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Setting Up A Care Home

Setting Up a Care Home Guide for Starting up a Business.

As the legal issues change over time we strongly recommend you consult your solicitor before making any investment decisions regarding setting up a care home. Please note this article barely scratches the surface of the ever changing regulatory issues, laws and guidelines involved in setting up a care home.

Currently there are almost half a million elderly people residing in care homes in the UK and this is forecasted to rise dramatically in the future. However with UK Government public sector spending cuts now being implemented, and the retirement age being pushed back and back, it is clear that elderly people will have to contribute more from their own personal wealth for their retirement care. This is occurring at a time when our society is becoming increasingly expectant on buying higher levels of choice and care individuality. To intensify this pressure on scarce resources the UK population is living longer, (due to medical advances in technology and medicine combined with a healthier lifestyle). This will mean that our ageing population will increase steadily over the next few decades creating huge pressures on elderly housing needs.

For friends and family the financial burden will intensify as their demand to seek out the highest quality of local care within their budget or local geographic reach. For business people who want to supply a profitable high quality care home business, there are quite a few practical, commercial and legal issues to consider. Competition to build or run an existing care home is increasing as the number of providers increases. 80% of the UK’s wealth is held by the over 50’s age bracket, attracting many to the care home industry business opportunity.

For investors seeking to help elderly people, there are two main areas for investment; nursing homes and residential care homes. In the UK roughly 10% of residential care is provided by the public sector (local authorities) while the rest is run and owned by private companies.

Nursing homes are essentially private hospitals for elderly residents requiring high levels of care. These are usually staffed by highly qualified medically qualified managers and nurses. Some nursing homes specialise in looking after severely disabled residents. Of those receiving nursing care (as opposed to personal care in privately run homes), almost a quarter have their fees paid by the government. This is a highly regulated area to enter as a viable long term business.

Residential care homes are sometimes referred to as ‘old peoples homes’. They provide a variety of personal and nursing care. They are managed shared homes for elderly people to live who cannot do everything for themselves, staffed by qualified carers. Carers will also offer basic support, at meal times, bathing, basic medication and visiting the toilet. That said most care home residents enjoy their own independence and can usually manage most of their own personal needs. The qualifications required by carers in care homes are dictated by The National Care Standards Commission (which regulates both nursing homes and residential care homes).

As a care home provider hoping to attract new residents it’s vital you understand how far local authorities are prepared to fund people going into care homes. The law says that where the local authority is funding accommodation it must allow the person entering residential care to choose which care home they would prefer. Social services must first agree that the home is suitable for the person’s needs and that it would not cost more than they would normally pay for a home that would meet those needs. If the person chooses to go into a more expensive home, a relative or friend may be able to ‘top up’ the difference in cost.

It is also important you understand the growing market trend towards community based home care (which sees carers look after the elderly in their own homes not in care homes). The Government is also supporting this trend to encourage more older people to remain in their own home for as long as possible to reduce the burden on The State. This trend continues despite population increases from people living longer. So demand may be tempered in the future by this trend of increased take up of home based care. To counter this an increasing number of franchise based solution providers are entering the UK market to help encourage entrepreneurs to invest their time and effort into running a residential building care home.

As an investor you will need to address all the same practical and commercial challenges any landlord procuring and managing a commercial conversion will need to address. These may include ensuring all building regulations are complied with, suitable building insurance is arranged (in this case care home insurance), health and safety aspects of the physical design are complied with. These may include doorway access for disabled, health and air conditioning systems to maintain healthy and comfortable climate, and so on. If you are planning a new build you will also have the planning system to overcome. If as an investor you also have absolutely no medical qualifications or medical experience in health management, it is highly unlikely your local authority will accept any building planning application for registration.

In your application to the local authority you will need to show your staff are both motivated and highly qualified (such as employing experienced doctors, nurses, social workers are care workers). You will also need to prove all regulatory checks on staff have been undertaken. For instance you will need to employ care assistants which will mean as an employer you will be legally obliged to undertake a number of regulatory checks before employing them. It is an offence for employers to allow a person to engage in a ‘regulated activity’ if they know or have reason to believe that the individual is barred. The care home should apply to the CRB for enhanced disclosure with an Independent Safety Authority (ISA) check that will reveal whether the applicant has a criminal record and any relevant non-conviction information from local police records.

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