Executive Summary

Care HomesExecutive SummaryExecutive SummaryThis Key Note Market Report examines the UK market for long-term care ofthe elderly through residential care homes and nursing homes operated bylocal councils, private businesses and not-for-profit organisations (NPOs). Themarket for long-term care for elderly people in the UK has exhibited stronggrowth over the last few decades as the country’s population has aged.Between 1990 and 2011, the total market for long-term care for the elderlyand physically disabled in residential settings grew by 148.8% in value terms.However, growth started to slow as a result of the recent economic downturn;this impacted the Government’s finances, which led to severe spending cuts inthe public sector, including within local authority budgets. Many localauthorities have responded to the cuts by increasing the threshold foreligibility for free adult social care, with the majority having stopped providingsupport to those with low to moderate needs. Both public and private fundingsources are currently under severe pressure, which is directly impacting carehome owners’ revenues and pricing modelsDespite the threats of reduced funding, according to Laing & Buisson, between2007 and 2011, the long-term care market for elderly and physically disabledpeople in the UK increased by 15% in value terms. The private sector continuesto dominate the UK long-term care market and its market share has beengrowing; in 2011, the private sector accounted for 85.6% of the total marketin value terms, representing an increase on 2007. In line with increasing valuewithin the market, the number of places for elderly and physically disabledpeople in care homes rose by 3.4%.In October 2012, Key Note commissioned exclusive market research onconsumer attitudes and opinions towards care homes in the UK. Survey resultsfrom NEMS Market Research revealed that, in 2012, nearly four-fifths ofrespondents would only consider care or nursing homes as a last resort, whichwas a decline on 2011. Meanwhile, the proportion of respondents who saidthey would be happy to live in a care or nursing home increased over the sameperiod.Public perception of care and nursing homes appears to have improved sinceKey Note’s previous edition of Care Homes — published in 2011 — with themajority of adults surveyed regarding them as well run. The proportion ofthose that thought care and nursing homes provide a good standard of carealso rose over the period.Despite short-term funding constraints, Key Note expects the cost of long-termcare to continue to rise in the next few decades as a result of the increasinglyageing population. With this in mind, Key Note forecasts that, between 2012and 2016, the UK care homes market will grow by 15.8%.© Key Note Ltd 2013 1

Care HomesContentsContentsExecutive Summary 11. Market Definition 2REPORT COVERAGE....................................................................................................................2MARKET SECTORS.......................................................................................................................3Residential Care..............................................................................................................................3Nursing Care....................................................................................................................................3Specialist Care.................................................................................................................................3MARKET TRENDS.........................................................................................................................4Number of Elderly Persons Continues to Rise .........................................................................4Government Initiatives to Promote Independent Living.......................................................4NHS Hospital Bed-Blocking Rising..............................................................................................5ECONOMIC TRENDS....................................................................................................................5Table 1.1: UK Economic Trends (000, £m, %, million and £), 2007-2011............................6MARKET POSITION......................................................................................................................8The UK..............................................................................................................................................8Overseas...........................................................................................................................................82. Market Size 9THE TOTAL MARKET..................................................................................................................9By Value...........................................................................................................................................9Table 2.1: The UK Market for Nursing, Residential and Long-Stay Hospital Careof Elderly, Chronically Ill and Physically Disabled Peopleby Sector by Value (£m), Years Ending April 2007-2011........................................................9Figure 2.1: The UK Market for Nursing, Residentialand Long-Stay Hospital Care of Elderly, Chronically Illand Physically Disabled People by Sector by Value (£m),Years Ending April 2007-2011...................................................................................................11Figure 2.2: The UK Market for Nursing, Residentialand Long-Stay Hospital Care of Elderly, Chronically Illand Physically Disabled People by Sector by Value (%), Year Ending April 2011.........11By Capacity....................................................................................................................................12Table 2.2: The UK Market for Nursing, Residential and Long-Stay Hospital Careof Elderly, Chronically Ill and Physically Disabled Peopleby Sector by Number of Places (000), 2007-2011...................................................................12© Key Note Ltd 2013

