2 Ways Residential Elderly Care Providers Can Drive Growth
The care sector is growing fast. People are its most valuable asset and investment in care-home developments is being fuelled by an ageing population and a growing demand for specialist skills.
Scalability and Replication Have Now Become the Building Blocks That Will Enable Residential Elderly Care Providers to Sustain Growth, Deliver Successful Change and Achieve High-quality Service Outcomes
Dean Jones, former Investment Growth Programme Manager for Care UK offers insight into how REC providers can take advantage of market opportunities by building a sustainable and scalable system. Jones’ experience includes programme managing a £250 million investment-growth programme from 2012 to 2015, which involved building and commissioning 20 new state-of-the-art care homes and their services. He also oversaw a £60 million 3-year investment in a Suffolk programme, for the building of 10 new care homes and 10-day clubs and bringing much needed additional nursing and dementia-specialist care to the community.
REC Providers Can Develop Their Own Blueprints to Replicate and Scale Growth
REC providers can learn much from Jones’ involvement with scaling successful care homes. In his work at Care UK, Jones employed innovative ideas for evolving the next generation of care homes and introducing a competitive edge through unique selling points to harness market potential. The trendsetting programmes have led to phenomenal success, with more than 30 new homes built over a five-year period, a level of growth rarely seen in this sector. Jones describes how REC providers can develop their own blueprints to replicate and scale growth.
Building a foundation
The organization relied on a guiding principle as it developed a scalable system. It consisted of a toolkit that would outline how to manage projects and launch new homes, along with the standard of care the organization expected once a home is operational. The first system in the toolkit, the Project Management Blueprint (PMB) consisted of methodologies, processes and systems that would guide the creation of an ambitious and exciting growth pipeline for new homes.
The Blueprint ensured that the programme and project’s team resources would deliver high-quality outcomes through the practice of sound project management, both at a programme and individual project level. However, the Blueprint was just one of three tools the organisation would use to govern the commissioning and operation of new care homes. The other tools, a Home Manager Launch Manual (LM) and a suite of Standard Operating Procedures (SOP), complemented the programme on the whole.
Building the Capability to Service the Demand Is the Key to Driving Growth
The blueprint
Creating the demand for growth and the environment for change is not enough to generate scalability. According to Jones, building the capability to service the demand is the key to driving growth. Instead of control, managers need to:
- Introduce a framework and certainty about processes.
- Implement repeatable best practices.
- Build the ability to drive quality.
- Equip people to do the best job possible.
- Introduce a suite of project documents that directly suit the organisation’s purposes while ensuring consistence use.
- Increase efficiency and productivity.
As a result of the Blueprint, Care UK was able to construct the building blocks for scalability and replication that would encourage change, growth and quality outcomes. When the foundation of an organisation is built on highly standardised and formal processes underpinned by highly developed performance-monitoring systems and the ability to control quality, it has a scalable business model. Another component involved in the process, evolving the product offerings through a process of service innovation enabled Care UK to apply standardised business-model concepts.
The requirements
Building a methodology for scalability involves considering project and business requirements first. Then, the organization can develop a system that meets the business and management-style needs to deliver successful outcomes. Jones employed a methodology that outlined the standard project-management methods to be used, and practices and guidelines to follow when managing new-home opening projects and business-transformation projects. With a disciplined, well-managed and consistent methodology, Care UK promoted the delivery of quality products and services, on time and within budget for each location.
The essential benefit of adhering to such a defined project- and programme-management methodology is the ability to demonstrate repeatable successes, rather than learning the same difficult lessons again and again. The objective of the methodology ensures that each new home opening was delivered to the highest possible standards via:
- High-quality product or service that adheres to the business case.
- Excellent standards of care and service.
- Financial performance that achieves or exceeds the business case.
- Homes or change initiatives delivered on time.
- Projects executed on budget.
