Care Homes For Older People UK Market Report 33rd Ed

1.1 Definition and scope
1.2 Data sources
1.3 Market size
1.4 Segmentation
1.4.1 Supply side segmentation
1.4.2 Segmentation by client type
1.4.3 Dementia
1.4.3.1 Major care home operators’ focus on dementia care
1.4.3.2 ‘Full-service’ dementia care brands yet to emerge
1.4.3.3 Segregated or non-segregated care homes for people with dementia
1.4.3.4 Antipsychotic medication and non-pharmacological alternatives
1.4.3.5 Quality of dementia care services
1.4.3.6 Dementia fee premium
1.4.3.7 National Dementia Strategy
1.4.4 Premium priced homes
1.4.5 Pricing in premium care homes
1.4.6 Respite care
1.5 Funding by payor type
1.6 Growth
1.6.1 Historic trends in capacity and volume
1.6.2 Capacity
1.6.3 Volume of demand
1.6.4 Historic growth in market value
1.6.5 Growth by source of funding
1.6.5.1 Market value
1.6.5.2 Market volume
1.6.5.3 Trends in numbers of independent sector homes and capacity per home
1.6.6 Future growth - projections of demand
1.6.6.1 Conservative projection
1.6.6.2 Alternative (less conservative) projections
1.7 Demand drivers
1.7.1 Age-specific demand
1.7.2 Population ageing and demand projections
1.7.3 Further commentary on demographic issues
1.7.3.1 Changes in families’ willingness to provide informal care
1.7.3.2 Dementia
1.7.3.3 Compression of morbidity
1.7.4 Financial resources - public funding
1.7.5 Financial resources - private pay
1.7.5.1 Ability to pay from income
1.7.5.2 Ability to pay from assets ? home ownership
1.7.5.3 Value of property assets
1.7.5.4 Resilience of residential property values
1.7.6 Counter drivers of care home demand
1.7.6.1 Housing with care
1.7.6.2 Live-in homecare
1.8 Demand and supply
1.8.1 Occupancy and spare capacity
1.8.1.1 Resident numbers published in CQC inspection reports
1.8.1.2 Capacity Tracker
1.8.1.3 How much spare capacity is there?
1.8.2 Historical trends in volume of demand and capacity
1.8.3 Balance between nursing and residential care
1.8.4 Declining access to the range of state-funded care for older people
1.8.5 Local authority demand
1.8.5.1 Local authority commissioning share is higher in residential than nursing care
1.8.5.2 Policy preference for community-based models of care
1.8.5.3 Care in residential settings is more economical at high levels of care intensity
1.8.5.4 ‘Social’ housing with care more readily available than privately paid
1.8.5.5 Prospective expansion of councils’ market influence under social care funding reforms
1.8.6 Self-pay demand
1.8.7 NHS-funded demand
1.8.8 Occupancy rates
1.8.8.1 Reasons for registered capacity being unavailable
1.8.8.2 Other published information on occupancy rates
1.8.9 Openings and closures
1.8.10 Index of supply by region
1.8.11 International comparisons
1.9 Staffing
1.9.1 Endemic recruitment and retention challenges in the UK social care sector
1.9.2 Acute staff shortages following emergence from Covid
1.9.3 Data from Skills for Care
1.9.4 Will labour availability constrain future expansion of supply?
1.9.4.1 Low paid staff
1.9.4.2 Higher paid staff grades
1.9.4.3 Scope for more targeted recruitment
1.10 Key operational metrics
1.10.1 Operating costs
1.10.1.1 Payroll costs
1.10.1.2 Agency staff
1.10.2 Non-staff current costs
1.10.3 Repairs and maintenance
1.10.4 Other non-staff current costs
1.10.5 Corporate overheads
1.10.6 Return on capital and operations
1.10.7 Fees
1.10.7.1 Components of composite average fees - council paid and private pay
1.10.7.2 Comparisons between council-paid and private pay fees at individual council level
1.10.8 Occupancy rates
1.11 Operating and investment models
1.11.1 Operating models
1.11.2 Investment models
1.12 Performance measures
1.12.1 Profitability metrics
1.12.2 Historical profitability (EBITDARM, at home level, reported by securitised portfolios)
1.12.3 Recent operating profit margins
1.12.4 Quality performance
1.12.4.1 Incentives to perform well on CQC fundamental standards
1.12.4.2 Does size matter?
1.12.4.3 Scotland - rejection of overall ratings
1.12.4.4 Wales - no ratings
1.12.4.5 Customer satisfaction

