The care homes industry was hugely affected by the Covid-19 pandemic during 2020, with mortality rates disproportionately high amongst the care home population and the UK’s older age groups (those aged 70+). This led to a sharp drop in the care home population and hence occupancy levels during 2020.

Total care home sector revenue in 2020/2021, down by almost 3% from the previous year due to the pandemic. The private/independent sector accounted for a leading 91% of overall market value in 2020/2021, with the public sector comprising the remainder. Despite the drop in value within the last year, the market is expected to return to growth from 2021 onwards thanks in part to the COVID-19 vaccination scheme now running in the UK.

The most significant change in the provision of residential care in the last 25 years has been the much greater involvement of the private sector, with substantial growth in the number of private nursing home places – these have replaced large numbers of NHS hospital beds for both geriatric and mental illness care.

The private care home market in the UK is highly fragmented, consisting of several key players and many small providers. A key feature of the care home market is the prevalence of small and medium sized providers, of which there are around 9,500 at present.

The Government remains under pressure to introduce a more sustainable model for funding social care in the UK. There have been ongoing delays to the publication of its Social Care Green Paper, a situation not helped by the distractions caused in dealing with Covid-19.

Despite the fall in market value and reduction in occupancy levels which took place in 2020, the future for the care home sector appears reasonably positive, assuming the current vaccination programme succeeds in suppressing the threats posed by Covid-19 and its mutant strains.

With the UK population expected to continue ageing during the next few decades, demand for care home places should remain high throughout much of the UK. Despite the strong pipeline of construction activity, a considerable number of the UK’s care homes are considered sub-standard. An estimated 6,500 care homes are at risk of closure within the next five years, chiefly for this reason – this equates to approximately 140,000 bed spaces. By 2025, the UK faces an anticipated shortfall of 28,000 bed spaces.

While Covid-19 may have reduced the demand for care home places in the short term, the risk of potential shortages of bed spaces is likely to persist as the decade progresses.

About AMA Research

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