HCMS CEO Tony Stein champions local solutions
These are busy times for turnaround expert Healthcare Management Solutions (HCMS). CEO Tony Stein gives his take on the current market climate and explains how more local thinking is the best route to a sustainable care sector.
These are both turbulent and exciting times for the care home market. Recent years have seen a sea change with operators increasingly turning away from low-margin local authority fees to the more lucrative private pay market. The remaining local authority focused homes have faced increasing pressures as fees have failed to keep pace with a rising cost base. This year, meanwhile, has seen a new wave of private equity interest in the market spurred on by the compelling demographics of the sector.
Care home consultancy HCMS CEO Tony Stein is especially well-qualified to provide insight into what is going on in the market, with the turnaround of failing care homes one of the key services he provides.
Despite the increasing pressures on care home providers, Tony told CHP there was no sign of a rise in insolvencies.
“Banks and lenders have for a long time seen administration as both expensive, and damaging to value. Putting a property onto the market that is in administration immediately discounts the price because people know that it’s a distressed sale,” Tony said.
To avoid this scenario, Tony said most homes were being sold on a consensual basis to other operators, often at a discounted price.
“We’re not going to see a huge raft of insolvencies,” Tony added. “A lot of these homes will just be moved on quietly.”
The HCMS boss said that cities with bedding overcapacity in the north east, Yorkshire and the Midlands, were the main places where this activity was focused.
“The market is quite polarised,” he noted.
“On the one hand you’ve got those operators that are providing to the private sector and they are often doing very well, and then on the other hand you’ve got those that are serving predominantly the local authority market and a lot of those are struggling.”
He predicted that the polarisation would get worse unless there was a “sea change” in both commissioning and the way local authorities were funded.
“Operators have just survived by cutting back on capital reinvestment,” he observed.
“A lot of the older stock has got progressively worse in condition. Homes reliant on publicly funded clients are now very often in a very poor state of repair and when they go on the market there is a huge discount for the capex required to bring them back up to a decent standard. A lot of new investors are having to put aside considerable sums for reinvestment.”
The perfect storm of low local authority fees, rising costs and a labour shortage has been starkly illustrated by problems facing high profile care home providers such as Runwood Homes and Four Seasons in Northern Ireland in recent years.
“It’s a very different market to the rest of the UK,” Tony observed.
“You have very little private pay. The average weekly fees are low at around £650. You also have a real shortage of staff so there is a lot of agency use. You have a combination of this and a lack of desire to invest. You have a huge number of very old homes still in operation which are quite expensive to run and not the most efficient in terms of layout. There are some real challenges.”
Looking across the board, Tony highlighted the sector’s dependency on agency workers as one of the major issues.
“If you get to the age of 85 and you are suddenly dependent on others for personal care that loss of control and independence is massive,” he said.
“How much worse is that, when you ring a call bell and a complete stranger walks into your room?” This is just one reason Tony argues agency is undesirable.
In typical, straight talking fashion, Tony described agency workers as a “necessary evil” that should be eradicated as soon as possible.
“We should encourage people back into the permanent workforce,” he added.
“We need to get rid of this agency addiction that we have. I seriously believe as a nation we can find the right people for our care homes. It’s a great rewarding job.”
Given the rising pressures on care home providers, it is little wonder then that increasing numbers are falling into trouble. So what is the HCMS turnaround formula?
“Finding the right person is key,” Tony stressed.
“Often the bigger providers when they have a problem with a care home will throw resources at it and they think the answer is bringing in someone from head office or another competent manager from another local service or a quality team.
“What we have discovered over the years is that the best and most effective way to turnaround a failing service is to find the right person to be responsible for the execution of the recovery plan and then provide them with a strong central support.”
HCMS offers a large team of peripatetic managers with extensive experience in turnarounds as well as a regional manager, an operations director and a full head office support team including ,IT and HR support.
“We never forget that the function of the whole team is to support the person on site who is the one responsible for driving change,” Tony said.
“We do a lot of this for small to medium sized independent operators. If they’re spending 85% of their time on one service that’s in crisis that has a damaging impact on the rest of their portfolio.
“They will bring us in to take away the burden of that individual asset whilst we get it stabilised and turned around and that allows them to make sure that a ball is not dropped elsewhere.”
HCMS also provides a range of systems to offer help for struggling providers.
Its Impact audit tool helps people identify where they are going wrong, why they are going wrong and what they need to do to change things.
“It’s a very powerful tool,” Tony said.
“It can be a very overwhelming exercise because it often identifies a very long list of things that need to be fixed. Those homes that have been through this process a number of times, though, begin to see it as a challenge. They are looking forward to the next audit to see where they have improved. It becomes a catalyst for change and development.”
HCMS has also developed the How Did We Do? app, which enables visiting relatives and professionals to provide direct feedback to senior management.
“The majority of the feedback is very positive but it’s nice to know when someone has got a problem we can jump on it immediately,” Tony said.
“Quite often we can turn around what was initially a problem into a real benefit.”
Looking ahead, given the challenges facing the sector, what should the government be proposing in its much-awaited Green Paper?
“I hate to see waste and inefficiency,” Tony said.
“We are always hearing that the care sector needs more money when actually I think there’s still potential room for further efficiency and better management in some areas but we do need more money for the local authority funded care.
“There is not the resource available in a time of austerity for local authorities to provide the services that are needed.”
Tony said some form of tax would inevitably need to be introduced to meet the spiralling social care bill.
A fierce Brexit proponent, Tony remains an ardent critic of central interference in the sector. He cites the case of the Scottish government’s stipulations on room sizes which he said had resulted in providers no longer being able to afford to build homes to deliver care at local authority rates.
“What they have done is consign public pay residents to living in old stock for years to come,” Tony argued.
“Government should not get involved in issues where they don’t need to get involved. Residents or their advocates can decide what size room they want – it doesn’t need government to intervene. We do need to seriously think about how we fund social care, however.”
Promoting more effective integration of health and social care across the country is one area where Tony would like to see more government action, however, while he concedes the enormity of the task.
“By trying to integrate local authority funded social care with nationally funded health care you are fighting 70 years of ingrained practice,” Tony observed.
“Trying to make the merger of health and social care is one of the most impossible tasks I can imagine unless it’s led from the centre.”
Tony stressed the government needs to be “prescriptive” and to “force the change” as vested interests would not accept that change easily.
“If people are not given a clear set of instructions it is going to be chaos for years to come,” he warned.
“That might be saying to local authorities this isn’t your responsibility anymore, it’s a national funding issue and we are going to take it away from you and put it into the NHS. There will be losers as a result who are going to find that change difficult.
“We have seen examples such as Manchester where the budgets have been combined – a great idea but those I’ve spoken to who are affected seem totally confused.”
Given the uncertainty threatening the sector as a result of a lack of progress on Brexit negotiations, has Tony had any change of heart on being an ardent ‘leaver’?
“People to say to me it’s a disaster for the sector due to a loss of EU staff,” Tony said.
“I can’t understand where that is coming from because we have yet to determine what our policy on immigration is going to be. The answer could be that we just leave the doors wide open.”
The Brexiteer did acknowledge, however, that there had been a negative short term impact on the number of EU nurses wanting to work in the sector.
“We need a decision and we need a decision quickly about what our immigration policy is going to be,” he highlighted.
“I am a great believer in local solutions. The problems facing social care are very different in different parts of the country.
“When we had increases in council taxes to fund social care, those areas that needed it the most got the least out of it. We need to be more local in our thinking and to have different solutions to some of the problems that we have got.”