Five things the care industry is getting wrong

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By Pete Dowds, Co-founder, Elder

Few would disagree that a care home for the elderly, like any business, should be run by a mixture of time-served good practices and innovations that improve the lives of users. After all, around half of the 410,000 Britons living in these institutions pay privately for the service. They are entitled to expect, you might argue, that providers would uphold the highest business standards. Yet, in general, they do not.

A multitude of poor business practices has led to the system coming close to financial collapse. Indeed, the Competition and Markets Authority (CMA) has identified an annual funding gap of £1bn – and this shortfall could see several leading companies going to the wall.

So what has been going wrong? Here are five basic and timeless business principles being ignored by large parts of this industry.

  1. Be careful what you borrow

As any good investor knows, debt is one of the first things to look for when poring over a company’s numbers to assess its financial strength. Yet, the root of many of the problems blighting care home companies is the gargantuan borrowing they have taken on. Some of the UK’s largest operators are spending all their would-be profits servicing debt. It goes without saying that the cost of this borrowing has added a crippling burden both to families and to society as a whole.

  1. Find out everything you can about the needs of your customers

The best businesses seek their customers’ views on everything they do, from the latest iterations of their products and services to how much they pay their staff. The best example of a care home would be one where both customers and carers had a say – alongside management – in the running of that businesses. While there are some noble efforts, this style of management is too often the exception in the care home sector.

  1. Pay it forward

Put simply, when a business “pays it forward”, it does good deeds in its community expecting nothing in return – not even a few paragraphs in the local paper. Instead it encourages the beneficiaries, in turn, to lighten the lives of others. This benevolent behaviour has been shown to boost staff morale, teamwork, communication and loyalty. A personal observation, I grant you, but while care homes might be doing this up and down the land I have seen no evidence of it and would welcome some examples.

  1. Always think about what’s coming next

In business, you will always need a next: a new service, a new type of buyer or a new relationship; no matter how well you are doing today. Yet, the majority of care home operators are now in survival mode. They are incapable of planning for subsequent and can see only see weeks ahead. They have been dubbed “zombie companies” because they are only managing to pay the interest off their loans. All they are thinking about is how to generate the revenue they need to survive. ‘Next’ is virtually a foreign word to most care home providers.

  1. Learn from your failures

Times were once rosy for the care home sector and this was the time for individual companies to invest properly in their own offerings. But they failed to do this year after year as this mistake was repeated again and again. As a result, they are still using pen and paper to process customers. And now, with the accounts looking bad, it might just be too late.