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Friday, October 09, 2015

Health and Care provision spiraling out of control. it will get a lot worse



A few years back I worked a lot providing marketing advice to companies in the 'care industry'. It was obvious that it was an unstable business model and would limp along but be unable to provide anything like a decent level of care/support for the majority of people.

This is not a new story and I know it will be reported time and time again with more and more gruesome stories of older people suffering. Just have a look at this news report.

You are witnessing a mega fragmentation between the levels of care provided by the state and those purchased by the individual (if they have the money). The state has done all it can to squeeze the suppliers of care service to reduce costs it has forced the 'private payer' to subsidise the cost of their fellow state customers. Since 2011 the rates paid by the state have declined by 6% in real terms.

Clearly BUPA has decided to stop playing the game all together and has put the 'For Sale' sign up outside its 200 care homes in the UK. Four Seasons, the largest provider of care, has a nasty pile of debt (£50 million annual interest payments).

As care suppliers will either go out of business or focus solely on the private sector then the state will have to pay the full costs - but it doesn't have the money. Heavens knows where it goes from here.

Well one scenario that was discussed in yesterday's FT was that once the care industry is able to ditch its dependence on state customers it negotiating position radically improves. This is not going to happen overnight. In the interim life is going to be tough if the state is your biggest customer.

An additional comment (23/10/2015). Four Seasons, the second largest provider of care in the UK has had its bonds downgraded to junk and looks like it is reaching the end of the road. Not sure what that will look like but it will not be be pleasant. Dick Stroud

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