Adult Social Care: Insights into the Year Ahead from RWK Goodman
RWK Goodman’s Health and Social Care team look at some key areas which may impact the Adult Social Care Sector in 2024.
Data Protection, Cyber Security and CQC
• CQC’s new single assessment framework which was first implemented but only for a few providers in November 2023 will be rolled out to all services in 2024.
This methodology retains some of the old (the five key questions, the current regulations and risk-based monitoring) and combines it with the new (six evidence categories, scored numerically to provide a rating). CQC have been slow to provide details about how the new system will work. We have been keeping a watching brief on developments and have created a Care Directors’ Network to share information as things change. We will publish updates over the course of the spring and the rest of the year to help providers manage these changes.
• We anticipate the use of technology in care services continuing to increase meaning robust data protection and cyber security measures will be more important than ever. Providers are likely to see more scrutiny from CQC in these areas which will be assessed through the responsive and well-led questions under the single assessment framework. Data breaches are a case of when, not if.
• We will continue to see a significant increase in requests for information being made to providers. These include data subject access requests and requests for medical records after someone has passed away. Different rules apply to different types of request.
Transactions, Development and Funding
• The initial market shock from the hike in interest rates settled during 2023 and we saw plenty of activity across all aspects of the market, with appetite from investors returning. There continues to be substantial appetite for growth, as evidenced by the significant number of transactions and refinancing we completed in 2023 for groups looking to expand. We expect this to continue through the course of 2024, albeit against the uncertainty that an early budget and General Election will create.
• With high interest rates affecting the market last year, some borrowers struggled to obtain funding from the High Street lenders, who were favouring existing customers. However, the proliferation of alternative lenders in the care sector has come to the rescue as has the market’s expectation that interest rates will be reducing in the mid-term.
• For those looking to exit to borrowers with bank funding, expectations will need to be managed. We have seen timescales for completions extended for several months from those agreed at heads of term stage whilst buyers obtain their formal credit offers. Careful thought needs to be given to agreeing exclusivity periods and commencing legal work to ensure that sellers are not over-committing before funding is agreed.
• For estate management and development, an early budget and General Election could have a number of consequences. Positive steps would be new green deals for renewable energy sources and energy efficiency measures, reform of the planning process and increased legislative steps to move to net zero for new developments. It is a good time to look at planning future energy efficiency measures for existing properties so providers can be reactive to possible future legislative changes. Our estate management audit can help with this.
Workforce
• In 2023, the chronic shortage of care workers was partially alleviated by significantly increased levels of international recruitment (c. 70,000 over 12 months). However, the recently announced restriction on care workers bringing their dependants to the UK, could make coming to the UK less attractive. The use of international recruitment has resulted in reduced vacancies for some operators and others have benefited from the additional capacity created in the system. Some have continued to struggle with recruitment and have faced increased agency spend as there remains a significant shortage of workers in the domestic workforce. This is likely to continue in 2024.
• International recruitment is not without its risks and considerable concerns have been reported about modern slavery practices and non-compliance with sponsor licence requirements. In 2024, it will be critical for providers to audit their recruitment practices, re-fresh their compliance training, and ensure that they are operating ethically to avoid significant penalties and reputational damage.
• In 2024, providers will need to grapple with the recent and significant changes to the rules on holiday entitlement and pay for workers with irregular hours, and implement a raft of new employment law rights, including increased protection from redundancy for employees on maternity leave, new carers’ leave rights, a requirement to take ‘reasonable steps’ to protect against sexual harassment, increased flexible working rights and a new right to request predictable working hours. Look out for our webinars on these changes.
The importance of the bottom line
• The challenging economic situation will continue to focus providers on financial health, particularly in relation to negotiating fees, managing funding streams (specifically in nursing care), evaluating source of funding for new admissions, ensuring client contracts are robust, maximising top ups, and proactively dealing with unpaid debts. We expect increased uptake for the financial health package we offer to providers to assist with these issues.
Hazel Phillips, partner and head of health and social care at RWK Goodman comments:
“We are optimistic for Adult Social Care in 2024. It remains a market where significant investment is being made by UK and overseas investors, which will continue to drive improvement and innovation. Whilst the challenges around funding and staffing remain, perhaps this is the year when a change in Government could finally trigger reform of the system, we hope so!”
