Before the present crisis, home care was always the poor cousin to nursing home care, certainly with regard funding. There are approximately 23,000 people in nursing homes around the country and the sector receives just short of €1B per annum. Whereas roughly 50,000 people are in receipt of publicly funded home care but the sector only receives about €440M in public funding annually.
Nursing home care is also regulated by the State and people have a statutory right to nursing home care through the Fair Deal Scheme. No such regulation or statutory right exists with home care.
Significant funding from the State, high entry barriers, no fear of bad debts and a demand lead scheme, has made investment in the nursing home sector very attractive for private capital. From having originally 80% public beds we have moved to the exact opposite, of having now 80% private beds in the system.
There has been a lot of activity in the sector in recent times including;
- AXA IM purchase of 10 nursing homes
- French Infra Via Capital purchase of Carechoice group
- Blackbee Investment of €250M in sector
- SE Capital purchase of the TLC group
This crisis though, has highlighted some real clouds on the horizon for the sector and these recent investors, such as;
- Increased future costs to improve social distancing and maximise infection control within facilities
- Much more difficult sell going forward to families because of the crisis and especially taking into consideration people’s first choice is generally to age at home
- Possible future legal costs because of the high number of deaths during the crisis
- Possible decrease in State funding because of health budgets coming under pressure
None of this of course changes the demographics of our population and the fact that the demand for older persons care is only going to increase.
However, due to the battering nursing homes have taken during this crisis and if we reasonably assume, that the government moves forward rapidly on its promise to regulate the home care sector and provide a statutory right to the service, it is probably fair to say that there will be a huge increase in interest from private capital sources, to invest in the sector.
No longer will those sources of capital be put off by low entry barriers, high risk because of lack of regulation and limited state funding due to budget lead funding.
Home care could shortly find itself the darling of plentiful health capital, looking for a home and indeed a pivot by these recent investors to protect their flanks. The home care sector which has seen relatively little change in recent times, is going to see itself changed beyond recognition through investment and new owners coming into the market.
Because of this, the Government needs to be clear on what kind of home care sector it wants? We have seen in the UK how the sector experienced an influx of capital in the last 15 years and now finds itself dominated by private provision of home care and a sector facing serious quality problems because of high staff turnover and deep seated financial problems, to the extent where many investors are now looking to withdraw from the sector all together.
In Ireland, I think we need to ensure a vibrant, outcomes focussed industry, that values the people working in the sector and that provides real choice for families and carers. A sector that doesn’t become too concentrated, dominated by a short list of approved foreign owned companies. A sector that puts a premium on quality and on a local focus.
The home care sector is in for some radical changes in the next short while and those changes can be positive, if properly managed and thought through by the State.