Care HomesContentsFigure 2.3: The UK Market for Nursing, Residential and Long Stay Hospital Careof Elderly, Chronically Ill and Physically Disabled Peopleby Sector by Number of Places (000), 2007-2011...................................................................14Figure 2.4: The UK Market for Nursing, Residential and Long Stay Hospital Careof Elderly, Chronically Ill and Physically Disabled Peopleby Sector by Number of Places (%), 2011...............................................................................14By Demand....................................................................................................................................15Table 2.3: Volume of Demand for Elderly and Physically Disabled Peoplein Residential Settings in the UK by Sector (000), 2007-2011.............................................15Figure 2.5: Volume of Demand for Elderly and Physically Disabled Peoplein Residential Settings in the UK by Sector (000), 2007-2011.............................................16Figure 2.6: Volume of Demand for Elderly and Physically Disabled Peoplein Residential Settings in the UK by Sector (000), 2011.......................................................173. Industry Background 18RECENT HISTORY.......................................................................................................................18NUMBER OF COMPANIES.......................................................................................................18Table 3.1: Number of UK VAT- and/or PAYE-Based Enterprises Engagedin Residential Care and Nursing Activities by Turnover Sizeband (£000), 2012..............19Figure 3.1: UK VAT- and/or PAYE-Based Enterprises Engagedin Residential Care for the Elderly and Disabled by Turnover Sizeband by MarketShare (£000 and %), 2012..........................................................................................................19Figure 3.2: UK VAT- and/or PAYE-Based Enterprises Engagedin Residential Nursing Care by Turnover Sizebandby Market Share (£000 and %), 2012.......................................................................................20EMPLOYMENT............................................................................................................................20Table 3.2: Number of UK VAT- and/or PAYE-Based Enterprises Engagedin Residential Care and Nursing Activities by Employment Sizeband, 2012....................20Figure 3.3: UK VAT- and/or PAYE-Based Enterprises Engagedin Residential Care for the Elderly and Disabled Care by Employment Sizebandby Market Share (number of employees and %), 2012.......................................................21Figure 3.4: UK VAT- and/or PAYE-Based Enterprises Engagedin Residential Nursing Care by Employment Sizebandby Market Share (number of employees and %), 2012.......................................................22REGIONAL VARIATIONS IN THE MARKETPLACE.............................................................22Table 3.3: Number of UK VAT- and/or PAYE-Based Enterprises Engagedin Residential Care and Nursing Activities by Region, 2012................................................22DISTRIBUTION.............................................................................................................................23HOW ROBUST IS THE MARKET?...........................................................................................24LEGISLATION...............................................................................................................................24England..........................................................................................................................................24Wales..............................................................................................................................................25Scotland.........................................................................................................................................25© Key Note Ltd 2013

Care HomesContentsNorthern Ireland..........................................................................................................................26KEY TRADE ASSOCIATIONS....................................................................................................26English Community Care Association.......................................................................................26National Care Association..........................................................................................................26National Care Forum...................................................................................................................26The National Institute for Health and Clinical Excellence...................................................26Registered Nursing Home Association.....................................................................................27Royal College of Nursing............................................................................................................274. Competitor Analysis 28THE MARKETPLACE..................................................................................................................28MARKET LEADERS.....................................................................................................................28Anchor Trust..................................................................................................................................28Table 4.1: Financial Results for Anchor Trust (£000),Years Ending 31st March 2008-2012........................................................................................29Avondale Care (Scotland) Ltd....................................................................................................29Table 4.2: Financial Results for Avondale Care (Scotland) Ltd (£000), Years Ending30th April 2008-2012...................................................................................................................30Barchester Healthcare Ltd .........................................................................................................30Table 4.3: Financial Results for Barchester Healthcare Ltd (£000), Years Ending31st December 2007-2011..........................................................................................................31BUPA Care Homes (CFG) PLC ....................................................................................................31Table 4.4: Financial Results for BUPA Care Homes (CFG) PLC (£000), Years Ending31st December 2007-2011..........................................................................................................32Care UK Ltd ..................................................................................................................................32Table 4.5: Financial Results for Care UK Ltd (£000),Years Ending 30th September 2007-2011...............................................................................33Four Seasons Health Care...........................................................................................................33Table 4.6: Financial Results for Four Seasons Health Care Ltd (£000), Years Ending31st December 2007-2011..........................................................................................................34Hadrian Healthcare Group.........................................................................................................34Table 4.7: Financial Results for Hadrian Healthcare Ltd (£000), Years Ending31st March 2007-2011.................................................................................................................35Ideal Carehomes Ltd....................................................................................................................35Table 4.8: Financial Results for Ideal Carehomes Ltd (£000), Years Ending31st March 2010 and 2011.........................................................................................................35Northcare (Scotland) Ltd ...........................................................................................................36Table 4.9: Financial Results for Northcare (Scotland) Ltd (£000), Years Ending30th November 2007-2011.........................................................................................................36Quantum Care (UK) Ltd..............................................................................................................36Table 4.10: Financial Results for Quantum Care (UK) Ltd (£000), Years Ending31st December 2007-2011..........................................................................................................37© Key Note Ltd 2013

