This week, the Competition and Markets Authority (CMA) officially closed its nine-month investigation into US real estate investment trust (REIT) Welltower's acquisition of more than 600 UK care homes previously owned by Barchester, Care UK and other providers (see the full story here).
The regulator ultimately approved the deal subject to a series of divestments, with homes sold to Care UK, Stow Healthcare owner CGEN Care, Orders of St John Care Trust and Healthcare Ireland. According to sector leaders I have spoken to, the outcome was largely expected and brings welcome clarity after months of uncertainty and speculation.
However, attention has now turned to what the decision could mean for future investment and growth across the market, and sector leaders will be watching closely to see whether the CMA's intervention signals greater scrutiny of local care markets, a more cautious approach to consolidation, or might lead to a potential shift in sentiment among overseas investors considering expansion in the UK.
On top of the watchdog’s involvement in the Welltower acquisitions, the Prime Minister Andy Burnham’s comments over the summer about not wanting to see “profiteering” in social care, while stood in a care home, have also sparked further uncertainty over the future investment picture for adult social care in the UK. What did he mean by that word? Was he talking about companies ‘making an honest profit’, or those that prioritise ROI for their investors, with the quality of care a secondary consideration?
If the latter, then that’s something everyone involved in backing, providing and facilitating care could and would absolutely get behind. If the former, we’re facing a more problematic future for a market dominated by for-profit providers.
Autumn budget
All eyes will be on next month’s Autumn budget for some of the answers. Despite Mr Burnham’s high-profile early commitment to adult social care reform (during the same aforementioned care home speech), there has been very little in the way of signs of progress on reforms, including the delayed appointment of a Dementia Tsar.
This is of course due in part to the fact that the first stage national care service roadmap being created by Baroness Louise Casey’s independent commission on adult social care is not due until later in the year, and there are plenty of competing priorities for government cash and attention.
However, many in the sector hope the budget will at least bring extra public investment to underpin the wider care workforce reform the PM also trailed over the summer, to head off concerns that the ambition will slow progress on the Fair Pay Agreement process.
Taken together, the impact of the CMA’s Welltower decision on the shape of the market, and the continuing debate over profit, investment and reform underline the delicate balance facing social care. To maintain a relentless focus on quality, the sector needs responsible capital and sustainable returns, alongside clearer policy, effective oversight and realistic public funding.
