Bupa Dental Care acquired 13 new independent practices across the UK and Ireland in 2019, taking the company’s total to 483 sites.
What are the key external macro issues impacting leaders in the health and social care sectors – and what do they mean?
The health and social care sectors have experienced a turbulent previous 12 months, with indications suggesting that the next year will be just as, if not more, unsettled.
Challenges facing employees from the grass roots to the boardroom impact on a daily basis. However with each change comes an opportunity for organisations to take advantage of the situation and use it to their advantage, as well as to act now to pre-empt potential negative implications.
Through analysis of a variety of cited sources referenced below, Compass Executives have examined a number of key political, economic, social, legal and technical macro factors which leaders in the health and social care sectors are facing, with the opportunities and threats attributable for each.
There have been a number of hugely impacting political events leading up to May 2017, including “Brexit”; the US Presidential Elections; and the French Presidential Elections; whilst around the corner next month, the General Election will be held in the UK, whilst elections in Germany are taking place in late September, early October this year too.
“Brexit” in particular will have repercussions within the health and social care sector from an employment perspective:
- 83% of the Adult Social Care workforce is British, with 9,000 from inside the EU and 140,000 from outside. Regional variations see only 59% of ASC workers in London are British (Skills for Care 2016 Report, featuring in HealthInvestor, March 2017)
- EU Competition laws are enshrined in the 2012 Health and Social Care Act
- Value of the Pound (£) against global currencies: will a weak Pound encourage foreign investment, or will “Brexit” cause a decrease in asset value?
US Presidential Election results are impacting how the UK health and social care markets are viewed from an investment perspective:
- US involvement particularly within the Private Equity and Corporate Finance industries is prevalent – uncertainty at home can lead to an increased enthusiasm to look overseas for investment stability
- As with “Brexit”, the value of the £ against global currencies: a weak Pound is attractive to foreign investment
French and German Presidential Elections are also important political events to consider:
- The second stage presidential finalists in the French elections were both anti-EU and pro-EU – the outcome of which were to give a barometer of how pro-EU the French were – as a founder member of the EU community it would have had huge political and economical implications if the country had rejected membership, which could have an impact on “Brexit” negotiations
- Germany will be heading to the polls in September/October 2017 where parties who are advocating a tough stance on “Brexit” are standing. The results will likely have some significant boding on how the UK negotiations happen, and the role of EU citizens in the UK workplace
UK General Election – the build up to the elections has seen political debate bringing to attention a number of issues in both health and social care across the United Kingdom, with promises made across all parties in readdressing these:
- Commitments from major political parties to commit spending on both health and social care according to respective party manifestos
- Timescales put in place before the realisation of these promises can be delivered
- Social care funding has already increased in some local authorities by 4% on average, but pledges to increase funding remain
What does this mean? As a result of a weakened Pound (£) after the results of the UK EU referendum (now referred to as “Brexit”), the UK became attractive to foreign investors for M&A activity. Conversely, for UK based H&SC business, can the declining strength of the Pound impact the asset value overall? There is a real chance for businesses to strengthen through expansion and growth, but timescale will be restricted as the Pound strengthens, and the impact of staffing for the H&SC remains a real issue: how will senior management ensure the required flow of employees into the organisation continues, when 17% of ASC comes from either the EU or further afield? Will this have a negative impact on the CQC rating if you are suffering from staff shortages? There are numerous political events taking place at the moment which will have consequences across H&SC in the immediate future.
There has been much clear documentation of the economic frailty within the health and social care sectors for many years. As previously mentioned, political parties competing in the UK General Election in June have committed to giving more financial support should they became the next governing party, but there are also a number of key economic factors which have happened, are in the process of happening, and will happen in the next 12 months which will also impact an organisation:
National Living Wage (NLW) increasing in April 2017 and again later this year, with further incremental increases leading up to 2020:
- More allocation of budget to staff salaries: NLW has risen by 4.2% at the start of the new Financial Year to become £7.50/hour in line with former Chancellor, George Osborne’s aim of increasing it to £9/hour for over 25s by 2020 (HealthInvestor, Dec 16 / Jan 17)
- How do you anticipate handling employees who might not quite be eligible for the NLW increase? Do you employee many people who will benefit from this new law?
