ey care homes sector forum 2016 - ernst & young · ey recently hosted the care home forum 2016,...
The UK care homes industry has undergone a period of constant change from the turbulence surrounding the unwinding of the pre-financial crisis structures, the change in the regulatory environment, nurse staffing shortages, and more recently the announcement of the ational Living Wage. Owners and investors have been kept constantly on th eir toes as th ey understand and adap t to ch ang es in th e industry.
EY recently hosted the Care Home Forum 2016, which featured a discussion of the key changes currently impacting th e sector, and h ow th ose in th e industry are navig ating today s uncertain environment. We are pleased to summarise the key messages here, and invite you to contact us should you wish to discuss any of the issues raised.
Is there light at the end of the tunnel?
Government spending cuts are of h istoric p rop ortions b ut l ocal l y th e largest cuts have already been made
UK economic outlook – over the worst? Two key issues: NLW and nursing supply Transaction environment – uncertainty, but appetite remains
There are better prospects for h ouseh ol ds ab il ity to p ay p rivatel y as h ouseh ol d w eal th increases
Residential care will be the most affected sector in the UK by NLW with 51% of employees impacted resulting in a 2.8% wage bill increase by 2020
Estimated 24,000 nursing vacancies in the UK today
Short term trading outlook and N L W introduced uncertainty in th e transactions market
However, lending banks, op p ortunistic and w el l cap ital
buyers remain engaged, w ith strateg ic international interest
£27.8bn* £27.7bn* ?
*applies to GB only
Local authority spending
Social care spending Largely driven by forecasted 12%
h ouse p rice g row th
ursing supply impacted by . . .
7,000 fewer nurses coming to the UK compared to 10 years ago
10,000 additional training places are to be provided through replacing grants with loans
with 37% of nurses aged over
“The Government recognises further action must be taken to help the sector, b ut it is too earl y to tel l w h eth er recent ch ang es announced w il l make a real impact at home level
Joe O’Connor, E Y
“ L ocal auth ority b udg ets are stil l under p ressure, but the largest cuts may already have been made
Colin Edwards, E Y
“ Th roug h introducing payment of the real l iving w ag e w e reduced staff turnover and increased staff attendance and morale
Jane Ashcroft, CBE,Chief Executive, Anchor
“Underlying demographics indicate a positive long term investment outlook
Andrew Ovey, Healthcare, AXA IM – Real Assets
“CQC has raised the b ar, increasing care standards
Paul Birley, Head of Healthcare, B arcl ays p l c
“The key in portfolio valuation has shifted from EBITDA multiple to what sustainable EBITDA really is, post LW
Mathieu Roland-Billecart,E Y
Joe O’ConnorPartner, RestructuringTel : + 4 4 0 2 0 7 9 5 1 2 2 5 2M ob : + 4 4 0 7 7 1 1 2 6 1 2 8 4E m ail : j oconnor@ uk . ey. com
Mathieu Roland-BillecartPartner, Corporate FinanceTel : + 4 4 0 2 0 7 9 5 1 5 2 0 6M ob : + 4 4 0 7 7 9 9 3 4 2 6 8 2E m ail : m rol andb il l ecart@ uk . ey. com
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