of the changes in the structure of the hospital activities - Medical nursing home activities industry, 2011-2015
                                                                                                                                                                                    • Structure by employment
                                                                                                                                                                                      • Figure 74: Analysis of the employment structure of the residential nursing care activities industry, 2014-15
                                                                                                                                                                                      • Figure 75: Analysis of the employment structure of the residential care activities for the elderly and disabled industry, 2014-15
                                                                                                                                                                                      • Figure 76: Analysis of the employment structure of the hospital activities - Medical nursing home activities industry, 2014-15
                                                                                                                                                                                    • Structure by turnover
                                                                                                                                                                                      • Figure 77: Analysis of the financial structure of the residential nursing care activities industry, 2014-15
                                                                                                                                                                                      • Figure 78: Analysis of the financial structure of the residential care activities for the elderly and disabled industry, 2014-15
                                                                                                                                                                                      • Figure 79: Analysis of the financial structure of the hospital activities - Medical nursing home activities industry, 2014-15
                                                                                                                                                                                  • Company Profiles

                                                                                                                                                                                    • Abbeyfield Society

                                                                                                                                                                                          • Figure 80: Financial analysis of Abbeyfield Society, 2012-16
                                                                                                                                                                                        • Company strategy
                                                                                                                                                                                        • Anchor Trust

                                                                                                                                                                                              • Figure 81: Financial analysis of Anchor Trust, 2011-15
                                                                                                                                                                                            • Company strategy
                                                                                                                                                                                            • Avante Care and Support (formerly Avante Partnership)

                                                                                                                                                                                                  • Figure 82: Financial analysis of Avante Care & Support, 2011-15
                                                                                                                                                                                                • Company strategy
                                                                                                                                                                                                • Barchester Healthcare

                                                                                                                                                                                                      • Figure 83: Financial analysis of Barchester Healthcare, 2010-14
                                                                                                                                                                                                    • Company strategy
                                                                                                                                                                                                    • Bupa

                                                                                                                                                                                                          • Figure 84: Financial analysis of Bupa, 2011-15
                                                                                                                                                                                                          • Figure 85: Divisional analysis of Bupa, 2011-15
                                                                                                                                                                                                        • Company strategy
                                                                                                                                                                                                        • Bupa Care Homes (ANS)

                                                                                                                                                                                                            • Figure 86: Financial analysis of Bupa Care Homes (ANS), 2010-14
                                                                                                                                                                                                        • Bupa Care Homes (CFG)

                                                                                                                                                                                                            • Company strategy
                                                                                                                                                                                                            • Care UK

                                                                                                                                                                                                                  • Figure 87: Financial analysis of Care UK, 2011-15
                                                                                                                                                                                                                  • Figure 88: Revenue breakdown of Care UK, by division, 2013-15
                                                                                                                                                                                                                • Company strategy
                                                                                                                                                                                                                • Embrace

                                                                                                                                                                                                                      • Figure 89: Financial analysis of Embrace, 2014-15
                                                                                                                                                                                                                    • Company strategy
                                                                                                                                                                                                                    • Four Seasons Health Care

                                                                                                                                                                                                                          • Figure 90: Financial analysis of Four Seasons Health Care, 2011-15
                                                                                                                                                                                                                        • Company strategy
                                                                                                                                                                                                                        • HC-One

                                                                                                                                                                                                                              • Figure 91: Financial analysis of HC-One, 2012-15
                                                                                                                                                                                                                            • Company strategy
                                                                                                                                                                                                                            • Housing & Care 21

                                                                                                                                                                                                                                  • Figure 92: Financial analysis of Housing & Care 21 (formerly Housing 21), 2011-15
                                                                                                                                                                                                                                • Company strategy
                                                                                                                                                                                                                                • Methodist Homes

                                                                                                                                                                                                                                      • Figure 93: Financial analysis of Methodist Homes, 2011-15
                                                                                                                                                                                                                                    • Company strategy
                                                                                                                                                                                                                                    • Minster Care Group

                                                                                                                                                                                                                                          • Figure 94: Financial analysis of Minster Care Group, 2011-15
                                                                                                                                                                                                                                        • Company strategy
                                                                                                                                                                                                                                        • Priory Group

