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Residential Care for the Elderly - UK - August 2018

“Alongside restrictive operating margins, care homes face an ongoing challenge to recruit and retain staff, with many operators reporting that they are increasingly competing with other low-pay sectors, such as supermarkets, who are actively recruiting and offering attractive pay rates.”
– Lewis Cone, B2B Analyst

This report looks at the following areas:

  • Green paper delay leading to uncertainty
  • Provider insolvencies and poor quality of care in homes adding to industry pressures

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Table of contents

  1. Overview

    • What you need to know
      • Covered in this Report
      • Executive Summary

          • The market
            • Market value reaches high in 2018 but growth slows
              • Figure 1: UK residential care market, by value, 2014-18, (£ million)
            • Old age support ratio to continue to decline
              • Figure 2: Old age support ratio, 2018-43, (ratio)
            • Market value to rise by 7% to 2023
              • Figure 3: Forecast UK residential care market value, 2018/19-2022/23, (£ million at 2018 prices)
            • Companies and brands
              • The consumer
                • 68% of people have not thought about how they would fund their long-term care
                  • Figure 4: Residential care payment plans, April 2018, (% of respondents)
                • Nearly a third put performance rating as most important factor behind choice of home
                  • Nearly three-quarters believe that CCTV camera installation would stop negative treatment of residents
                    • What we think
                    • Issues and Insights

                      • Green paper delay leading to uncertainty
                        • The facts
                          • The implications
                            • Provider insolvencies and poor quality of care in homes adding to industry pressures
                              • The facts
                                • The implications
                                • The Market – What You Need to Know

                                  • Market value reaches high in 2018 but growth slows
                                    • Local authority expenditure
                                      • Market value to rise by 7% to 2023
                                      • Market Size

                                        • Market value reaches high in 2018 but growth slows
                                          • Figure 5: UK residential care market, by value, 2014-18, (£ million)
                                          • Figure 6: UK residential care market, by number of registered care homes, 2014-18, (units)
                                          • Figure 7: UK residential care market, by number of registered places, 2014-18, (000)
                                        • Shortage in care home places is starting to arise
                                          • Trend towards larger homes
                                              • Figure 8: Average number of places, revenue per care home and revenue per place, UK, 2014-18, (average number of places, revenue in £000)
                                          • Market Segmentation

                                              • Accommodation type
                                                • Figure 9: Segmentation of the UK residential care market, by type of accommodation, 2014-18, (number of homes, sheltered housing in 000 units)
                                              • Care purchaser
                                                • Figure 10: Segmentation of the UK residential care market, by type of purchaser, 2014-18, (£ million)
                                              • Provider type
                                                • Figure 11: Segmentation of the UK residential care market, by type of provider, 2014-18, (£ million)
                                              • Local authority expenditure
                                                  • Figure 12: Segmentation of local authority-commissioned residential and nursing care expenditure, by provider and client type, 2014-18, (£ million)
                                                  • Figure 13: Segmentation of local authority-commissioned residential and nursing care expenditure, by provider and service type, 2014-18, (£ million)
                                                • Older people (65+) expenditure
                                                  • Figure 14: Segmentation of local authority expenditure on residential care services for older people (65+), by service type, 2014-18, (£ million)
                                                • Adults aged 18-64 expenditure
                                                  • Figure 15: Segmentation of local authority expenditure on residential care services for adults aged 18-64, by service type, 2014-18, (£ million)
                                                • NHS Care Expenditure
                                                    • Figure 16: Segmentation of NHS expenditure on residential and nursing care, by provider type, 2014-18, (£ million)
                                                  • Private care purchasers
                                                      • Figure 17: Private expenditure on residential and nursing care, 2014-18, (£ million and % market share)
                                                    • Sheltered housing
                                                        • Figure 18: The development of sheltered housing in the UK, 2014-18, (000 units and % change)
                                                      • Extra care housing
                                                      • Market Forecast

                                                        • Market value to rise by 7% to 2023
                                                            • Figure 19: Forecast segmentation of the UK residential and nursing care market, by type of purchaser, 2019-2023, (£ million)
                                                          • Shortfall in number of homes and beds expected
                                                            • Technology use could free-up carer time and reduce costs
                                                            • Market Trends

                                                              • Old age support ratio to continue to decline
                                                                  • Figure 20: UK population projections, by age group, 2018-43, (000 people)
                                                                • Care worker and manager turnover rates rise although average wages have generally improved
                                                                    • Figure 21: Annual workforce turnover rates in the adult residential care sector, England, 2016-17, by employee position, (%)
                                                                    • Figure 22: Average annual pay in the adult residential care sector, England, 2016-17, by employee position, (£)
                                                                  • Home care accounts for majority of social care’s delays in transfer of care from NHS hospitals, but residential and nursing care figures also remain high
                                                                    • Cost of the average care home residency has reached a record high
                                                                      • Occupancy rates reach 11-year high
                                                                      • Market Drivers

                                                                        • The ageing population and changes to the pension system will affect the industry’s operating model
                                                                          • Staff costs continue to rise due to the increased NLW and NMW rate, but U-turn over ‘sleep-in’ back pay has provided temporary relief
                                                                            • Implications of Brexit
                                                                            • Legislation

                                                                              • Care Standards Act
                                                                                • Regulation and Inspection of Social Care (Wales) Act
                                                                                  • The Carers (Scotland) Act
                                                                                    • The Care Act 2014 and Better Care Fund
                                                                                      • CQC and Market Oversight
                                                                                        • Pensions Act
                                                                                          • Other legislation
                                                                                          • Companies and Brands – What You Need to Know

                                                                                            • Anchor and Hanover plan to merge to become the largest provider of care for older people in England
                                                                                              • Providers are choosing to construct high-quality homes and retirement villages that target the growing self-funder market
                                                                                              • Industry Structure

