There is no doubt that residential care homes — where elderly people get looked after when living independently has become too much of a struggle — involve more responsibility than many sectors.
Though they may not seem an obvious way of getting into business, care homes can be rewarding and profitable, particularly in the case of more specialised nursing homes, where fully qualified nurses will look after severely disabled residents.
There are clear signals that the sector is moving from a contraction to an expansion phase, albeit slowly, to meet inexorable demographic pressures
William Laing, Laing & Buisson
The preference for community-based care — which sees carers look after the elderly in their homes — has been a minor blow to the care home industry.
Despite an ageing population, the number of older and physically disabled people living in care homes has fallen from its 1993 peak of 511,000 to 420,000 in 2007, according to Laing & Buisson, which provides information and market intelligence on the independent health, community care and childcare sectors.
However, this long-term fall halted for the first time in 14 years for the 12 months up to April 2007. Laing & Buisson even projects a marginal increase over the next five years. The rate of care home closures — a source of concern in recent years — has slowed, with 269 closures in the year up to April 2007, as opposed to 323 the year before.
Meanwhile, only 11% of residential care is provided by the public sector, and this proportion is set to shrink further.
Franchises such as Home Instead are at the forefront of a new wave of private providers. Bringing to the industry a customer-orientated, responsive approach, the company is an innovative thinker, offering a service where people are cared for in their own home.
Although the government is reducing its participation in terms of supply, it has a growing commitment to funding. Local authorities support 221,000 older and physically disabled residents in independent sector care homes, compared to only 31,000 in public sector homes.
Of those receiving nursing care — as opposed to personal care — in privately run homes, almost a quarter have their fees paid by the government.
Overall, the prospects seem good.
“Demand stabilised in 2007 and independent capacity increased, which are clear signals that the sector is moving from a contraction to an expansion phase, albeit slowly, to meet inexorable demographic pressures,” says William Laing of Laing & Buisson.
“Generally, profit margins have been rebuilt following the severe pressures experienced around the turn of the century and there are growing opportunities for investment in new capacity.”
John Joyce of Redwoods Dowling Kerr, a business broker (an intermediary between buyers and sellers), has experience of running a care home. He believes buyers fall into two groups:
“On the one hand, there are the ex-professionals, who have worked as nurses, social workers or even GPs, and are looking to run a business themselves,” he says.
“On the other hand, there are those who are looking at care homes as a profitable business venture. In this case, it’s absolutely necessary to have qualified and motivated staff.”
The latter tend to target the larger homes, where administration can be more of an issue. Meanwhile, owners of smaller homes tend to adopt a more hands-on approach because they can’t afford to separate administrative, managerial and nursing functions completely.
Local authorities are unlikely to accept an application for registration from an individual without qualifications or any experience in health management or the caring professions.
