The Grand Challenge...
Addressing the practicalities of the ‘ageing society’ is one of the UK’s government’s four ‘Grand Challenges’, which form the cornerstones of its Industrial Strategy. And although the current turbulent political environment is preventing meaningful progress at a policy level, operators, investors and advisors active in the UK care sector would concur with the government’s fundamental assumption that “ageing populations will create new demands for technologies, products and services, including new care technologies, new housing models and innovative savings products for retirement”.
However, while there is undoubtedly consensus around the scale of the opportunity, it remains unclear precisely how the care market will evolve and which strategies will prosper in this changing environment.
The care sector will inevitably change, but understanding the market’s future requirements remains a major challenge for investors and operators investing capital for long term – which is why on 27 September HealthInvestor UK partnered with four leading organisations from the UK healthcare market – Shawbrook Bank, Freeths, Colliers International and Kingsley Healthcare – to host a round table discussion in London on how the sector should define ‘fit for purpose’ care in the mid to long term.
The following is an abridged version of that conversation.
Vernon Baxter: Charlie, quality can mean different things to different people – in your work with BKR, how does its interpretation vary across the market?
Charlie Jones: We often find that quality is driven by what regulators require of services rather than services defining for themselves what quality looks like. For us, quality starts with the resident. Sometimes the sector is guilty of thinking about how quality looks to the family and not necessarily to the person experiencing the care. We certainly see a lot of services that undertake the audit as a tick box exercise, rather than actually understanding what the questions mean. Quality isn’t something that sits still; it should be an evolving process.
Vernon Baxter: Daya, how do you approach this at Kingsley?
Daya Thayan: It has to be very outcome-based. At the end of the day you care for the very people who are in your services, so it has to be person-centred and you have to have a very flexible approach. People’s needs on day one will be very different to day two and day three. You’ve got to have a very engaged team, so you invest in the staff – for us, the quality starts with our vision for our services.
Adam Hutchison: Picking up on what Charlie said, the thought that goes through my mind is ‘how do we actually measure quality’? And how can we define it as organisations?
Daya Thayan: I think it’s a relentless and obsessive focus on customer care. An organisation has to set out exactly what it needs from its staff – it’s not something you just do to get a CQC report.
Charlie Jones: Absolutely, and certainly some of the very best managers that I’ve come across in the sector don’t actually know what the regulations are. They fundamentally care about looking after the people in the building.
Vernon Baxter: David, how has the investment community’s attitude to quality evolved over the years?
David Jones: In any transaction we undertake in today’s market, one of the first questions is around the quality and the culture of the business. Very few investors now want to take on a genuinely challenging business where there’s a number of improvements needed – it’s just too hard. If you look at the teeth of the CQC now, especially with the financial oversight powers, it’s really tough. For any business that’s considering any sort of transaction, it’s important that the quality boxes are ticked.
Adam Hutchison: It’s a challenge for every business, as it’s all about people. It doesn’t matter whether you’ve got two homes or 30 homes – if you’re looking at it from a care home perspective, you can’t manage individual people to that degree. They have to want to do it; you have to drive that culture for them to be involved, and then they will pass on that passion to the people in the service.
Vernon Baxter: Chris, how easy is it for a lender to quantify concepts such as passion or culture? How do you appraise a management team’s commitment to quality?
Chris Christodoulou: First and foremost, I look at the proprietor. I’ve been to homes where owners know every resident and others where owners don’t know anybody – their sole focus is on financial performance and sometimes they don’t even know that! I’ll also look at a structure chart and the make-up of the team by exploring the experience of specific individuals and speaking to the staff within the home. Then, most importantly, I’ll look at governance within the business; what policies and procedures do they have in place and how do they audit themselves against those policies. From a Shawbrook perspective, the two transactions that we’ve completed in the three or four months that I’ve been here, I’ve been impressed with the management teams that we’ve backed after spending time with them and seeing how they run their business and interact with their residents.
Ravi Gidar: We know how quality can go down very quickly – at Gold Care we’ve been through the quality journey, but now we have 80% good and 10% outstanding. I think every group has a battle with quality at one stage. It’s all about the staff. If you get that right, your quality is there. However, at the moment there’s a big shortage of talent – it’s the greatest challenge we’re going to face in the care business in the next two to five years.
