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Scott Sanderson, Partner at Hawsons and Care Home Specialist gives his thoughts on the events of the past year: “Throughout 2016 the care sector continued to be challenging for operators, with staffing shortages in nursing care, continued funding pressures from local authorities and rising wage costs. Yet, the sector continues to be an attractive option amongst wealthy new entrants looking to develop purpose built homes, together with existing operators looking to expand or re-develop existing sites to remain fit for purpose in future years.

However, for smaller operators, we have seen a growing number choosing to leave the sector due to the continued compliance demands and funding constraints. The Care Quality Commission (“CQC”) recently published their report on The State of Health Care & Adult Social Care in England 2015/16, in the report CQC acknowledge the above noted concerns facing operators, commenting “that smaller providers are particularly susceptible to closures”.

Phillip Hammond’s Autumn Statement also did little to support the funding gaps in the adult social care sector either, however more positive signs for the sector were announced at the back end of 2016 with 95% of all local authorities planning council tax rises of between 3.9 per cent and 3.99 per cent. Local authorities have warned that despite the planned rises they will still not have enough money to cover the burgeoning cost of social care, at the same time as absorbing continuing cuts from central government.

On compliance matters, CQC’s annual report shows a significant increase in standards across the sector with 72% of adult social care homes being rated as either Good or Outstanding, up from 60% from 2014/15. For those operators who were rated as either Requires Improvement or Inadequate, upon re-inspection 77% of which had their ratings improved.”

What will 2017 bring for the sector?

One certainty for 2017 is that we can expect the next 12 months to be equally as challenging!

With a growing number of smaller home owners thinking of exiting the sector, new entrants continuing to show interest, improved willingness for banks to lend and an attractive tax regime, we expect the next year to involve an increasing number of acquisitions and disposals, both nationally and locally. If you have been waiting for a healthy environment to sell your care home or enter the sector, then the next 12 months may be a great opportunity for you to make that move. Read more about this at www.hawsons.co.uk/care-home-buying-selling.

The care sector is also set to become a gradually more competitive and uncertain environment, as the new entrants challenge the status quo. It is therefore crucial that care home owners within the sector see the increased compliance and growing emphasis on financial sustainability as an opportunity to highlight key areas where their home can improve and, critically, implement new policies and procedures to work towards a stronger, sustainable financial future.

Scott Sanderson began his career with Hawsons and trained as a Chartered Accountant, becoming a partner in 2015, specialising in the healthcare sector and small businesses. For more details and advice, please contact Scott on [email protected] or 0114 266 7141.

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