The CEO of City & County Healthcare, the second-largest domiciliary care provider in the UK with 2019 revenue of £ 236m, tells HBI how the company is navigating the COVID-19 crisis and what prospects are now like for a sale.
How have you been impacted by the crisis?
There was an immediate 8-10% increase in absence rates but the flexibility inherent in our zero-hours contracts meant we had a latent staff capacity which stepped into the breach and absorbed this nicely. But we saw a lot of increased sick pay, which doubled.
We also saw a sharp drop in volumes by 9-10% and that happened quickly through April and May. People cancelled care if they had a strong infection risk concern, or if their friends and family on lockdown were able to step in. Also our day centres, paediatric care and agency staffing business were a disproportionate part of this drop. This trend is now reversing as those receiving care return and care assessments by local authorities (LAs), which were stopped while resource was redirected to emergency planning, are now coming back through.
When it came to PPE (personal protective equipment) we had some natural advantages as we are quite a large professional business with procurement capabilities. We immediately put out orders for PPE and acquired around £4m worth in the first two months of covid, which stood us in good stead.
From a financial support point of view, the government provided two packages of £1.6m to LAs (local authorities) to support them with their covid response, as well as a further £600,000 for infection control. Most LAs have supported providers with that money to contribute to increased SSP (statutory sick pay) and PPE costs. This has helped us address the additional costs as well as temporarily reduced revenues.
There has been government support for private sector homecare providers, but a lot of LAs did not provide that support. Looking across the broad market though, I’d say 60-70% of LAs were appropriately supportive of providers. Of course, this leaves 30-40% who have not, and whilst recognising the pressures on those Local Authorities, I am concerned for those who are not as well diversified as we are.
But as one of the largest community care providers we are not representative of the industry. We’ve had a strong advantage in dealing with the crisis due to our size. We have strong central functions teams – our communications, health and safety, HR, policy advisory, central quality and recruitment teams… We’ve been able to redirect a lot of resources to support the front end branches and translate government guidance into action.
How do you see the next few months panning out?
The government issued a procurement notice saying LAs should revert to normal contract arrangements towards the end of the furlough scheme in all areas, so support is being removed from the sector. But the positive thing is that volumes are picking up underneath that.
We are getting back to normal trading apart from PPE and SSP costs. We are campaigning for LAs to continue to provide free PPE from government contingency stockpiles or to provide us with direct reimbursement of these additional costs. The cost increases are significant even when buying at our scale.
Our initial discussions with LAs have been quite encouraging on that front. There is a strong contractual argument for the industry and public law obligations on Local Authorities because the use of masks and visors are a new temporary requirement which was not there when contracts first were agreed.
I don’t see revenues falling in the wider homecare sector as a whole. I think covid has brought to public consciousness the importance of social care. Like social distancing protects the public, social care protects the NHS.
We are looking after 500,000 people with community care and the NHS has around 100,000 beds. When some of that half a million ends up using far more expensive NHS resources, people want to get them back into the community. In many cases we can.
What we have is a public health issue that needs to be looked at in a very broad way, not just treating at the point of highest need, and at the highest cost, on the NHS. We need to look at how to effectively care for this massively growing, ageing and increasingly sick population in a sensible way from a public finances point of view, which would be in the community.
You were for sale prior to COVID by investor Graphite Capital. What now?
Any thoughts of sale were very far from our minds during the crisis. But I do think our approach in the last few months will turn out to be an advantage.
There will be businesses that do better and some that do worse as there’s always a shakeout in such a significant crisis. This has been a hugely fragmented market so I think there is likely to be more integration and consolidation, which may also be something that interests the NHS as we think about more joined-up health systems and the investment needed in technology, risk management and infrastructure in order to deal with social care as part of the overall public health system.
What excites me both as a business person and a citizen, and what I think we’ll see in public health terms, is a big shift away from a myopic focus on the most expensive settings of high acuity care homes and hospitals into a much more enlightened community care focus.We would welcome your thoughts on this story. Email your views to Anaïs Charles or call 0207 183 3779.