Vernon Baxter: Paul, are you seeing the same issues in the retirement village market?
Paul Harries: For us it’s very similar; it’s got to be quality-focused. Whether we’re charging £1,000 a week in Dorset or £2,500 a week in London, that doesn’t mean the quality of the care changes. I come from the hotel industry and you tend to think there are lots of people who can work in hotels, so why can’t they come and work in the care industry? But this standard of staff is much harder to find. There aren’t big pools of people who have that sort of empathy and ability to deal with residents day in, day out.
Vernon Baxter: Is there a different sense of expectation with your residents? How do you collect and measure feedback?
Paul Harries: In all of our villages, we are very keen to make sure our relationship is with the residents and also with their families. Our interaction with our community is different from other retirement village operators because we run a model where we fund all of the capital repairs in the building. It’s not funded through a traditional service charge, where the residents are worrying about what the costs might be. So they’re coming to us and telling us things are wrong, whereas in a traditional apartment block, your residents won’t go to the manager and say anything’s wrong because they realise it’s their cost.
Vernon Baxter: Dasos, given your experience in the sector, what guides you when identifying partners to work with?
Dasos Kirtsides: Within my business at Shawbrook, I believe we’re in healthcare first and foremost – providing finance is then the role we play. When I joined Shawbrook I was given support right across the bank to invest in the healthcare team on the premise we would always focus on the outcomes of any funding we provide on the patients and residents in question – not solely on projected commercial returns. There’s a simple reason for that: I’ve been involved in enough healthcare businesses to realise that successful operators are relentlessly obsessed about the quality of the care they provide and on delivering great healthcare outcomes. Everything else then falls into place through good management and hard work, but without that initial ingredient there’s a problem.
So when we first walk into a care operator, a hospital or a specialist clinic, the first thing we want to look at is care quality and patient outcomes – not a balance sheet or financial projection. If it’s a children’s service business, when a child comes into your service how do you evaluate them and then track their progress? Has their ability, behaviour or well-being been improved? When a care operator or healthcare provider demonstrably cares about these types of metrics, then I’m immediately reassured as a lender. But more than that, it’s also gratifying personally to be involved in the provision of a service that is actually making a meaningful difference to people.
David Jones: Going back to Adam’s point on quality, I still think definition is a really big issue. We’re all relatively educated in the sector and we still struggle to define quality. I work in an organisation with 17,000 people. I get calls regularly from sons, daughters, brothers, who are looking at where they’re placing their parents. To the man on the street, assessing the quality of a care home is next to impossible.
Daya Thayan: That’s true, but I think the sector deserves some praise. Over the past 20 years we have evolved. It’s not about numbers, it’s not about how many care homes you own or build or hold or when you come to own or sell. As an industry we’ve got better and better – and the contribution by the private sector has made a huge difference.
Dasos Kirtsides: If you look at the headwinds in the sector, the people that have made it through the other side and are surviving are the ones – like Daya – that have put quality of care at the centre of what they do. The ones that were struggling to make ends meet have gone.
Vernon Baxter: Max, you must see first-hand how different organisations have approached quality over the years – how do you approach assessing a home?
Max Broadbent: Listening is key and observing the interaction between both staff in a home, and between staff and residents. It’s possible to quickly gain a picture of a good-quality home and one where there are issues. That will in turn be evidenced by the quality of information provided, the physical environment and CQC reports. I love talking through with the managers, but often find out the most when being shown around by a maintenance manager or more junior member of care staff, which is always the best way to find out how a home is really functioning on a day-to-day basis. They will typically provide a warts and all portrait of a home. Knowing to ask the right questions in that regard is important. I often ask them, “What do you think about the head office team?” just to get their opinion and view. I was quite junior in the Southern Cross days, mainly out on the road on daily care home inspections. Some of the financial troubles in the press seemed quite distant, but from visiting the homes I could quickly see there were issues. It would start by sitting in the reception for half an hour – the manager had left, no one’s there, there’s cobwebs in the corner, no one really to show you around, and you can see a complete breakdown in the whole system.
Phil Baigent: It’s like Dasos said – the good ones get through those financial problems because the care is there, and the financial crisis just actually picked out the ones that were weak. They were weak whether there was a financial crisis or not; it just happened to be the thing that exposed it to everybody else.
Vernon Baxter: Adam, as a relatively new entrant to the sector, how do you see the relationship between investing in quality and growing a service?
