Care after COVID-19: Recovery and Investment Outlook

Simon Bird Chief Executive of Care South
Kenneth MacKenzie Founder of Target Healthcare REIT
Tony Hegarty CEO of Sequence Care
Jason Leek CEO of Riverstone Living
David McHattie, Head of Healthcare, Corporate Banking

Hosted as a webinar, the first Care Conversation since the emergence of COVID-19 looked at the recovery and investment outlook in the wake of the pandemic

1600 - 1700

“Going in to lockdown was the easy bit – coming out has been the difficult bit,” Chief Executive of Care South, Simon Bird, told the webinar. “Knowing what you can relax and being ready to react if anything escalates.”

As soon as lockdown began, enquiries and admissions stopped, he said. “There was so much bad press around, why would someone place a loved one in a care home?” This was despite Care South having been ‘lightly touched’ by the virus. “We fundamentally disagreed with the process of hospital discharges and did not take any patients being discharged until they’d had a COVID test or had been in isolation for 14 days.”

Enquiries were now back up to previous levels, however, although admissions were still running at around 50%. “People are anxious, so it’s important that we try to get some degree of normality and plan for going into the winter when you won’t be able to have gazebos and garden visits.”

The independent living sector, meanwhile, appeared so far to be “coping very well”, said Chief Executive of Riverstone, Jason Leek. “Residents have an ability to isolate in their own home but to be supported with onsite help, whether in the form of shopping, meals or care for those who need it. So there’s significant help available but within an environment where residents can protect themselves in their own secure space.”

Purpose built, newer environments also tended to have better infection control, he said, with the infection rate in the sector less than 1%. “The perception of residents themselves is that retirement communities are a very good place to be – they’ve got the right mix of their own space plus some communal elements.” There had been a significant increase in new registrations in a number of the key operators, he said, while in terms of the investor view, the fundamentals remained unchanged. “There’s such a big supply/demand gap. We feel very positive about the opportunities, but recognise that there’s some challenges along the way.”

“We’ve never had more enquiries for new homes,” said Chief Executive of Target Healthcare REIT, Kenneth MacKenzie. Many had come from providers who wanted to move from older, Victorian homes with no ensuites or from properties where the ensuites were simply a WC and a washbasin. “How does the resident have a self-isolated wash if you have to be taken to a common bathroom down the corridor?”

It was likely that a significant number of homes would leave the market post-COVID, he stated, and it was vital that occupancy levels began to build again. “More than three quarters of our homes have had admissions in recent weeks, so we’re encouraged by that. We will continue to acquire new homes, and we will continue to be cautious about the rent levels that are set.”

Offering the view from the specialist care segment, Chief Executive of Sequence Care Group, Tony Hegarty, stated that, “Some of the challenges are the same – care is still care.” His organisation had locked down 11 days before the government lockdown, which had been “enormously beneficial”, he pointed out. While there had been outbreaks in some homes no service users had died or been hospitalised, and there were no homes where more than one person had been infected.

“There’s a stored-up demand of people who need to move, so the future looks relatively bright in that sense,” he said. “What this whole thing has been is a huge stress test for businesses, and what we are able to claim is that our business was robust enough to withstand an extraordinary event”. Investor sentiment towards businesses that had responded well to the pandemic should be positive – “if it hasn’t fallen over under the strain of a global pandemic then it’s probably not going to fall over. If people need to invest their money, putting it into healthcare and social care is a very good place.”

Another plus was that the value of social care was finally being recognised, he added. “I’m hoping that a political settlement might come for social care, because that’s been kicked around for too long. This period has obviously been challenging but I am confident that good things will come out of it, in terms of a settlement and of social care being seen as a good place to work and to invest.”

As to whether COVID would change the design the care of care homes,  

“Everybody now is asking, ‘are you ensuite?’” said Simon Bird. “COVID has brought forward the changes that we need to see in a lot of different areas. In care it’s accelerated that drive towards the modern, purpose-built care home. It’s also about being able to lock down units into smaller sizes.”  

“You really need real estate that’s appropriate, and that means a mix of private and public space on every floor – whether that’s a library or a bistro,” added Kenneth MacKenzie. “Having these different spaces is really fundamental.

“The other thing we all need to be aware of is we’re not anywhere near being through this yet. I think we need to be really cautious – the record for a vaccine is four years, and 32 years later there is still no vaccine for HIV. So batten down the hatches and get ready for a tough winter, and if it’s better than that, great.”

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