MEMBER SPOTLIGHT
National Care Group
National Care Group has achieved considerable expansion and completed numerous acquisitions during a time when many providers have had to hand back packages of care, scale back or close services. National Care Group’s Commercial Director, Mike Ranson, tells us how it has achieved that growth and expansion and offers advice in the form of five strategies to focus on.
Without a doubt, social care is moving through a period of significant challenge, which is likely to result in a change of practice and behaviour in commissioning teams and providers alike. This type of challenge and change has been a constant in the working-age adult sector for two decades. There is, therefore, an extraordinary amount of learning and experience already being applied to the question of sustainability and the maximisation of potential that challenging times bring with them.
1. Establish a flexible platform on which to grow
A stable base on which to grow is an obvious place to start, but that platform needs to be capable of flexing to ensure
we remain efficient at times of both growth and retraction. Whether that flexibility is at a service level, due to support packages starting or ending, or at an organisational level, due to the integrations of new businesses. Understanding our fixed and variable structures and associated costs places us in a position to sustain our business and react swiftly to opportunities when they present themselves.
As an organisation, National Care Group (NCG) has taken time to position itself within the market and establish the platform most appropriate to that position. In doing so, we can quickly assess what opportunities would be advantageous to us and those which might lead to us overextending the business.
We maintain an eye on our market share in specific sectors and localities to ensure we are not ‘overexposed’ to any significant changes in organisations or commissioning strategies. This does not mean we shy away from diversification; far from it, diversification is one tactic we use to avoid being overexposed and to mitigate against that risk.
2. Consider the potential for leverage
As a larger organisation, we have ‘buying power’ and an ability to negotiate down some of our costs, such as insurance and utility bills, without affecting service quality. However, leverage is also gained from the partnerships we form and our ability to demonstrate value, over and above the service paid for.
It feels obvious to say, but knowing the extent to which you can ‘grow’ your services within the current management and support structures before you need to increase costs is vital. Sometimes saying no to another support package is more financially advantageous than saying yes.
Should you decide to grow past your current capacity, be realistic about how long it will take you to increase your income. Consider recruitment, property development timescales, and delays to registration, as a minimum. Do you know when you will break even between cost and income? Do you have the cash flow or lending facility in place to get to that point?
3. Take a partnership approach
Building a reputation as a trusted and integral part of the local system and paying attention to our communication with commissioners, significantly enhances our understanding of the demand, opportunity, and challenges. This all contributes to the insight we have at NCG into the market as a whole and how it is moving.
It is difficult to understand the imperative for growth or acquisition when an organisation is unable to maintain a sustainable level of occupancy or activity within its existing services. Part of achieving that outcome is recognising our co-dependency with our commissioning partners; it is easy to focus on what we require without considering what others
in the ‘partnership’ need. An approach of treating each support package or contract in isolation may get you a better margin on one support package. Being combative in your approach may win the point but not the business. Helping with this problem may mean you are asked to help with several others and not relegated to the ‘only when there is no other option’ pile.
For NCG, collaboration and consultation are critical factors that have contributed to our success. Our results are our responsibility alone, but we are reliant on commissioners and people with support needs demanding and wanting what we provide. The best route to achieving this outcome is to provide what they want, not just what we want to do. It may be more difficult and not quite what you had in mind but a slight adjustment to plans at the start could mean the difference between opening one unsuccessful service or opening one that is successful, every year for the foreseeable future.
4. Consider service models
When creating our service models, we consider what we know about the structures required to provide a quality service and deliver the expected outcomes. We look to understand the economies of scale required to provide sustainability and the demand for particular service models or focus.
This, along with the contractual frameworks that might support or impinge on our ability to trade, enables us to be clear with potential commissioning partners about how we will approach the development of a new service solution, the benefits of that, and the costs associated. The same detail enables us to quickly assess how an existing service might be repositioned to respond to changing demand.
All these considerations give us a clear position on the overall level of funding required to maintain a service with an acceptable level of return. Depending on the contract framework we can then make a feasibility decision in respect of the hourly rates on offer or discuss affordability
with the commissioning team. Preferably before we have committed significant capital.
5. Have a clear focus
With a considerable history of acquisitions completed over the past six years, we have developed a robust process of feasibility assessment and a strong combined sense within the management team of what’s driving performance. The process we follow when looking at growth and achieving a sustainable platform gives us a clear focus for considering acquisitions. As well as the strategic ‘fit’ the key questions are, can we add value, is the business sustainable, or could it be sustainable as part of NCG?
With legal and financial due diligence, taxes, and other transaction fees likely to amount to 10% of the acquisition price, being able to undertake this ‘high level’ assessment of a potential acquisition upfront ensures we do not commit time and resources to formal processes unnecessarily. It also enables us to commit to a process from the start.