Insurance Premium Tax Increase in June 2017
- Impacts the private medical insurance market (PMI) in particularly: those who had been using healthcare insurance will reconsider which will see an ever more increasing burden on the NHS if the IPT insurers pass this cost to customers (HealthInvestor, Dec 16 / Jan 17)
- £2bn in grant funding over the next 3 years: £1bn available in 2017 / 2018 through the Better Care Fund (L&B, Care Markets, March 17); how will this impact your organisation?
- Independent sector operators provide 90% of publicly funded social care sectors (L&B, Care Markets, March 17)
CQC Fee Changes for providers
- Fees represent 0.16% of overall indicative turnover of the market
- Increases for care homes with 26-30 residents; single location community social care providers; single location GP practices with 5001-10000 patients BUT decrease for single-location dental practice with 4 chairs (Care Management Matters – CMM – Apr 17)
Changes to Apprenticeship Funding in May 2017
- UK employees who pay more than £3m in payroll become a “levy paying employer” and will pay 0.5% over £3m on a monthly basis: size of your organisation will depend on how much you have to pay – will this restrict growth or apprenticeship opportunities provided?
- 15 funding bands; 1:9 ratio for payment (employer = 10% funding; government = 90% funding): again this funding will need to be allocated into the yearly budget; understand where your organisation fits into the banding too (Care Management Matters – CMM – Apr 17)
What does this mean? Whilst the introduction of increasing the NLW can encourage more people into the H&SC sectors – where there are documented staff shortages – and the fact that a number of political parties are committed to increasing funding for the H&SC sectors is a positive step for many organisations. Is this enough? It’s unlikely that the funding will cover all day-to-day business requirements, and the threat of staff moving companies for a higher salary remains high. Opportunities to use this extra funding to enhance employee engagement through qualifications, rewards and similar can help retain staff, but having a clear financial understanding of where your business is at, is vital to ensure these costs don’t bankrupt the organisation.
There are numerous social macro factors which will impact the leadership teams of any H&SC organisation. Whilst issues such as an ageing population and an ageing workplace impact society as a whole, these issues represent huge challenges to the H&SC industries – what is being done at present to anticipate, address and prepare for these future impacts?
Government Green Papers
- “Long term funding of social care” preliminary report of government proposals that is published in order to provoke discussions and later potential actions – as a leader of an H&SC organisation what are you doing to contribute suggestions around long term care funding? What would benefit your industry the most?
- “Work, health and disability” how will the proposals impact your current organisation, and what are its demographics? (HealthInvestor, Dec 16 / Jan 17)
Challenge on Dementia 2020
- 2013 policy from the G8 Summit under the 2010-2015 Coalition Government stating that “England to become best country in the world for dementia care and support for people with dementia, their carers and families to live; to be the best place in the world to undertake research into dementia”: on-going challenge of meeting the outlined challenge (L&B, Care Markets, Mar 17)
- Currently there are 850,000 people with dementia in the UK, with 2m by 2051: rising numbers of dementia suffers will need specialist help, as well as resources, funding and workers over the years (L&B, Care Markets, Mar 17)
- H&SC struggles to attract younger works or people joining from outside the industry, and are therefore having to cope with an ageing workforce (Skills for Care Report [SFCR], 2015) considered a “workforce time bomb”: 40% of working age population will need to enter the care profession to make up the deficit
- Increase in mental health issues plus the rise in sedentary lifestyles UK wide: increase demand on H&SC services
- By 2030 the expected number of older people to rise to over 13.5m: care help for c.4.1m which is an increase of more than 60% from 2012; c.570,000 people with dementia at present – over the next 30 years to increase to 1.4m (L&B, Care Markets, Mar 17)
- 590,000 extra care housing units need to be built over the next 10 years in order to meet potential demand: opportunities to increase the size of the organisation and need to recruit (L&B, Extra Care and Retirement Communities, UK Market Report, 14th Edition)
- There are 5.7m houses that are owned outright where the head of the household is over 65 years old – across Britain 69.3% of households owned are over 65 – areas where elderly / domiciliary care is required fluctuates massively: increasing requirement for elderly and domiciliary care providers across varied geographical locations (CMM, Apr 17)
Turnover rates for social care sector
- For nurses working in social care, the turnover is 35.9% whilst 47.8% of care workers leave within a year of starting: What is being done to address this? It is only likely to get worse (Commons Select Committee, Adult Social Care [ASC] Report 2017, Mar 17)
- According to the ILC-UK, forecasts of ASC shortfall of 200,000 workers by 2020: need to address this rebalance (2015 report, International Longevity Centre, UK)
- Skills for Care reported that over 900 social care workers leave their jobs every day (of which 46% leave the sector entirely) – widely reported “crisis” in the industry: these figures suggest retention of staff is very low – need to counteract this quickly, very negative public image for potential workers
What does this mean? Any public discussions around future funding of H&SC can only be a good thing – and it is vital to be addressing the issues of an ageing workforce and population. Likewise, the target of becoming the best place in the world for dementia research and treatment is admirable, provided the steps are put in place now to ensure this happens. The opportunity to contribute towards government green papers to say exactly what needs to be done to help your organisation is a great opportunity. Looking at contingency plans for recruitment and addressing staff shortages through incentives must be addressed now.
