Confidential review of a portfolio of homes

Our client wished to carry out the covert review of a medium sized portfolio of services with a view to possible acquisition however formal access was not possible.

HCMS mystery shopped all services using highly  qualified managers with years of experience of care home operation. Being able to assess the quality of a service, identify CAPEX requirements and Health and Safety risks and compare staff performance with other services, we were able to determine how badly or how well services were performing and, with reference to available financial information produce forecasts of future performance.

Being able to gain comfort as the worst, likely and best case future trading outcomes the client was able to assess the performance of current management and to estimate the potential upside in the portfolio.

Review of a large portfolio of care homes for an overseas investor

 

HCMS were invited to provider an operator’s perspective on information generated by other outside agencies on trading and values. Over an intensive 4 week period information on over a hundred services was reviewed and discussed and the output taken to a roll-up meeting at the client’s overseas offices.

Whilst the generation of information from publicly available information and mystery shopping exercises provided invaluable data, as operators HCMS understand the reality of what is achievable and, due to the large number of services that the HCMS have involvement in, very relevant and very current knowledge can be applied, providing genuine value to any due diligence process.

Interim Management of several homes for an Administrator

Healthcare Solutions (HCMS) was invited by a major national insolvency firm to tender for the Management in Administration of 11 care homes with a wide geographical spread.

The group had been struggling financially for some time and as a consequence the homes were suffering from irregular supplies, under-investment in the fabric of the buildings, poor relationships with the Care Quality Commission (“CQC”) and Local Authority contracting departments (“LA’s”) and, in certain cases, admissions embargoes were in force.

On appointment, HCMS mobilised it’s team of Regional managers and their field based teams to attend each home and the group’s head office.

Day 1

HCMS staff contacted the CQC and LA’s to advise of the Administration and open channels of communication. Basic information relating to each home was collated regarding staff, clients, and supplies. Suppliers were contacted and arrangements made for new accounts to be opened for each home.
Home managers were briefed and staff meetings were arranged. Staff were advised of the situation thus helping to alleviate concerns. An initial review of each home was carried out to ensure that there were no immediate Health and Safety, Safeguarding or physical risks to clients.

Staffing levels were reviewed and rotas checked to ensure that adequate staffing levels were maintained.

HCMS staff met with the Administrator’s representatives at the group’s head office. It was established that not all information was readily available and there were doubts as to the accuracy of that found.

Week 1

A full health & Safety audit was carried out identifying any potential risks. As part of this exercise a number of surveys were commissioned – including fire, electrical testing, Legionella testing, PAT (portable electrical appliances) and LOLER (lifts and hoists).

Staff files were reviewed to ensure the legality of employment of staff and, in particular, overseas workers. As a result a number of staff were immediately suspended pending establishment of their legal right to work.

Client files were reviewed to ensure that care plans are properly prepared, accurate, current and relevant to the individuals. Where necessary risk assessments were carried out.

Optimum staffing levels were determined and changes implemented within the homes.

Financial information was reviewed and financial forecasts prepared in conjunction with the revised staffing levels.

Without accurate and up to date financial information it was difficult to determine with confidence the financial performance of the homes on Appointment. What could be determined was that the homes were in a poor physical condition, there were serious issues with the regulator and with the contractors, management at the homes was patchy and largely unsupported and unsupervised, record keeping was poor and basic supplies hard to obtain.

HCMS continued to operate the homes, improving both the standards of care and financial performance. Two homes which had been poorly rated and on embargo, were successfully regraded and the admissions blocks lifted.

From the start and all the way through the assignment close professional links were developed with the CQC and LA contracting teams. Quality was improved across all sites and embargoes lifted.

A series of audits of individual care homes to identify any “red-flag” items and to develop a risk management profile for newly appointed Administrator

 

A partner at a major national insolvency practice was appointed Administrator to various small care homes in the South of England. It was felt that, although on the face of it there were no major causes for concern, both he and the bank would be reassured by an audit carried out by HCMS.

With just 48 hours notice a senior member of the HCMS team attended site at each location and carried out an audit of all major areas of each business including:

  • Environment (including Health & Safety risk profile and plan)
  • Staffing (including a current and proposed staffing model)
  • Medication: storage, administration recording and audit
  • Quality system
  • Client care
  • Staff training
  • Contractual concerns of the Local Authority
  • Risk Management
  • Accidents and Complaints
  • Catering

HCMS were able to provide a verbal update regarding the key findings the following day and this was supported by an email summary within two working days.

A full written report was submitted within the week addressing each area. The report highlighted a number of areas of risk and included suggestions for minimizing exposure.

Operational support to home owners with serious Regulatory issues

HCMS were contacted by a care home owner unsure of how to resolve problems with the Regulator (CQC) and commissioners following a series of mishandled Safeguarding cases.

The owners saw the home as an investment and had no practical experience of care home operation. They had relied heavily upon their long serving Registered Manager to provide the day to day management of the service. The RM left the home to seek a new challenge, and the owners appointed a new Manager.

A few short months later, after several ‘botched’ Safeguarding cases, an inspection by the CQC and several visits by the Local Authority Contracts Monitoring Team, the home was on embargo and at risk of residents being removed.

The owner contacted HCMS uncertain of how to proceed and agreed that HCMS would provide a ‘head-office’ and Regional Management function to support the new Home Manager. HCMS met with the owners on site and it was agreed that we would immediately take responsibility for managing the recovery process. Sadly, the new Home Manager was unable to rise to the challenges of getting the home back on track and left. HCMS recruited a new Manager for the owners and worked with the CQC and Local Authority to achieve full compliance and have the embargo lifted.