                                                                                                • Industry development
                                                                                                  • M&As and other industry movements
                                                                                                    • Market share
                                                                                                      • Changes in the Structure of the Industry
                                                                                                        • Figure 23: Analysis of the changes in the structure of the ‘residential nursing care activities’ industry, 2013-17, (number of local units and businesses)
                                                                                                        • Figure 24: Analysis of the changes in the structure of the ‘residential care activities for the elderly and disabled’ industry, 2013-17, (number of local units and businesses)
                                                                                                        • Figure 25: Analysis of the changes in the structure of the hospital activities - medical nursing home activities industry, 2013-17, (number of outlets and businesses)
                                                                                                      • Structure by employment
                                                                                                        • Figure 26: Analysis of the employment structure of the residential nursing care activities industry, 2016-17, (number of outlets and outlet employment size)
                                                                                                        • Figure 27: Analysis of the employment structure of the residential care activities for the elderly and disabled industry, 2016-17, (number of outlets and outlet employment size)
                                                                                                        • Figure 28: Analysis of the employment structure of the hospital activities - medical nursing home activities industry, 2016-17, (number of outlets and outlet employment size)
                                                                                                      • Structure by turnover
                                                                                                        • Figure 29: Analysis of the Financial Structure of the Residential Nursing Care Activities Industry, 2016-2017, (£ 000 and % of Total Turnover)
                                                                                                        • Figure 30: Analysis of the financial structure of the residential care activities for the elderly and disabled industry, 2016-17, (£ 000 and % of total turnover)
                                                                                                        • Figure 31: Analysis of the financial structure of the hospital activities - medical nursing home activities industry, 2016-17, (£ 000 and % of total turnover)
                                                                                                    • Competitive Strategies

                                                                                                      • Anchor and Hanover plan to merge to become the largest provider of care for older people in England
                                                                                                        • Providers are choosing to construct high-quality homes and retirement villages that target the growing self-funder market
                                                                                                          • Digitising operational processes could lead to much needed cost savings and improve service provision
                                                                                                          • Company Profiles

                                                                                                            • Abbeyfield Society
                                                                                                              • Recent company activity
                                                                                                                • Financial information
                                                                                                                  • Figure 32: Financial analysis of Abbeyfield Society, 2013-17, (£ million)
                                                                                                                • Barchester Healthcare
                                                                                                                  • Recent company activity
                                                                                                                    • Financial information
                                                                                                                      • Figure 33: Financial analysis of Barchester Healthcare, 2012-16, (£000)
                                                                                                                    • Four Seasons Healthcare
                                                                                                                      • Recent company activity
                                                                                                                        • Financial information
                                                                                                                          • Figure 34: Financial analysis of Four Seasons Health Care, 2013-17, (£ million)
                                                                                                                        • HC-One
                                                                                                                          • Recent company activity
                                                                                                                            • Financial information
                                                                                                                              • Figure 35: Financial analysis of HC-One, 2013-17, (£ million)
                                                                                                                            • Housing & Care 21
                                                                                                                              • Recent company activity
                                                                                                                                • Financial information
                                                                                                                                  • Figure 36: Financial analysis of Housing & Care 21, 2013-17, (£ million)
                                                                                                                                • Sanctuary Care
                                                                                                                                  • Recent company activity
                                                                                                                                    • Financial information
                                                                                                                                      • Figure 37: Financial analysis of Sanctuary Care, 2013-17, (£ million)
                                                                                                                                  • The Consumer – What You Need to Know

                                                                                                                                    • 68% of people have not thought about how they would fund their long-term care
                                                                                                                                      • Nearly a third put performance rating as most important factor behind choice of home
                                                                                                                                        • Nearly three-quarters believe that CCTV camera installation would stop negative treatment of residents
                                                                                                                                        • Care Payment

                                                                                                                                          • 68% of people have not thought about how they would fund their long-term care
                                                                                                                                            • Figure 38: Residential care payment plans, April 2018, (% of respondents)
                                                                                                                                          • Half of women over-65 have considered the financial consequences of care compared to less than a third of men over 65
                                                                                                                                            • Figure 39: Residential care payment plans, by age and gender, April 2018, (% of respondents)
                                                                                                                                          • Personal savings expected to fund long-term care
                                                                                                                                            • Figure 40: Residential care payment method, April 2018, (% of respondents)
                                                                                                                                        • Choosing a Care Home

                                                                                                                                          • Nearly a third put performance rating as most important factor behind choice of home
                                                                                                                                            • Figure 41: Residential Care Home Choice Factors, by Rank of Importance, April 2018, (% of Respondents)
                                                                                                                                        • Sources of Information

                                                                                                                                          • Reviews and open days are most useful guides in selecting a home
                                                                                                                                            • Figure 42: Residential care home information sources, by rank of importance, April 2018, (% of respondents)
                                                                                                                                        • Care Home Opinion

                                                                                                                                          • Nearly three-quarters believe that CCTV camera installation would stop negative treatment of residents
                                                                                                                                            • Figure 43: Residential care home opinion, April 2018, (% of respondents)
                                                                                                                                          • Women have stronger opinion on CCTV in homes and higher guilt about moving a family member into a home
                                                                                                                                            • Figure 44: Residential care home opinion, by gender, April 2018, (% of respondents)
                                                                                                                                        • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                            • Abbreviations
                                                                                                                                              • Methodology
                                                                                                                                              • Further Sources and Contacts

                                                                                                                                                • Trade associations
                                                                                                                                                  • Trade magazines
                                                                                                                                                    • Trade events

                                                                                                                                                    Residential Care for the Elderly - UK - August 2018

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