In addition to the numerous points previously raised, the legal macro factors are vital to be adhering to, as well as looking at forthcoming legal requirements which your H&SC organisation must be compliant with. Failure to adhere these laws can have a severe impact to your organisation as a whole.
- Very important GDPR implementation taking place in May 2018; changes in how data can be stored, used and accessed: all companies will need to have a designated Data Protection Officer (DPO) in charge of compliance or risk huge fines (4% of annual turnover or €20m)
- Internal recruitment processes will need to be aligned to the new regulations; fundraising needs to become opt-in; marketing needs to be opt-in: how will the strategic marketing vision of the organisation be impacted and what processes do you have in place at present to counteract or pre-empt this?
- Increase in the use of external agencies for recruitment purposes: increase in demand for staff, along with changes to Data Protection will lead to an increase use of external agencies, or the problematic growth of an internal recruitment team (high costs, slow if not already in process)
CMA (Competition and Markets Authority)
- As a result of the weakened £, the potential increase in foreign investment can result in gaining a monopoly in the market: how do you ensure you remain compliant whilst getting the best possible deal?
What does this mean? Remaining compliant with the new GDPR rules means that H&SC organisations will be able to target audiences who have opted-in to receive marketing, fundraising, news or similar, whilst in-house recruitment teams will be able to target solely interested candidates, provided they have complied with the legal requirements to obtain the necessary personal information. However, failure to comply with the new laws and lack of understanding of changes can have long-reaching impact to the firm, most notably through financial sanctions. The need to prepare is vital.
Technological The speed in which technology is evolving is dramatic, particularly over the last 10 years. There is evidence to support the fact that technology, particularly bringing your organisation up to date digitally, can have a revolutionary impact on the health and social care sectors. Below are several key technological macro factors which are impacting leaders in H&SC at present:
Digital Healthcare: PLATFORMS and APPS
- Increasing number of apps and platforms created to support healthcare from a digital perspective, for instance: Babylon, Rival Doctor Care Anywhere, Doctify, DeepMind etc. There has been an increasingly widening cyber gap between healthcare and other sectors; there is an increasingly tech-savvy public and the NHS is at “breaking point” providing a number of digital opportunities for health and social care organisations. Innovation is key to ensure survival (HealthInvestor, Dec 16 – Jan 17)
Comparison sites for care
- Care Sourcer is a good example of a comparison site for choosing the right sort of care – this links care seekers with care providers allowing tailored needs to be considered: as an executive do you want to ensure maximum exposure to the markets for your services? Increasing awareness can drive sales, how will you position yourself with this? (HealthInvestor, Mar 17)
What does this mean? Much has been spoken about how technology can help lift the strain off the NHS, whilst individually, it provides opportunities for businesses to update themselves digitally to enhance their presence and reach both UK wide and worldwide. That said, as we have seen in recent times with the accidental cyber attack on the NHS, security – especially loss of data – is a chief concern, whilst getting an ageing population to adopt these more modern practices could potentially be time-consuming. Cost will always remain an issue to smaller organisations, but with the growing need to adopt and adapt to digital changes: is this an issue H&SC organisations can afford to ignore?
Whilst the above is by no means a complete comprehensive guide on all the macro factors which have impacted, are currently impacting, and will impact health and social care senior management leaders in the sector, it does serve to show some of the issues which can impact the business in the next 12 months.
At Compass Executives, it is our job to discuss these issues, and more, to ensure future leaders in the health and social care sectors are anticipating, planning and preparing to act against these potential threats, and to use these issues as opportunities to strengthen the organisation.
Call us today to see whether we might be able to assist bringing talented leaders to your company: 0207 887 6115