After approximately 4 months the home was once again operating to a high standard with high levels of occupancy and HCMS have been retained since to provide operational support.

Risk Review of 157 homes on behalf of a major national operator

In late 2013, HCMS was retained to carry out a high-level risk review of 157 care homes for a major national operator who wanted an independent and objective review across their portfolio. This represented 50% of the operator’s care-homes across all three national regulatory areas.

HCMS’ review programme resulted in the fieldwork for all 157 homes being completed in less than three months with individual service reports uploaded onto its online Portal system within five working days of the site visit.

All homes were assessed as Red-Amber-Green in terms of the risks that they presented and the detailed report produced from the IMPaCT output enabled identification of key themes and risks across this portfolio to enable management to implement the necessary improvements.

Operational review and strategic reporting for a UK Charity

January 2014 saw HCMS undertake a review of seven specialist care services operated by a major UK Charity as part of its group operations.

The Board, who were considering the group’s long-term strategic direction and future development opportunities, needed an independent and objective report on how effectively the Charity was leading and operating its care services in terms of quality and cost management, along with recommendations for improvements.

HCMS completed the detailed operational review of the seven services within five working days and provided the operational management team with a ‘Red-Amber-Green’ assessment of the level of risk presented along with a detailed schedule of corrective action required for each service. In addition, the financial review identified significant cost savings for the services through improvements in staffing and other overhead cost reduction.

The comprehensive review of the market for the Charity’s care services, including a review of the operational leadership and management team, provided the Board with the information needed to commence their strategic review process.

Operational and Financial review of a 12 care home group in the South West

On the instruction of a major bank Healthcare Solutions (HCMS) were instructed to carry out an appraisal of a 12 home group. The brief was to determine whether management had the capability to turn around a business that had been unable to meet it’s financial obligations, and that was under creditor pressure from suppliers and HMR&C. Two homes in the group had recently been closed by the care homes regulator.

The bank had been unable to obtain meaningful financial information from the borrower to support requests for overdraft extensions and interest and capital moratoriums. Despite the financial problems and the complex structure of the group, the principal concern was the potential for the homes to be closed following problems with the Care Quality Commission (CQC) as this would significantly impact upon the value of the bank’s security.

HCMS were instructed to carry out a review of the management to ensure that they had the skills and experience necessary to work their way through the problems that the group faced. Following a preliminary meeting it became apparent that the group also had issues within the finance department and the scope of the review was extended to encompass a review of the financial systems and reporting.

The reviews were carried out in a relatively hostile environment with resistance from the existing management team who, on the whole, felt that all their problems were behind them. It became apparent that there were serious deficiencies in the quality of management information and in the dissemination of this information to home managers.

The report, which included a review of competition, physical condition, management and financial systems and reporting, highlighted a number of areas where it was felt that the management team could improve, most notably in developing strategies to market the homes, manage agency staff costs and produce relevant, timely, and accurate management information. This was presented to the existing management team who argued that they had the capacity to work through the problems without further external intervention.

Following a post-report briefing by HCMS, the operator recruited a new financial controller and, determined to prove their capabilities, focused intently on implementing the HCMS report recommendations and improving their financial performance.

Review of three family owned homes on behalf of a bank

A leading lender to the sector contacted HCMS with concern over the viability of a family operated, three home care group. The bank in question believed that the homes were being operated to a reasonably high standard but was concerned that a high cost base, together with the imminent end to a capital repayment moratorium would lead to financial difficulties for the group.

The bank wanted a review of the business, but they were mindful of concerns raised by the owners that a high profile review would lead to worry among the staff and damage the reputation of the business locally.

HCMS discussed the concerns with both the bank and client and it was decided that a ‘light touch’ review of operations should be undertaken together with a more thorough review of the financial performance, most of which could be carried out off-site and in advance of the field work.

It was agreed that a thorough examination of the operations would only be required if the initial visits indicated that there might be problems.

The owners worked closely to provide detailed information which was carefully analysed before the visit. A single HCMS representative was involved throughout the process, in this case a Director, and the physical time on site at the various homes was limited to a single day.

The conclusion drawn was that the operations at the home, although not perfect, were good and that there was evidence that the owners were driving further improvement. Despite much closer attention to costs it was evident that the business was unlikely to be able to meet the capital repayments, however in the light of the report, the bank concluded that a further interest-only period was appropriate as it avoided the crystallization of debt and gave the business the breathing space to make further improvements.

Operational audit and financial review of a care-home group consisting of 20 homes

 

In early 2011 HCMS was asked to carry out both an operational audit and a financial review of a care-home group consisting of c. 20 homes. All of the homes were located in England.

The group had been with the lender’s restructuring team for over 12 months, and whilst independent financial business reviews had been undertaken during his time, the lender wanted an independent sector specialist’s viewpoint. The objective was to enable the creation of a turnaround strategy for the group.

Working closely with the business owners, HCMS completed the detailed operational reviews at the homes within 9 working days. The final report summarised the key issues, home by home, and clearly identified areas where improvements were required. The completed review found that that whilst 9 homes were performing well and 3 homes had some occupancy issues, there were several homes within the group with serious problems. As a result, management effort could be focused on these homes and, as part of the review, HCMS prepared action plans for immediate implementation.

In addition to the identification of operational issues, significant savings/cost reductions were identified throughout the homes and the Head Office function.