Jonny Landau is dual qualified as both a solicitor and barrister, specialising in regulation and crisis management. He is currently a Partner at the law firm RadcliffesLeBrasseur, a firm acting for all independent mental health hospital groups, virtually all the large care home groups and many smaller groups and specialist operators. Here he talks to Finance Monthly about the current happenings in the healthcare sector
What trends are you noticing in the sector at the moment?
The growing emergence of REITs in the UK is an important development. I expect foreign investment, from private equity as well as REITs, to continue as the demographic evidence points firmly towards an ageing population and consequently a growing market.
The proposed reforms of social care funding have been postponed until at least 2020. This means the proportion of people paying for their own care will continue to rise as people have more capital saved in their homes and therefore will not qualify for public funding. This favours the high-end of the market. As well as this, demands on local authority funding will pose a challenge for operators relying on publically funding residents.
I expect that people paying higher fees than local authority rates will increasingly demand a differentiated service. I anticipate a polarisation in the market between high end Hilton type services at one end, and standard Travelodge type services on the other. There has been a consistent trend of people entering care homes when they are older and have more complex needs. I expect that to continue as innovative ways are found to enable people to stay at home, especially as a greater proportion of older people own their own homes.
What risks are associated with investing in care?
I recently met with a Director of one of the big lenders to the healthcare sector who said regulation was the issue that kept his team up at night. The care sector regulator has strong powers that can impact very quickly and significantly on the bottom line. The perception of many in the sector is that the regulator does not always use its powers proportionately or consistently.
How can those risks be managed?
Well-informed due diligence before investment is vital. Following that, every element of operations should be informed by regulation. An effective audit system should be in place to continually check regulatory compliance. A dedicated quality director leading a team of regulatory auditors separated operationally from the care home management is beneficial to those groups large enough to be able to bear the cost.
What if the risk nevertheless materialises?
Obtaining sensible and well-informed advice promptly is key. If standards have fallen, the provider will need to take prompt remedial action and communicate that effectively in order to rebuild the regulator’s confidence. However, if the regulator’s judgments are wrong or its actions disproportionate, it will usually be appropriate to make an assertive and well-argued case to that effect.
How do you handle the media aspect of your cases?
It’s something we are very aware of. We very often work in partnership with PR agencies to safeguard our clients’ reputation. Occasionally, legal input is required to prevent publication of defamatory material, but usually it’s a matter of working with the client and PR agency to establish a strategy (for all stakeholders, not just the press) that communicates a message that changes perspectives and hopefully keeps the story out of the papers, as well as out of court.
How has the increased media focus on healthcare affected the sector?
Changes in the rules on civil litigation funding mean that despite the increasing scrutiny of care homes, there are now fewer civil claims against care homes. However the intense scrutiny in the sector is creating challenges for operators and their advisors. CCTV or covert recording by families and new criminal offences are two recent examples.
As a full service law firm, RadcliffesLeBrasseur is well-placed to meet the broadening challenges of the healthcare sector, and we do so in practical ways. For example, we provide our clients with a 24 hour helpline so that if urgent matters arise, they can get the advice they need immediately. We are particularly well-placed to service the needs of REITS through our integrated healthcare and property department.