Adam Hutchison: We took the decision three years ago to say we need to be meeting people much further down the life cycle of the care journey, hence why we started doing day care, we started doing rehab, we started doing hospital stepdown and we started doing domiciliary care. If you’re dealing with a much more structured approach to how you deal with people then it’s a much longer journey. Instead of dealing with somebody for 18 months you’re actually having somebody in your services for 10 to 15 years. You’re adding much more value because you can actually plan. Then you become much more attractive and you’re creating something that is much more investible because actually you’re thinking about what care’s going to look like over the next decade and you can almost pipeline the people that are going to be utilising your service.
David Jones: Absolutely, and there is a place for government in coordinating all of this – but we need to shout about it. We get very upset about the internet coverage not reaching parts of Wales and Cumbria, but we don’t hear about the areas where care homes are closing because they can’t get any new nurses – everybody’s deregistered.
Max Broadbent: Care as a career needs to be supported by offering the clear chance of progression, training and salary growth. It’s an amazing sector to work in. It should not just be graduate training for the accountants in head office! Too often I hear of carers leaving the sector for sometimes relatively menial jobs but better paid. Operators and the industry as a whole should be working together to better promote care as a career, working in close collaboration with schools and colleges. There are great success stories of junior carers becoming home managers and regional operations directors, but that needs to be lent a clearer structure as in other careers and ‘shouted about’.
Adam Hutchison: We’ve got to employ another 650,000 healthcare assistants over the next decade; where are they going to come from? We’ve got to make this sector a cool place to work. We should be telling the amazing stories about how we’ve developed somebody or we’ve improved somebody. People don’t realise that coming out of school they can have a great career in care.
Paul Harries: In terms of valuing care, and care as a career, it’s about having confidence in how we provide value. Actually, we are good value for the money we’re trying to charge, which may be higher than what the local authority want to pay. We need to explain to them why they can’t get the service that they actually want for the price that they’re willing to pay.
Charlie Jones: Doesn’t that go back to really understanding the quality that you deliver as an organisation and evidencing how much it costs you?
Daya Thayan: Spot on, Charlie.
Ravi Gidar: We’ve got to understand that the pace of change is so fast, that the way we deliver care and who is in our care homes is totally different to what it was even five years ago. Ten years ago, or 20 years ago we were talking about the thin line between health and care. There is no health and care. Everything is health. The government has taken a pot of money, a very small pot of money, given it to the local authorities and said, “You solve this problem”. The local authorities can’t solve the problem. We’ve had austerity. We know about 50% of the county council funding is for elderly care. They can’t afford it.
Charlie Jones: A lot of this discussion seems to be really about how if you chase the quality, the pounds will follow. Whereas the providers that are chasing the pounds fall to the wayside and the quality goes out the window. There are still some local authority services, but typically they’re failing and they’re poorly rated. Where organisations are pushing back on price we’re starting to see an improvement in both the services and the ‘value’ operators are able to attract for them.
Adam Hutchison: The true solver of all of that is if you’ve got truly community-led social care services, I firmly believe that 75% to 80% of people going to hospital should not need to go in. If you’ve got somebody in their own home that already know they can access their local adult social care provision, they will go to them first before phoning 999. We’re starting to see acoustic monitoring technology that could send an alert to a local care home if something is awry. That local care home can go out and see that person and see if they’re all right – just from that sound of whether they’ve had a fall or a cough or their breathing is irregular while they’re in bed. We could stop that person from dying. We could stop that person from ever needing the NHS. That’s a real joined-up approach.
The above is an edited transcript and is not reported verbatim. The panel met in London on 27 September 2019.
Director, Colliers International
Senior relationship director – healthcare, Shawbrook Bank
Managing director, Gold Care Homes
Non-executive chairman, LifeCare Residences
Managing director, Belmont Healthcare
Clinical lead, BKR Care Consultancy
Partner – health and life sciences M&A, Deloitte
Head of healthcare, Shawbrook Bank
Chief executive, Kingsley Healthcare
HealthInvestor magazine Twitter feedTweets by @HealthInvestor
For all white paper, thought leadership and round tables please contact:
T: 0207 104 2006
For editorial enquiries please contact:
T: 0207 104 2006
London SW1Y 4RF
T: 020 7104 2000