The Future of Care

Independent Care Sector Mortgage Broker Mark Hickman, Director at Chandler&Co, offers his insights for the year ahead.

The year 2022 has certainly seen its share of economic and geopolitical pressures, but one enduring fact is that we have a rapidly ageing population with increasing age-related complexities, which needs the support of a sustainable social care sector working alongside the NHS.

The latest announcement from the Care Quality Commission regulator stated that, ‘in 2022 the health and care system is gridlocked, unable to operate effectively’ and, ‘that too often people just can’t access the care they need.’ With increasing hospital bed blocking from elderly patients seeking care at discharge, the demand for care home or care at home provision continues to escalate, adding weight to the demand for a viable and sustainable social care sector.

At the time of writing industry challenges continue within the social care sector, with the much-publicised staff and recruitment challenges, the cost-of-living crisis and the continued funding and ‘who should pay for care’ debate. Spearheaded by Care England and the wider care network and associations, the Government is being challenged to put social care on a level footing with the NHS to better reward those that work in this extremely rewarding and valuable sector. There is no doubt that to prevent increased polarisation between those who can afford to pay for their care and those with limited means who require support from their Local Authorities, all providers and their employees need to have the recognition and funding that they deserve.

It is vital that the care sector has a sustainable financial foundation as it moves into 2023. The importance of real time financial management accounts and forecasting cannot be overestimated, providing insight into periods of gap funding, supporting business growth (whether this is for the first-time care home buyer or a multi-site provider), and delivering on the care provision’s mission and vision.

With sustainable funding, care provision can move forward to tackle the challenges facing the sector. People who use care services want consistency in their care, which funding reform can assist with if the true cost of care is acknowledged. Planned workforce strategies are becoming the norm, with providers seeking to diversify their staffing. They are also reacting to the possibility of a higher minimum wage moving towards the living wage by using fee uplifts for the self-funding sector, in addition to third party top-ups to the Local Authority rates. The questions around what the true cap on care costs means remain, as does the uncertainty surrounding whether it will be reformed again under the Prime Minister in 2023.

Throughout 2022 we have seen a gradual increase in the cost of debt which is used to fund many care home operators with current and long-term liquidity requirements. As a result, whether care providers are new to the sector or developing their business, considering funding options will be key to their viability and sustainability alongside reviews of service user pricing strategy.

At the time of writing the market uncertainty remains. However, the interest rate outlook has lowered from its previous peak, with lenders continuing to monitor the interest rate market closely.

With COP27 being very fresh in minds, and care home businesses seeking to mitigate the rise in energy costs, the sector can expect increased interest in green refurbishments, care home extensions and new builds. The Corporate care home sector tends to lead the way in this regard, however, as the independent care home sector plans for 2023 we can expect increased demand for lending criteria for a greener care home environment.

For an in depth look at ‘green’ issues see our Summer 2021 issue.

Care sector innovation accelerated during the pandemic and has continued. As regulators across the UK step up their digital processes with the evolution of Integrated Care Systems we have seen a higher take-up of digital care planning and digital business operations.

Regulation continues to evolve across the UK. As an example, the Care Quality Commission’s ‘Single Assessment Framework in 2023’ will have a bearing on the care sector’s post pandemic accelerated innovation, as it addresses real time data collection and feedback seeking an enhanced personal care service. As care sector technology and innovation increase so too will healthcare preventative measures, enhancing the role of the social care sector and reducing the strain on the NHS. Provider strategies will continue to pivot towards best practice outcomes, enhancing the personal care service. Carrying out bespoke care service surveys and updating continuous improvement plans will gain increasing importance under the new regulation, evidencing the standards that a care provision is attaining or aiming to attain.

Carl May-Smith talks in detail about CQC’s new framework elsewhere in this issue and in our Autumn 2022 edition.

In conclusion, the resilience of the care sector continues despite the challenges it faces. Some care homes will reconfigure into supported living, whilst others will continue to seek growth and expand through extensions or acquisition.

Funding can be addressed organically, for example through retained profits from successful business operations alongside lender finance. Identifying how finance can add value to a care home or wider provision forms part of the business’ forecasting and business planning, working alongside care sector experts to ensure the long-term viability of the care sector.

For more care home and wider care sector financing tips visit chandlerandco.co.uk, independent specialist care sector brokers or call 01622 817484