Care HomesContentsSunrise Senior Living Ltd ...........................................................................................................37Table 4.11: Financial Results for Sunrise Senior Living Ltd (£000), Years Ending31st December 2007-2011..........................................................................................................38The Orders of St John Care Trust..............................................................................................38Table 4.12: Financial Results for The Orders of St John Care Trust (£000), YearsEnding 31st March 2007-2011...................................................................................................39OUTSIDE SUPPLIERS..................................................................................................................39MARKETING ACTIVITY.............................................................................................................39Table 4.13: Main Media Advertising Expenditure for Care, Nursing and RetirementHomes (£000), Years Ending 30th June 2011 and 2012.......................................................39Exhibitions.....................................................................................................................................405. Strengths, Weaknesses, Opportunities and Threats 41STRENGTHS..................................................................................................................................41WEAKNESSES..............................................................................................................................41OPPORTUNITIES.........................................................................................................................41THREATS.......................................................................................................................................426. Buying Behaviour 43OVERVIEW...................................................................................................................................43Table 6.1: Attitudes and Opinions Towards Care and Nursing Homes(% of respondents), October 2011 and 2012.........................................................................44S1: “I Currently Have/Have Had a Relative Living in a Care Home”..................................44Table 6.2: “I Currently Have/Have Had a Relative Living in a Care Home”(% of respondents), October 2011 and 2012.........................................................................45S2: “I Would Provide Home Care for An Elderly Relative If the Situation Allows”........48Table 6.3: “I Would Provide Home Care for An Elderly RelativeIf The Situation Allows” (% of respondents), October 2011 and 2012.............................48S3: “I Would Prefer My Elderly Relatives to Move Into a Nursing or Care Home WhenThey Can No Longer Look After Themselves”.......................................................................51Table 6.4: “I Would Prefer My Elderly Relatives to Move Intoa Nursing or Care Home When They Can No Longer LookAfter Themselves” (% of respondents), October 2011 and 2012 ......................................51S4: “I Would Be Happy to Live in a Nursing or Care Home in Old Age”..........................54Table 6.5: “I Would Be Happy to Live in a Nursing or Care Home in Old Age”(% of respondents), October 2011 and 2012.........................................................................55S5: “I Would Only Consider Moving into a Nursing or Care Home as the LastResort”...........................................................................................................................................57Table 6.6: “I Would Only Consider Moving to a Nursing or Care Home as a LastResort” (% of respondents), October 2011 and 2012 .........................................................58© Key Note Ltd 2013

Care HomesContentsS6: “I Would Prefer to be Looked After by Family in Old Age”.........................................60Table 6.7: “I Would Prefer to be Looked After by Familyin Old Age” (% of respondents), October 2011 and 2012..................................................61S7: “I Believe Nursing or Care Homes Provide a Good Standard of Care”.......................63Table 6.8: “I Believe Nursing or Care Homes Provide a Good Standard of Care”(% of respondents), October 2011 and 2012.........................................................................64S8: “I Believe Most Care or Nursing Homes Are Well Run”................................................66Table 6.9: “I Believe Most Care or Nursing Homes Are Well Run”(% of respondents), October 2011 and 2012.........................................................................67S9: “I Have a Financial Plan in Place to Pay for My Care in Old Age”...............................69Table 6.10: “I Have a Financial Plan in Place to Pay for My Care in Old Age”(% of respondents), October 2011 and 2012.........................................................................70S10: “I Am Concerned About the Affordability of Long-Term Care in Old Age”..........72Table 6.11: “I Am Concerned About The Affordabilityof Long-Term Care in Old Age” (% of respondents), October 2011 and 2012 ..............737. Current Issues 76PUBLIC-SECTOR CUTS...............................................................................................................76HEALTH AND SOCIAL CARE ACT 2012 ..............................................................................778. The Global Market 78TOTAL MARKET SIZE................................................................................................................78REGIONAL VARIATIONS..........................................................................................................789. Forecasts 79GENERAL ECONOMIC FORECASTS.......................................................................................79Table 9.1: Economic Forecasts (000, % and million), 2012-2016........................................79FORECASTS 2012 TO 2016......................................................................................................80Table 9.2: Forecast UK Market for Nursing, Residential and Long-Stay Hospital Careof Elderly, Chronically Ill and Physically Disabled People by Sector by Value (£m),Years Ending April 2012-2016...................................................................................................80Figure 9.1: Forecast UK Market for Nursing, Residential and Long-Stay Hospital Careof Elderly, Chronically Ill and Physically Disabled People by Sector by Value (£m),Years Ending April 2012-2016...................................................................................................81MARKET GROWTH....................................................................................................................81Figure 9.2: Growth in the UK Market for Nursing, Residentialand Long-Stay Hospital Care of Elderly, Chronically Illand Physically Disabled People by Sector by Value (£m),Years Ending April 2007-2016...................................................................................................81© Key Note Ltd 2013