2.1 Historical background: privatisation of social care services from the late-1970s
2.1.1 Why did outsourcing of social care become mainstream so rapidly?
2.1.2 Expansion of the independent care home sector triggered by income support from late-1970s
2.1.3 Contraction of the care home sector following the 1993 community care reforms
2.1.4 Benign financial environment 2003?2009
2.1.5 Austerity 2011/12-
2.1.6 Conflation of two essentially separate policy questions in the ‘social care funding’ debate
2.2 The English social care funding reforms 2021?
2.2.1 The social care ‘fix’ announced in September 2021 ? and subsequent progress
2.2.2 Risks to operators and investors from the twin policies of Fair Cost of Care (FCOC) and 18(3)
2.2.2.1 Payor shift
2.2.2.2 Market equalisation
2.2.3 Strategic choices open to care home operators to mitigate the impact of market equalisation
2.2.4 What would mitigate risks to the older people’s care home sector?
2.2.5 How much more public money is required to end the ‘crisis’ in social care?
2.3 Political consensus on social care ? other than funding issues
2.3.1 No ideological threat to the existence of the private care home sector
2.4 Other legislation and policies
2.4.1 People at the Heart of Care
2.4.2 Health and Care Act 2022 ? integration of health and social care
2.4.2.1 History - removal of legal barriers to integration
2.4.3 Integration of health and social care in Scotland
2.4.4 Delayed transfers of care
2.4.5 Personalisation and self-directed care: direct payments and personal budgets
2.4.6 Intermediate care
2.4.7 NHS Funded Nursing Care (NHS FNC)
2.4.7.1 History and further information on NHS-funded nursing care
2.4.7.2 Scotland NHS-funded nursing care
2.4.7.3 Wales NHS-funded nursing care
2.4.7.4 Northern Ireland NHS-funded nursing care
2.4.8 Asset thresholds and capital disregards used for means testing
2.4.9 Charges for publicly funded non-residential care services
2.4.10 Eligibility rules for publicly funded care services
2.4.10.1 Former FACS framework
2.4.10.2 National eligibility threshold
2.4.10.3 NHS continuing healthcare eligibility criteria
2.4.11 The Care Act 2014
2.4.11.1 Local authority duties under the Care Act
2.4.12 Third party and first party top-ups
2.4.13 Deferred payments
2.4.14 Provider failure, market oversight and light touch financial regulation
2.4.15 Transfer of assets to avoid charges
2.4.16 Outsourcing of core local authority functions
2.4.17 National Service Framework for Older People and the single assessment process
2.4.18 Best Value and withdrawal of councils from in-house provision
2.4.19 Human rights protection for residents of independent sector care homes
2.4.20 Competition law, monopoly situations and abuse of dominant position
2.4.21 Government policies affecting payroll costs
2.4.21.1 National/Living Minimum Wage
2.4.21.2 Statutory minimum holiday pay
2.4.21.3 Mandatory employers pension contributions
2.4.21.4 Apprenticeship levy
2.4.21.5 VAT staff hire concession
2.4.22 Central and local government funding of personal social services
2.4.23 Top-ups
2.4.23.1 Rules relating to ‘topping-up’ of council-paid care home fees
2.4.24 Government policy on ‘fair fees’
2.4.24.1 Historical context - limited effectiveness of care home lobbying of central government
2.4.24.2 Judicial reviews
2.4.25 Central and regional initiatives to promote procurement efficiency
2.4.26 Weakness of care sector trade bodies
2.4.27 Quality measures and consumer information
2.4.28 Competition and Markets Authority enquiry into care homes
2.4.28.1 Consumer protection
2.4.28.2 Public funding
2.4.28.3 The government’s response to the CMA report
2.4.29 Immigration policy and Brexit
2.4.30 ESG and Net Zero
2.5 Regulation of social services
2.5.1 Underpinning legislation in England - Health and Social Care Act 2008
2.5.1.1 Fundamental Standards
2.5.2 Scotland, Wales and Northern Ireland
2.5.2.1 Scotland
2.5.2.2 Wales
2.5.2.3 Northern Ireland
2.5.3 Scope of regulation - services covered and not covered in England
2.5.4 CQC’s strategy for regulation in England - fewer inspections and more focus on data
2.5.5 Extension of CQC’s remit to assess local authorities’ delivery of adult social care duties
2.5.6 History of social care regulation in England
2.5.6.1 Government volte-face at high point of prescriptive regulation in 2002
2.5.6.2 Replacement of National Minimum Standards with less prescriptive Essential Standards
2.5.6.4 Fundamental Standards of Quality and Safety 2014?
2.5.6.5 Risks to providers from breaches of regulations and Fundamental Standards
2.5.6.6 Stronger enforcement powers
2.6 Profile of regulators

