1. Care Homes Market Study
Presentation to National Care Forum Finance Forum, 2 March 2017
Marie Clark and Darren Eade, CMA

2. Thank you for meeting us
We want to hear from providers at today’s meeting on:
How well the care and nursing homes market is working for consumers; and
What, if anything, is needed to make it work better for consumers.
This is to inform the CMA care homes market study.
Before hearing from you, we will provide some brief background on the CMA and our market study.

3. The CMA and our market study
The CMA is an independent, non-ministerial government department covering the whole of the UK.
Our mission is to make markets work well in the interests of consumers, businesses and the economy.
Market studies are one of our tools to examine possible competition or consumer protection issues and address them as appropriate.
On 2nd December 2016 we launched a market study into care homes for the elderly in the UK, to review how well the market works and if people are treated fairly.
There are four key themes for the study: consumer protection issues; choosing care homes; how the market is shaped by regulation, local authority participation and public commissioning/procurement; and competition between care homes.
We want to understand how market conditions differ between areas of the UK, and with funding arrangements and the care needs of residents.
The scope of the market study does not include quality of care standards, domiciliary care or respite care.
We are not a policy making body, so will not be making recommendations on social care policy or funding levels. However we will look ahead to how the market will continue to serve residents and so are interested in the challenges that the sector faces.
We are based in London but works across the UK.

4. Process and outcomes of the market study
The care homes market study will be conducted over one year.
By 1 June 2017, we will publish an interim report with our initial findings and views on remedies, including if a market investigation reference is needed. By 1 December 2017, we will publish our full report.
We are now seeking evidence from many different stakeholders and reviewing evidence we have obtained. This process has included: obtaining written responses to our statement of scope, holding meetings with parties, and issuing information requests to providers and local authorities.
Outputs from the study – a report with:
recommendations to regulators, industry or national and local government
publicity and guidance (e.g. to consumers, advice to local authorities, guidance to the industry on compliance with consumer law)
Or we may decide no further action is needed (if no problem identified or responses would be disproportionate).
Where we find issues of particular concern, we may take further action during or after the end of the study such as opening consumer or competition enforcement cases.
Note evidence collection and analysis will continue in the second half of the study

5. Areas for discussion Consumer protection issues Choosing a care home
How the care homes market is shaped by regulation local authority participation and public commissioning/procurement
Competition between care homes
Challenges to the sector

6. To discuss: 1. consumer protection
What are your views on the fairness of contract terms and conditions for care home residents/their relatives?
We are interested in issues such as:
Transparency of information on fees and additional charges (including top up fees)
Significant and/ or unexpected or arbitrary fee increases with short notice.
Long termination notice periods
What do you think about the complaints and redress systems?
What could be done to improve consumer protection?
Some suggestions to date:
CMA to develop consumer law compliance guidance for providers
Better signposting of external complaints systems e.g. role of ombudsmen
Industry Codes of Practice with access to alternative dispute resolution schemes

7. To discuss: 2. choosing a care home
What are your views on the information available to older people/their representatives when they choose a care home?
We are interested in issues such as:
The sufficiency of the information available, and if it is clear and easy to access
If anything is preventing residents from moving care home if they wish to do so
How much choice residents have in practice, how this differs across the UK or with different funding arrangements and care needs
What are the deciding factors in choice of care home
What could be done to help people choosing care homes?
Some suggestions to date:
Care homes/local authorities (LAs) publish key information (including price lists) in a standardised way e.g. details of vacancies and waiting lists, indicative charges, services etc.
Information sources on care homes stress alternative care options
Self-funders are encouraged to get independent assessments of needs and signposted to LAs/regulators/charities for information
Consistent standards for providers’ assessments of needs e.g. BSI standard
Better signposting to LAs and charities to advise on funding and finance options

8. To discuss: 3. regulation/local authorities/ procurement
What are your views on regulation/procurement in the care homes market?
We are interested in issues such as:
The impact of regulators, local authorities (LAs) and NHS on competition between care homes in terms of quality and price
The impact of LAs (and NHS) on outcomes in this sector through their commissioning and ‘market shaping’ activities
The extent to which regulators, LA and NHS co-ordinate their activities to limit the burden on providers
The potential role for LAs in making the market work better for self and LA funded residents
The extent of financial and non-financial costs of regulation
What could be done to improve regulation/procurement?
Some suggestions to date:
Increased sharing of best practice amongst LAs and NHS
Recommendations to LAs on commissioning/procurement and market shaping
Recommendations to streamline regulatory frameworks
Increase consistency between LA inspection regimes and those of regulators
Improvements to regulators’ quality reports
We are interested in understanding whether and how regulation is a significant cost for CHs.
suggestion by providers that LA commissioners should be regulated.

9. To discuss: 4. competition
What are your views on competition in the care homes market?
We are interested in issues such as:
Is competition driving choice, quality and value for money for both self-funded and publically funded residents?
The financial and non-financial barriers to providers entering this market and expanding their activities
Capacity in this market and how this is affecting competition
The key pressures for providers that are affecting their long-term sustainability
What could be done to improve competition?
Some suggestions to date:
CMA to raise awareness of funding issues and cost pressures for providers
Recommendations to address labour, skill shortages, unnecessary regulation etc.
Reduce barriers to entry and expansion by changes to LA planning and procurement activities
Improved transparency of fees
Increased role of brokers
Is this a capital intensive industry; or can you easily get debt finance to buy property; or just rent property. What are their views?
Do other countries seem to have a more competitive sector?
Discussion of incentives to compete - is incentive to compete reduced by limited spare capacity, excess demand for good quality providers, no incentive to compete for LA contracts at/below cost unless filling temporary spare capacity (covering marginal cost)

10. To discuss: 5. challenges
What are the challenges to the care homes market?
Challenges to suppliers include:
Fee income: Prices paid by LAs and NHS Vs Self payers. Occupancy Vs demographics (increasing numbers and proportion of elderly)
Staff: NLW. Recruitment and retention – staff shortages, BREXIT.
Rent/lease costs: Trends
Regulatory burden?
Profitability: Operating margins (before and after interest payments)
Debt: High and unsustainable levels of gearing?
Procurement practices by LAs and NHS
Anything else?
Consequent impact on the market
Response of equity investors and debt holders. Reduced incentives?
Reduction in capacity, or refocussing of capacity in certain areas?
Drop in quality of service provision? Underinvestment in homes?
What could be done to address these challenges?
Some suggestions to date:
CMA to raise awareness of funding issues and cost pressures for providers
Recommendations to address labour, skill shortages, unnecessary regulation etc.

11. Questions and CMA contacts
Many thanks for sharing your views today.
The information you have provided will help inform our work, including our interim report to be published by 1 June 2017.
Do you have any further issues or any questions for us?
Should you wish to provide further information for our market study or have any queries, please contact:
Douglas Cooper, Project Director, Tel: ,
Laura Warren, Assistant Project Director, Tel: ,