Relationships
Effective working relationships are also critical to the success of large-scale projects. Management tactics based on a matrix structure ensure that functional and operational resources are aligned across the business. This approach results in significant advantages, as it enables effective and responsive participation from different parts of the organisation that have specialist expertise. In Jones’ matrix, people from different parts of the business took a lead role in managing a specific work stream and were known as Work Stream Leaders. Jones also adopted the RACI technique for identifying functional areas, key activities and decision points where ambiguities exist.
Project Lifecycle
The management of any large, complex project is made easier when broken down into more manageable chunks. This unique approach to the project’s lifecycle enabled Jones’ to establish clear controls, e.g. review points, or gateways, at which to consider progress before moving on to the next phase. The Care UK project lifecycle methodology consisted of five distinct stages, with each stage considered as a sequence, providing the structure and approach to progressively deliver the required outputs.
Risk and issue management
Focusing on critical risk issues helps programme managers mitigate threats. Regularly planning and leading benefit reviews helps organizations drive success and ensure that profits aren’t eaten up by largely avoidable risks. For example, a slight reduction to a home’s expected average weekly fee (AWF) – although based on a more up-to-date market analysis – could have a detrimental effect on the bottom line. However, if this market analysis re-evaluation were to take place at the pre-planning stages, then the organization has an opportunity to review down spec. Key decisions like these must be managed with due diligence and care, by referring to the original business case and using a clearly defined change-control process, and then directing such matters to the programme board for approval.
Recommendations
Programme managers embarking on a scalability journey should note that before diving into the planning of a system of methodologies and processes, it’s important to first understand what needs to be fixed. Jones began his appointment at Care UK by working with a small team. They spent time getting into the nitty gritty of launching care homes, reviewing checklists, liaising with the Care Quality Commissions (CQC), and understanding the business and identifying gaps. Only then did he present the findings and gain support for the project’s Blueprint. Managers also need to understand the organisational culture in which they operate, and then adapt their approach accordingly. Finally, gaining senior management trust is another critical step, as approval and support helps form links throughout the organization – including the lower-management levels.
Successful organizations need managers with a breadth of knowledge – not necessarily construction management expertise – to successfully drive the outcomes of the project. They also require some understanding of IT systems, staff, marketing strategy and more. Only then will the organisation reap the strategic benefits of higher management-level expertise. With the right approach to project management and creating repeatable systems, care home organizations can seize market conditions and drive growth, while delivering quality outcomes through scalable building blocks.
Professional Consultancy Responds to Health and Social Care Challenges
As people in the UK live longer, demand for residential care and nursing homes is growing, as are our expectations of the standard of living they will provide. Dean Jones offers insights about the value a professional consultancy has for overcoming the challenge and driving value for patients.
The current state of affairs
As a result of some well-broadcasted care scandals that attracted extensive, and in some cases, damaging media attention, the government has responded with cuts that are impacting local authority (LA) fees and resulting in far tougher Care Quality Commission (CQC) policies.
Office for National Statistics (ONS) Projects That by 2035 There Will Be 3.5 Million Uk Residents Aged 85 and Older, Compared to Only 1.4 Million Currently
In spite of this, the “extra-care” – or Residential Elderly Care (REC) sector – continues to overcome these challenges, attracting new investments, particularly into new-build care homes. These are specially designed, owner-occupied, self-contained housing, often with round-the-clock support and meals and sometimes with nursing assistance.
A typical pattern is for owner-founded care home operators to reach a growth limit, based on the founder’s management capacity, access to capital and appetite for risk. They cease to invest in new capacity and don’t benefit from economies of scale which can be passed on to commissioners. Public markets typically do not fulfil their function as a supplier of capital in the case of healthcare services, because they generally demand relatively modest gearing.
There’s a widely recognised need across all health and social care market segments for innovation and system change, as well as capital investment in new services. A private equity investor is well placed to leverage technical services to strategically programme and project-manage Residential Elderly Care (REC) public real estate schemes across their entire lifecycle.
