James Sage, Partner, Health and Social Care Team, RWK Goodman and Mei-Ling Huang, Partner, Health and Social Care Team, RWK Goodman
The challenges and opportunities facing the social care sector in 2022 will continue and build in 2023. Here, RWK Goodman’s James Sage and Mei-Ling Huang point to the four things social care providers will have to address in 2023.
CQC in the spotlight
During the pandemic, CQC introduced remote monthly reviews of services before deciding whether to request further information or inspect. This practice will continue and there is no indication that CQC will not continue its practice of ‘responding to risk’. Unfortunately, this means that if it decides to inspect, there is a high likelihood that it will find problems.
CQC is also focusing on winter pressures, saying it wants to create more capacity for hospitals to discharge to adult social care by increasing the number of providers with a ‘good’ or ‘outstanding’ rating. It has stated that it can do this by inspecting providers with ratings of ‘requires improvement’ or ‘inadequate’ where their evidence shows there has been improvement.
This may sound like positive news to many providers with negative ratings. However, the Government is indicating that local authorities and commissioners will be tasked with choosing the services that are re-inspected, so it may not be possible for providers to request an inspection.
CQC has indicated that it will be launching its new online provider portal in the summer of 2023 enabling it to gather evidence in a ‘new and structured way’. It is aiming to use the portal to carry out assessments towards the end of 2023. However, IT projects can be tricky at the best of times so it remains to be seen whether this will be implemented in the summer and how effective it will actually be.
Workforce challenges
Recruitment is more challenging than ever, with an estimated 165,000 vacant roles in the care sector and no Government strategy to fill the gaps.
Many providers are currently unable to expand or meet existing demand for their services due to a lack of staff, and this is likely to continue. A recession and redundancies in other sectors could provide some short-term respite, but it will not be a long-term solution. Any benefit may also be offset by increasing numbers of care staff leaving the sector due to the cost-of-living crisis.
Some providers awarded significant pay increases last year to help attract staff and we see this trend continuing this year, particularly in the high-end private market and the not-for-profit/charity market. However, those providers unable to fund staff pay increases due to reliance on public funding rates that fail to keep up with increasing costs and wage pressures will be at a disadvantage in the recruitment market.
Providers with robust and effective recruitment processes in place to create a positive candidate experience and avoid losing candidates during the process will have a competitive advantage. The first 90 days of employment is the highest risk area for staff attrition and perfecting the onboarding process will be key to retaining staff, with a greater and sustained focus on engagement, training, communication, and peer support during that time.
Those with a greater focus on culture, wellbeing, flexible working and learning and development will also be better placed to retain staff in 2023.
March of AI
There will be a continued push towards digitisation on all aspects of care and record keeping, along with an increase in providers offering AI tools to enhance and supplement care and diagnostic processes, and matching carers to residents. Expect virtual and augmented reality offerings to increase, giving care providers new and exciting opportunities to provide therapy and entertain residents.
However, progress will come with an increased focus on data protection. Data security will continue to be important and the ICO will look more carefully at what personal data care providers are collecting and why, the lawful basis used to justify processing, and transparency of communication to data subjects.
Availability of funding
Banks continue to see the Social Care sector in a positive light and are keen to make funds available to established providers wanting to expand or build new homes. However, margins along with the base rate have increased impacting loan-to-value and interest cover ratios. Expect terms to be set with more headroom.
Appetite from private equity for the sector appears to be recovering following the political upheaval in the autumn of last year. Sellers need to be realistic about the price and terms they can achieve given the increase in the cost of debt, energy costs and workforce issues. Price needs to be carefully balanced against the credibility of the offer received, with close attention being paid at the offer stage to the financial backing of the buyer and speed with which they can execute the transaction.
Image depicts Mei-Ling Huang, Partner, Health and Social Care Team, RWK Goodman