THROUGHOUT 2016, the care sector continued to be challenging for operators, with staffing shortages in nursing care, continued funding pressures from local authorities and rising wage costs. Yet the sector continues to be an attractive option amongst wealthy new entrants looking to develop purpose built homes, together with existing operators looking to expand or re-develop existing sites to remain fit for purpose in future years.
However, for smaller operators, we have seen a growing number choosing to leave the sector due to the continued compliance demands and funding constraints. The Care Quality Commission (CQC) recently published their report on The State of Health Care & Adult Social Care in England 2015/16. In the report CQC acknowledged the above noted concerns facing operators and commented that smaller providers are particularly susceptible to closures.
The Chancellor of the Exchequer’s Autumn Statement also did little to support the funding gaps in the adult social care sector, but more positive signs for the sector were announced at the back end of 2016 with 95 per cent of all local authorities planning council tax rises of over 3.9 per cent in 2017 to help address the shortfall. Local authorities have warned that despite the planned rises they will still not have enough money to cover the burgeoning cost of social care, at the same time as absorbing continuing cuts from central government.
On compliance matters, CQC’s annual report shows a significant increase in standards across the sector with 72 per cent of adult social care homes being rated as either Good or Outstanding, up from 60 per cent from 2014/15. For those operators who were rated as either Requires Improvement or Inadequate, upon re-inspection 77 per cent of those care homes had their ratings improved.
The care sector is also set to become a gradually more competitive and uncertain environment, as new entrants challenge the status quo. It is, therefore, crucial that care home owners within the sector see the increased compliance requirements and the growing emphasis on financial sustainability as an opportunity to highlight those areas as a point of differentiation from the competition.
One certainty for 2017 is that we can expect the next 12 months to be equally challenging. With a growing number of smaller care home owners thinking of exiting the sector and new entrants continuing to show interest, we have noted an improvement in the willingness for banks to lend in the sector. Allied with a relatively attractive tax regime, we expect an increasing number of acquisitions and disposals in 2017, both nationally and locally. If you have been waiting for a healthy environment to sell your care home or enter the sector, then the next 12 months may be a great opportunity for you to make that move.
If you would like to discuss further any matters relating to the care sector, then please get in touch with me on 01604 645600 or at