As people in the UK live longer, demand for residential care and nursing homes is growing, as are our expectations of the standard of living they will provide. Dean Jones offers insights about the value a professional consultancy has for overcoming the challenge and driving value for patients.

1. Professional Consultancy Responds to
Health and Social Care Challenges
As people in the UK live longer, demand for residential care and nursing
homes is growing, as are our expectations of the standard of living they will
provide. Dean Jones offers insights about the value a professional
consultancy has for overcoming the challenge and driving value for patients.
The current state of affairs
As a result of some well-broadcasted care scandals that attracted extensive,
and in some cases, damaging media attention, the government has
responded with cuts that are impacting local authority (LA) fees and resulting
in far tougher Care Quality Commission (CQC) policies.

2. Office for National Statistics
(ONS) projects that by 2035 there will be
3.5 million UK residents aged 85 and
older, compared to only 1.4 million
currently
In spite of this, the “extra-care” – or Residential Elderly Care (REC) sector –
continues to overcome these challenges, attracting new investments,
particularly into new-build care homes. These are specially designed, owner-
occupied, self-contained housing, often with round-the-clock support and
meals and sometimes with nursing assistance.
A typical pattern is for owner-founded care home operators to reach a growth
limit, based on the founder’s management capacity, access to capital and
appetite for risk. They cease to invest in new capacity and don’t benefit from
economies of scale which can be passed on to commissioners. Public
markets typically do not fulfil their function as a supplier of capital in the case
of healthcare services, because they generally demand relatively modest
gearing.
There’s a widely recognised need across all health and social care market
segments for innovation and system change, as well as capital investment in
new services. A private equity investor is well placed to leverage technical
services to strategically programme and project-manage Residential Elderly
Care (REC) public real estate schemes across their entire lifecycle.
Supply and demand challenges
Today, professional healthcare businesses and registered social landlords
(RSLs) are the main providers of new capacity, period. Since 2008, private

3. and voluntary status providers, who service 92 percent of all Residential
Elderly Care, have reported an upswing in demand and occupancy.
Paradoxically, as adult social care budgets are decreasing and the provision
of residential care by the NHS and local authorities has shrunk, the number of
UK people who require help and support is rapidly increasing.
The Increasingly Ageing Population of the
UK Appears to be Underpinning the
Overall Rise in REC Capacity and
Occupancy
While Local Authorities (Las) are seeking to divert placements to inexpensive
non-residential/domiciliary-based alternatives, the increasingly ageing
population of the UK appears to be underpinning the overall rise in REC
capacity and occupancy. Britons are living longer than ever. The Office for
National Statistics (ONS) projects that by 2035 there will be 3.5 million UK
residents aged 85 and older, compared to only 1.4 million currently. The cost
of caring for these residents is also forecasted to increase. For example,
caring for a person with dementia will increase to $1,142,677 by 2025 and
$2,092,945 by 2051. In total the government estimates that 1.7 million more
adults will require some type of care and support over the coming decades.
As a result, the current number of nursing and residential care homes in the
UK (over 381,000) will need to almost double over the next 20 years to cope
with rising numbers of people aged 85 or more.

4. A bright future?
The demand for care will continue to rise as a result of life expectancy
increasing and ageing. A robust REC independent sector arises primarily from
the net increase in residential demand, and more recently, improved
occupancy. These are the result of a number of competing forces:
 Demographics, with the ageing population expected to drive the
demand for health and social care.
 Outsourcing, the long-term transfer of residents from LA homes to
independent care homes.
 Severe financial constraints, at least over the next five years, as the
government – which pays for the bulk of health, social care and special
education – seeks to eradicate the public expenditure deficit and restrict
new builds.

5.  Outdated assets, or older care homes that no longer meet needs.
 Consolidation, a trend within segments of the independent sector.
 Maturity, against a currently immature healthcare market.
 Efficiency, highlighted by the “Nicholson challenge” for the NHS to
make £15 to £20 billion in efficiency savings between 2011 and 2014. (It
costs the NHS approximately £3,000 a week to care for elderly patients
with no clinical need to be in a hospital ward. By contrast, it comes to
about £1,000 per week for a residential care home provider.)
 Demand and Occupancy. Unless the supply of new builds increases
(currently by approx. 7,500 beds p.a.), it’s possible that some regions
may see bed shortages, driving up LA fees.
 New Technology. Progressive management capabilities in leveraging
technology and strategic collaboration will constitute the formula for
success and sustainability in the new healthcare business environment.
While a longer life is welcome news for millions of Britons, it could ironically
trigger a public service meltdown as our national health system is stretched to
its breaking point. Local authorities and NHS trusts retain a significant role in
delivering services, with 75 percent of nursing home places funded by the
public sector. There exist ever-increasing opportunities for private care
providers to take some of the strain from NHS and ease bed-blocking by
caring for patients, mostly elderly, in a residential setting when there is no
clinical need to be in a hospital ward.
The REC Sector Could Potentially Save
the NHS Billions of Pounds.
A combined approach to health and social care and some innovation is
required for this savings to become a reality. In addition, Care Home
Operators have a unique opportunity to grow their businesses and benefit

6. from economies of scale, leveraging the expertise and resources of a
professional consultancy. In doing so, they’ll have necessary resources and
systems to bid for significant re-provision of services tendered by local
authorities.
About Dean Jones
Dean is an Associate in AECOM’s Programme Leadership Practice. Dean
joined AECOM from Care UK, the UK's largest independent provider of health
and social care, where he was a Programme Manager and delivered a £250m
investment growth programme over 2012/15 which increased Care Uk’s
number of homes circa 33%. Dean was also Programme Manager for a £60m
Suffolk programme to build ten new care homes and ten day clubs, bringing
much needed additional nursing and specialist dementia care to the Suffolk
community. The new homes and day clubs will eventually replace Suffolk
County Council’s existing homes and well being centres which date mainly
from the 1960s and 1970s. Dean also has experience working in Local
Councils as their Project Manager for regeneration and community projects.
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care-challenges/