1. TheThe BigBig squeezesqueeze
Compression ofCompression of Care Home Provider margins in the UK over theCare Home Provider margins in the UK over the
next 4-5 yearsnext 4-5 years
Bernadette HinchliffeBernadette Hinchliffe

2. True or falseTrue or false
• Demographics; An aging populationDemographics; An aging population
• increased demand for care.increased demand for care.
• Increased demand for choiceIncreased demand for choice
• Higher customer expectationsHigher customer expectations
• True cost of care increasingTrue cost of care increasing
• Government strategy to support people at homeGovernment strategy to support people at home
• High level of external regulationHigh level of external regulation
• Cost of regulatory compliance increasingCost of regulatory compliance increasing
• An unlimited pot of moneyAn unlimited pot of money

3. The present…….The present…….
• 2010, Average margins were adversely2010, Average margins were adversely
impacted with baseline fees increasing nationallyimpacted with baseline fees increasing nationally
by only 0.8by only 0.8
• Further pressures predicted for 2011/12 withFurther pressures predicted for 2011/12 with
below inflationary increases or even negativebelow inflationary increases or even negative
fee uplifts.fee uplifts.
• Increased staffing costs: training, CRB, minimumIncreased staffing costs: training, CRB, minimum
wage.wage.
• Changing government strategy, a focus onChanging government strategy, a focus on
domiciliary caredomiciliary care
• Increased and unpredictable regulation,Increased and unpredictable regulation,
• Increased cost of compliance.Increased cost of compliance.
• Increasing utility costsIncreasing utility costs

4. But Wait……we've seen this before!But Wait……we've seen this before!

5. The good old days! 1993The good old days! 1993
• National Insurance rise by 1%National Insurance rise by 1%
• Council Tax rise averaging 13% in EnglandCouncil Tax rise averaging 13% in England
• Insurance premiums rise of 50% on last yearInsurance premiums rise of 50% on last year
• National minimum wage rise of 7% in OctoberNational minimum wage rise of 7% in October
• VAT exemption applying from April resulting in aVAT exemption applying from April resulting in a
loss of input of taxloss of input of tax
• National Care Standards Commission feesNational Care Standards Commission fees
£2,000 per unit£2,000 per unit
• Implementation of Criminal Enhanced disclosureImplementation of Criminal Enhanced disclosure
• Increasing utility costsIncreasing utility costs
(Miranda Wixon BADCO)(Miranda Wixon BADCO)

6. The reality and the futureThe reality and the future
• Demand has stayed stable over the last 5 yearsDemand has stayed stable over the last 5 years
up to 2010 Independent sectorup to 2010 Independent sector
• Demand projected to increase from:Demand projected to increase from:
• 382,000 in 2010382,000 in 2010
• To 399,000 in 2015To 399,000 in 2015
• To 420,000 by 2020To 420,000 by 2020
(Laing & Buisson)(Laing & Buisson)

7. Bad News……and Good?Bad News……and Good?
• - Reduced or static fees, with council demand threatened- Reduced or static fees, with council demand threatened
by spending cuts.by spending cuts.
• + This could be mitigated by increased NHS paid+ This could be mitigated by increased NHS paid
demand for care homesdemand for care homes
• + Private payers projected to grow, private clients 40% of+ Private payers projected to grow, private clients 40% of
national market share in 2010.national market share in 2010.
• - + New providers are still coming into the sector with- + New providers are still coming into the sector with
new builds in many areas, particularly in the North.new builds in many areas, particularly in the North.
(Laing & Buisson)(Laing & Buisson)

8. Stay Positive……Stay Positive……
• There is demand for Nursing, Residential andThere is demand for Nursing, Residential and
Dementia care. It takes its place alongside ExtraDementia care. It takes its place alongside Extra
Care and Domiciliary care.Care and Domiciliary care.
• Predicted decline in demand for residential carePredicted decline in demand for residential care
did not materialise in many areasdid not materialise in many areas
• There is a demand for alternative provision ieThere is a demand for alternative provision ie
Day Care. Long and short stay planned respite.Day Care. Long and short stay planned respite.
• There are opportunities to provide innovativeThere are opportunities to provide innovative
ways of delivering care!ways of delivering care!

9. Stay ready!Stay ready!

10. How?…….throughHow?…….through
• Targeted marketing: private clients, NHS, GPTargeted marketing: private clients, NHS, GP
commissioners?commissioners?
• Innovation: New services, rehabilitation,Innovation: New services, rehabilitation,
outreach, daycare, respite?outreach, daycare, respite?
• Maintaining quality and reputation in the sectorMaintaining quality and reputation in the sector
• Being leaders in the field of Care of the ElderlyBeing leaders in the field of Care of the Elderly
• Specialists in Dementia Care provisionSpecialists in Dementia Care provision
• Actively building relationships withActively building relationships with
CommissionersCommissioners
• Diplomatically challenging fee decisionsDiplomatically challenging fee decisions

11. How……..How……..
• Building a skilled and effective teamBuilding a skilled and effective team
• Providing clear directionProviding clear direction
• Staying abreast of the changes and evolvingStaying abreast of the changes and evolving
with them, government white paper, regulationwith them, government white paper, regulation
• Managing cost effectively without compromisingManaging cost effectively without compromising
qualityquality
• Nurturing external relationships and working inNurturing external relationships and working in
true partnership.true partnership.

12. How……How……
• Monitoring customer satisfaction and respondingMonitoring customer satisfaction and responding
swiftlyswiftly
• Developing Home Managers, encouragingDeveloping Home Managers, encouraging
creativity and new ideas, sharing best practicecreativity and new ideas, sharing best practice
• Monitoring and controlling costsMonitoring and controlling costs
• Succession planning for future managementSuccession planning for future management
vacancies and skilling up key playersvacancies and skilling up key players
A professional outfitA professional outfit

13. • FSHC have not seen the decline inFSHC have not seen the decline in
occupancy that was predictedoccupancy that was predicted
• Trusted provider, increasing BusinessTrusted provider, increasing Business
portfolio i.e. Southern Crossportfolio i.e. Southern Cross
• stay competitive!stay competitive!
Better than the rest!Better than the rest!

14. Wise Words!Wise Words!
Annual Income, twenty pounds andAnnual Income, twenty pounds and
sixpence, annual expenditure, nineteensixpence, annual expenditure, nineteen
shillings and sixpence, result happiness.shillings and sixpence, result happiness.
Annual income, twenty pounds, annualAnnual income, twenty pounds, annual
expenditure twenty pounds and sixpence,expenditure twenty pounds and sixpence,
result misery.result misery.
(Charles Dickens)(Charles Dickens)