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Buying, Selling or Building a Care Home

Professional advisors Broomfield & Alexander, The Royal Bank of Scotland (“RBS”)and New Law Solicitors have teamed up for amajor seminar on the subject in Cardiff next month.

Here, the professional experts dedicated to working in the healthcare sector look at some of the issues currently facing home care providers and why the sector is so important to businesses working in this area.

Shifting demographics, changing lifestyles, new regulations and costs of labour are just some of the external factors that are playing a part in reshaping the healthcare sector. The UK population is set to age substantially over the next 65 years and this will be a fundamental driver of demand for all aspects of social care, including the important area of Home Care. Generally people are living longer and increasing numbers from the Government Actuary Department show that by 2026 there will be almost 2.1 million people aged over 85 in the UK. Changing lifestyles mean that care provided from relatives is likely to reduce and the requirements for long-term care will invariably increase, particularly the need for dementia care.

As Sian Elvis, Head of Corporate Business of New Law Solicitors explained, “The Home Care sector has seen an increase in consolidation over the past few years, as companies seek to take advantage of economies of scale, and enhance their market share. Increasingly, operators need to understand the strategy of their local authority as many are carrying out ‘tendering’ exercises. This often dramatically reduces the number of ‘preferred’ providers in an area, with the winners receiving a block contract and the losers left wondering what to do with their staff.”

Howard Crackle, Head of Healthcare for RBS in Wales commented “We expect to see a decline in operator numbers over time from further consolidation of smaller and regional operators. Restructuring your business, or contemplating business acquisitions can mean operators that have previously only required traditional banking services now need more specialised funding options.

 “When we consider a request for borrowing, the most important area we look at is management. How well is the business positioned within the market? Do they have a track record of winning and renewing contracts? Are inspection reports positive? What are staff turnover rates like and has the business historically traded profitably?  We pride ourselves in getting ‘inside’ the business, and really understanding how it works, what the strategic aims are and, importantly, how we can assist in taking you to the next level.”

“While the sector is not without its concerns in the current economic climate”, commented Leighton Reed Tax Director of Broomfield & Alexander “with a healthy, well-informed and realistic attitude, it remains an attractive one to be in, provided that, as a business, the golden rules are followed:

Quality will always out - even if a small provider, the return will be in direct proportion to the quality of the operation.

Don’t get excited and over ambitious in any plans to expand. Such decisions need to be based on a thorough understanding of the specific market opportunity; a mistake could be catastrophic – for example, buying in a different area and failing to understand the different culture at play”.

Whether buying, operating or selling, operators should beware the pitfalls and take proper professional legal and financial advice - this is neither the time nor the sector to rely on friends and family for guidance. In the final analysis, a care home is not a building. It’s a business – and needs to be treated as such.

The Broomfield & Alexander, RBS and New Law free seminar, “Buying, selling or building a care home”, is on 18 November 2008 at the Vale Hotel & Spa, Hensol, South Wales from 10.30am until 2pm with lunch included.  Contact Claire Griffiths of the Broomfield & Alexander Marketing team on 029 2073 9424 or email marketing@broomfield.co.uk for more details.

Date:8th October 2008