                                                                                                                                                                                                                                              • Figure 95: Financial analysis of the Priory Group, 2011-15
                                                                                                                                                                                                                                              • Figure 96: Financial analysis of the Priory Education Services, 2011-15
                                                                                                                                                                                                                                            • Group strategy
                                                                                                                                                                                                                                            • Sanctuary Care

                                                                                                                                                                                                                                                  • Figure 97: Financial analysis of Sanctuary Care, 2011-15
                                                                                                                                                                                                                                                • Company strategy
                                                                                                                                                                                                                                                  • Figure 98: Profiled companies’ turnover, 2011-15
                                                                                                                                                                                                                                              • Forecast

                                                                                                                                                                                                                                                • Key points
                                                                                                                                                                                                                                                  • The market
                                                                                                                                                                                                                                                    • Demographic trends suggest strong demand and higher number of fully dependent care users
                                                                                                                                                                                                                                                      • Attempts to use council tax to help boost social care funding are likely to fall short
                                                                                                                                                                                                                                                        • Service fee pressures force providers to consider market position...
                                                                                                                                                                                                                                                          • ...while care costs continue to rise and ‘price out’ more of those in need
                                                                                                                                                                                                                                                            • Domiciliary care market trends also affect the development of the residential care market
                                                                                                                                                                                                                                                              • Lack of suitable housing is putting a squeeze on market development
                                                                                                                                                                                                                                                                • Care providers under pressure to adapt to market conditions
                                                                                                                                                                                                                                                                  • Market forecast
                                                                                                                                                                                                                                                                    • Figure 99: Forecast segmentation of the UK residential and nursing care market, by type of purchaser, 2017-21
                                                                                                                                                                                                                                                                    • Figure 100: Forecast segmentation of the UK residential and nursing care market, by type of purchaser, 2017-21
                                                                                                                                                                                                                                                                    • Figure 101: Forecast UK residential and nursing care, by number of registered places, 2017-21
                                                                                                                                                                                                                                                                    • Figure 102: Forecast UK residential and nursing care, by number of places, 2017-21
                                                                                                                                                                                                                                                                    • Figure 103: Forecast UK residential and nursing care, by number of homes, 2017-21
                                                                                                                                                                                                                                                                    • Figure 104: Forecast UK residential and nursing care by number of homes, 2017-21
                                                                                                                                                                                                                                                                  • Sheltered housing
                                                                                                                                                                                                                                                                    • Figure 105: Forecast UK sheltered housing units, 2017-21
                                                                                                                                                                                                                                                                    • Figure 106: Forecast UK sheltered housing units, 2017-21
                                                                                                                                                                                                                                                                  • Industry is in need of a larger and younger workforce
                                                                                                                                                                                                                                                                    • More widespread use of technology in care homes could help improve cost efficiency and boost operators’ profit margins
                                                                                                                                                                                                                                                                      • Social care requires a new approach
                                                                                                                                                                                                                                                                      • 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 Home Professional
                                                                                                                                                                                                                                                                                        • Care Management Matters
                                                                                                                                                                                                                                                                                          • Care Talk
                                                                                                                                                                                                                                                                                            • Caring Times
                                                                                                                                                                                                                                                                                              • Caring UK
                                                                                                                                                                                                                                                                                                • Community Care
                                                                                                                                                                                                                                                                                                  • Tomorrow’s Care
                                                                                                                                                                                                                                                                                                    • Trade exhibitions
                                                                                                                                                                                                                                                                                                      • Care England 2016
                                                                                                                                                                                                                                                                                                        • Care and Dementia Show 2016
                                                                                                                                                                                                                                                                                                          • Health + Care 2017
                                                                                                                                                                                                                                                                                                            • NAIDEX
                                                                                                                                                                                                                                                                                                              • Nursing in Practice 2016
                                                                                                                                                                                                                                                                                                                • Primary Care and Public Health 2017

                                                                                                                                                                                                                                                                                                                Residential Care for the Elderly - UK - September 2016

                                                                                                                                                                                                                                                                                                                US $1,984.91 (Excl.Tax)