3.1 Customer profiles
3.1.1 High needs
3.1.2 Socio-economic profile
3.1.3 Length of stay and expectation of life
3.2 Payor trends
3.2.1 Historic trend away from council funding towards private pay
3.2.2 Prospective reversal of payor trends under the English social care reforms
3.3 Public sources of finance ? local authorities
3.3.2 Local authority spending on adult social care, from feast to famine ? then Covid
3.3.3.1 Better Care Fund and Improved Better Care Fund (iBCF)
3.3.3.2 Social care precepts
3.3.3.3 NHS FNC revisions
3.3.3.4 Summary of recent government funding decisions on adult social care in England
3.3.3.5 Future prospects for council funding of care homes for older people
3.3.4 Commissioning dynamics
3.3.4.1 Monopsony power of local authorities
3.3.4.2 Fragmentation of local commissioning
3.3.4.3 Tariff prices rather than fees based on dependency
3.3.4.4 Spot purchasing rather than block purchasing or tenders
3.3.4.5 Market shaping
3.4 Public sources of finance - the NHS
3.4.1 Trends in NHS funded care home placements
3.4.2 Possible future ‘sub-acute’ purchasing by the NHS from the independent sector
3.4.3 Changes in NHS Funded Nursing Care (NHS FNC) rates
3.5 Private payers
3.5.1 Asymmetry of market power in favour of providers
3.5.2 Private pay market size
3.5.3 Recent private pay market trends
3.5.4 Private pay market prospects
3.5.5 Local variations in private pay penetration
3.5.6 Differentials between publicly paid and privately paid fees
3.5.6.1 Evidence of the scale of cross-subsidisation
3.5.6.2 More recent evidence of differentials between private pay andcouncil paid fee rates
3.6 Long-term care insurance and other LTC financial products
3.6.1 History
3.6.2 Insurance industry response to Dilnot
3.6.3 Absence of intermediation in privately funded older care services
3.6.4 Immediate care plans
3.6.5 The demise of pre-funded LTC insurance
3.6.6 LTC insurance market size in the UK
3.6.7 Equity release
3.6.8 Pensions

4.1 Market concentration
4.2 Group penetration
4.2.1 Market leaders by value
4.2.2 Market leaders by capacity
4.3 Consolidation and deconsolidation
4.3.1 Top ten deconsolidation
4.3.2 Middle market consolidation
4.3.3 Small business segment
4.4 Segmentation by provider sector, registration type and size of home
4.5 Exits and entries
4.5.1 Forced exits (including business failures and recapitalisations)
4.5.2 Unforced exits (full or partial)
4.5.3 Covid
4.5.4 Home-level exits
4.5.5 Entries
4.5.6 Home-level entries
4.6 Barriers to entry
4.7 Economies of scale and scope
4.7.1 At the home level
4.7.2 At the group level
4.8 Brand value
4.9 Sources of capital
4.10 Scale, age and quality of stock
4.10.1 Slow trend towards increased scale
4.10.2 Age and purpose-built status of UK care home stock
4.10.3 Single rooms and en suite facilities
4.10.4 Pace of modernisation

5.1 Returns sought by investors
5.1.1 End of the era of low interest rates
5.2 Sources of capital for investment
5.2.1 Debt
5.2.1.1 Bank debt
5.2.1.2 Bonds
5.2.1.3 Islamic funding
5.2.2 Leased assets
5.2.2.1 Penetration of leasing
5.2.3 US REITs
5.2.4 European property investors
5.2.5 UK financial institutions
5.2.5.1 Legal & General
5.2.5.2 Aviva Investors
5.2.5.3 Octopus Investments
5.2.5.4 Target Healthcare REIT
5.2.5.5 Impact Healthcare REIT
5.2.6 Private equity
5.3 Transactions and exit multiples
5.3.1 Pre-global credit crisis
5.3.2 Post-global credit crisis
5.3.3 Recent transactions for which operating profit multiples are not available

6.1 Alternative care home models
6.2 Digital technologies
APPENDIX 1. GLOSSARY
APPENDIX 2. KEY LEGISLATION
APPENDIX 3. REGULATORS
APPENDIX 4. TRADE BODIES AND ASSOCIATIONS
APPENDIX 5. FINAL CONCLUSIONS OF THE CMA INVESTIGATION
APPENDIX 6. MAJOR PROVIDERS OF CARE HOMES FOR OLDER PEOPLE
APPENDIX 7. FINANCIAL APPENDIX