The future of the care home industry

The future of the care home industry

Paul Zalkin, director at Quantuma, looks at the challenges when restructuring care homes.

Why is the care home industry in the news again?

The care home industry is in the news again for a number of different reasons, the first of which is generic concerns around ageing and the growing population. We are wondering how the state will fund care, especially for the elderly and we have questions about what the role of the individual will be in making provision for our own future. Life expectancy in the UK has been increasing steadily over the past 50 years and the consequence is that our needs are more complex and expensive at the latter end of our lives. Also, for some time, there has been a debate about the manner in which care homes are financed. Private facilities/larger groups are often financed using private equity (PE) structures, which means that typically businesses are loaded up with secured debt that provides them with a significant finance cost burden. Questions have been raised—is this an appropriate model for facilties where there is a significant degree of social utility? Is it sustainable to have businesses running facilities that vulnerable members of society require yet whose objectives are to maximise shareholder value whilst paying down massive secured loans?

Equally, there is much greater scrutiny nowadays on care homes following well publicised scandals which have led to greater transparency. People are better educated and can research the performance of individual care home operators. The public has begun to engage in the debate—if you are considering putting an elderly relative into a care home it is now easy to access information and reports about the facilities.

Finally, the most recent headlines have been precipitated by the introduction of the living wage, which for many homes will represent a major challenge to its long term survival.

In these varied ways, the care industry has sprung into public consciousness

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