The Outlook for the Care Home and Residential Care sector

Paul Zalkin looks at what 2020 holds for this underfunded and heavily regulated sector


by Paul Zalkin

This year has seen large amounts of activity in this sector, which is complex, underfunded and heavily regulated yet responsible for delivering care to some of society’s most vulnerable people. There have been a number of high-profile M&A transactions and equally a number of high- profile failures.

A number of well documented challenges face the care home sector – an ageing population, government cut-backs and underfunding, sub-standard care home stock, availability of sites, the impact of the national minimum wage of standards of care and an concerns around the ability to attract and retain staff in the event the UK exits the European Union.

A recent report suggested that over 400 care homes had failed in the last 5 years, and Quantuma have acted for a wide range of operators in this sector over that time.

In the late summer of this year we conducted a survey of are home operators and their senior management teams, in conjunction with leading sector trade publication, The Carer. The sample size was over 400, with a very significant number of responses for those who held senior leadership roles within this unique sector.

We asked respondents their thoughts on the outlook for the care home sector over the next few years. 

Short term concerns included the uncertainty of BREXT and concerns around attracting and retaining staff given that large numbers of carers are not from the UK. Medium term concerns included funding with the backdrop of increasing regulation – or “doing more with less for a greater number of residents” as one respondent commented. Long term concerns included the complexities involved in upholding reputation with increasing regulatory demands from CQC, the funding dichotomy and being able to offer a high quality of care if unable to attract and retain staff.

These concerns are raised in every meeting I have with directors of distressed care homes and I don’t see these being alleviated any time soon

I do see a range of opportunities for care-home operators, investors and entrepreneurs looking to invest in the sector, which go beyond building new care homes to meet demand. There are a arnage of alternative models emerging which also provide viable opportunities for investment. For instance, people with ageing parents or relatives manage their care by creating a multi-generational household. In other words, some might choose to retain wealth within the family by selling their parent’s home and their own and buying a bigger property for everyone to live in together. 

The opportunity here for entrepreneurs with care-home expertise is that they can set up agencies which support people who are able to make this choice.  It just takes some ‘out-of-the-box’ thinking. 

Paul Zalkin is a partner and licensed insolvency practitioner at leading business advisory firm Quantuma. Paul has almost 25 years’ experience of working with businesses in a wide range of business sectors helping them overcome financial and operational challenges.  During this time Paul has worked with a large number of care homes and has developed unique insight into the challenges they face. Over the last decade Paul has developed a niche in the care home sector and is a go-to adviser for distressed care home operators and their funders.  Paul is regularly invited to speak at sector conferences and to share his thoughts with leading trade publications.