INVESTMENT
Care sector investment and Covid-19 What are the implications of the Covid-19 crisis for investment in the adult and specialist care sector? Vincent Buscemi, Wendy Wilkes and Sarah Greenhalgh of Bevan Brittan give their views
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he care sector came under enormous strain during the height of the Covid-19 pandemic and indeed for a period of time was viewed as being at the epicentre of the outbreak. The resilience and professionalism of care operators and staff helped the sector come through the worst of the crisis and now, fortunately, there is a quieter period in which to take stock – and prepare for any possible second wave or localised spikes in infections. But what are the implications of the crisis for investment in the adult and specialist care sector? The sector, along with healthcare more broadly, has traditionally been seen as a safe harbour for long term investment due to its relative immunity from market cycles of boom and bust. And indeed, one positive arising out of the pandemic could be to attract new investors who have not historically taken a stake in the sector as they turn away from other asset classes like commercial real estate which have become much more challenged.
Short and mid-term challenges At the same time, however, there is no denying that parts of the care sector face challenges of their own. This especially applies to elderly care. It was already grappling with financial pressures long before the coronavirus appeared but now it is wrestling with a double whammy of occupancy rates becoming depressed while costs (such as providing PPE, extra staffing and carrying out additional cleaning protocols) have risen. Some analysts believe that occupancy rates are likely to fall by 10% or more from their pre-pandemic levels – pushing them down into the low eighties or even seventies. Carterwood estimates that occupancy rates were at 87% in January 2020 and will fall to a low of 79% by April 2021 – not recovering to prior levels until late 2022 or 2023.
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Other pressure points include the ever increasing difficulty of obtaining and retaining staff in a traditionally low paying industry, while recent flash quarantine restrictions on countries such as Spain and then France make managing staffing levels even harder. Ensuring compliance with evolving regulatory guidance and requirements from CQC as the pandemic progresses is another management challenge. Adult specialist care, meanwhile, appears to be in stronger health. It did not suffer the same pressures or high profile problems that the elderly sector did during the height of the pandemic. There is growing demand in the private funded market and ongoing investor interest in supported living settings for adults with long-term healthcare needs such as mental health or learning disabilities.
How to address the challenges and thrive? Despite all of the challenges facing social care, we believe that there are models of investment and partnership that offer a robust way forward for the future. Some of these were already emerging before the crisis, but have been accelerated and expanded because of it. These now need to be built on as the industry takes stock and moves forward. Collaborations and joint working
One of the keys to surviving and thriving is to maintain and embed the temporary/emergency collaboration arrangements made during the pandemic. Through the crisis, there was a growing and powerful sense that the NHS, local authorities, registered providers of social housing (RPs), commercial providers and indeed investors are all part of the care ecosystem alongside formal care operators, and need to find innovative ways of working with one another as part of a ‘national health and care system’.
HealthInvestor UK • September/October 2020