Supply and demand challenges
Today, professional healthcare businesses and registered social landlords (RSLs) are the main providers of new capacity, period. Since 2008, private and voluntary status providers, who service 92 percent of all Residential Elderly Care, have reported an upswing in demand and occupancy. Paradoxically, as adult social care budgets are decreasing and the provision of residential care by the NHS and local authorities has shrunk, the number of UK people who require help and support is rapidly increasing.
The Increasingly Ageing Population of the Uk Appears to Be Underpinning the Overall Rise in Rec Capacity and Occupancy
While Local Authorities (Las) are seeking to divert placements to inexpensive non-residential/domiciliary-based alternatives, the increasingly ageing population of the UK appears to be underpinning the overall rise in REC capacity and occupancy. Britons are living longer than ever. The Office for National Statistics (ONS) projects that by 2035 there will be 3.5 million UK residents aged 85 and older, compared to only 1.4 million currently. The cost of caring for these residents is also forecasted to increase. For example, caring for a person with dementia will increase to $1,142,677 by 2025 and $2,092,945 by 2051. In total the government estimates that 1.7 million more adults will require some type of care and support over the coming decades.
As a result, the current number of nursing and residential care homes in the UK (over 381,000) will need to almost double over the next 20 years to cope with rising numbers of people aged 85 or more.
A bright future?
The demand for care will continue to rise as a result of life expectancy increasing and ageing. A robust REC independent sector arises primarily from the net increase in residential demand, and more recently, improved occupancy. These are the result of a number of competing forces:
- Demographics, with the ageing population expected to drive the demand for health and social care.
- Outsourcing, the long-term transfer of residents from LA homes to independent care homes.
- Severe financial constraints, at least over the next five years, as the government – which pays for the bulk of health, social care and special education – seeks to eradicate the public expenditure deficit and restrict new builds.
- Outdated assets, or older care homes that no longer meet needs.
- Consolidation, a trend within segments of the independent sector.
- Maturity, against a currently immature healthcare market.
- Efficiency, highlighted by the “Nicholson challenge” for the NHS to make £15 to £20 billion in efficiency savings between 2011 and 2014. (It costs the NHS approximately £3,000 a week to care for elderly patients with no clinical need to be in a hospital ward. By contrast, it comes to about £1,000 per week for a residential care home provider.)
- Demand and Occupancy. Unless the supply of new builds increases (currently by approx. 7,500 beds p.a.), it’s possible that some regions may see bed shortages, driving up LA fees.
- New Technology. Progressive management capabilities in leveraging technology and strategic collaboration will constitute the formula for success and sustainability in the new healthcare business environment.
While a longer life is welcome news for millions of Britons, it could ironically trigger a public service meltdown as our national health system is stretched to its breaking point. Local authorities and NHS trusts retain a significant role in delivering services, with 75 percent of nursing home places funded by the public sector. There exist ever-increasing opportunities for private care providers to take some of the strain from NHS and ease bed-blocking by caring for patients, mostly elderly, in a residential setting when there is no clinical need to be in a hospital ward.
The REC Sector Could Potentially save the Nhs Billions of Pounds.
A combined approach to health and social care and some innovation is required for this savings to become a reality. In addition, Care Home Operators have a unique opportunity to grow their businesses and benefit from economies of scale, leveraging the expertise and resources of a professional consultancy. In doing so, they’ll have necessary resources and systems to bid for significant re-provision of services tendered by local authorities.
About Dean Jones
Dean is an Associate in AECOM’s Programme Leadership Practice. Dean joined AECOM from Care UK, the UK’s largest independent provider of health and social care, where he was a Programme Manager and delivered a £250m investment growth programme over 2012/15 which increased Care Uk’s number of homes circa 33%. Dean was also Programme Manager for a £60m Suffolk programme to build ten new care homes and ten day clubs, bringing much needed additional nursing and specialist dementia care to the Suffolk community.