Lessons from America for the UK care home sector

The UK care home sector is in a difficult position. In addition to being a crowded, competitive market, it's becoming increasingly clear that innovative, lower cost solutions to the evolving needs of the elderly population must be found.


There are many similarities between what is currently happening in the UK and what the US experienced in the late 1990s. In 1997 the US government dramatically cut spending for health and social service programs, and many large nursing home companies either filed for bankruptcy or were forced into voluntarily restructuring as a result.


This led to a realisation about the gravity and cost of meeting the long-term needs of the elderly population, in particular: that in the long run it is much less expensive and more effective to provide health and social services in the home than in a hospital or care home setting (a view backed up by research published by both the US National Institute of Health and the congressional Medicare payment advisory commission); and that the government cannot afford to pay the cost of long-term residential social or health care services for the entire population.


Instead, individuals must be expected to assume responsibility for their housing needs in old age – with the government providing a safety net for the poor, and a regulatory structure to appropriately govern the private market.


Resolving and responding to these challenges is ongoing in the US, but some significant progress has been made. A significant result has been the rapid expansion of privately funded assisted living (residential social care) and continuing care retirement communities (CCRCs), which are age restricted communities that combine independent living units (apartments or homes) with residential social and nursing care beds on the campus.


There are now more residents living in these facilities than in government supported nursing homes. The UK has almost no CCRCs in operation, yet in the US these are highly successful when combined with effective and available home care, and one of the most effective strategies to contain cost while simultaneously increasing the sophistication of services.


The future will require care providers to increase productivity year-on-year. Single homes in an increasingly diverse marketplace will have significant difficulties containing costs and one of the most effective strategies to meet this challenge, without negatively affecting residents' lives, is to either group homes or provide services to residents with different dependency levels, within defined local geographic markets. These "care clusters" mean operators are able to secure economies of scale.


However, as demand for services for the elderly and the disabled grows, discussion by policymakers and care providers is shifting away from just what price will be paid for services, to the mix of services and physical location of care (for example, private home, care home, hospital). 


The NHS and local authorities are seeking to lower the cost of health and social care without compromising on quality and reducing the much needed care provided in high-cost institutional settings, by moving care to less restrictive settings that will balance cost with individual independence. Without these adjustments, local authority budgets will be overwhelmed and opportunities for the private sector will lie in anticipating the structure of the future market and investing accordingly. The experiences in the US over the past 20 years can help inform this decision process.


Scott Phillips is managing director of Bolt-HMP (a joint venture of Bolt Partners LLP and Healthcare Management Partners LLC (US)). Bolt recently oversaw the workout of 751 care homes from Southern Cross


Sourced from The Guardian, 22nd May 2012.