TAKE CARE NOT TO LET THE HEART RULE THE HEAD

Operators of care home businesses in Wales are being reminded that they are not just in the businesses of caring, but in the business of running a business - in one of the few dynamic sectors of a post- credit crunch world.

Care home operators gathering for a major seminar later this month will be told that quality will be the winning factor as they deal with shifting demographics, changing lifestyles, new regulations and costs of labour - just some of the external factors that are playing a part in reshaping the healthcare sector.

A fundamental driver of demand for all aspects of social care remains the fact that the UK population is set to age substantially over the next 65 years - numbers from the Government Actuary Department show that by 2026, there will be almost 2.1 million people aged over 85 in the UK.

Experts from professional advisors Broomfield & Alexander, The Royal Bank of Scotland (“RBS”) and New Law Solicitors, who are running the seminar, say that operators must not let their hearts rule their heads.

“The care home market in Wales remains one that is bucking the trend in terms of takeover activity,” said Sian Elvis, Head of Corporate Business at New Law Solicitors.

“There has been an increase in consolidation over the past few years as companies seek to take advantage of economies of scale, and enhance their market share, and we expect to see that continuing.”

Howard Crackle, Head of Healthcare for RBS in Wales, said that despite an uncertain economic climate, one fact remained. “We still grow old. Changing demographics continue to present opportunities for business owners seeking finance to build new homes or expand existing homes. There are also an increasing number of businesses expanding in specialist care sectors, such as learning disability care,” he said.

“Those that do well will be those that invest in quality. Quality will always out - even if a small provider, the return will be in direct proportion to the quality of the operation.”

But at the same time, Leighton Reed, Tax Director of Broomfield & Alexander warned operators against getting excited and over ambitious in any plans to expand. “Such decisions need to be based on a thorough understanding of the specific market opportunity. A mistake could be catastrophic – for example, buying in a different area and failing to understand the different culture at play,” he said.

“Whether buying, operating or selling, operators should beware the pitfalls and take proper professional legal and financial advice - this is neither the time nor the sector to rely on friends and family for guidance. In the final analysis, a care home is not a building. It’s a business – and needs to be treated as such.”

The Broomfield & Alexander, RBS and New Law free seminar, “Buying, selling or building a care home”, is on 18 November 2008 at the Vale Hotel & Spa, Hensol, South Wales from 10.30am until 2pm with lunch included. Contact Stephanie Bailey of New Law Solicitors on 029 2043 7620 or email stephanie.bailey@new-law.co.uk for more details.