Fresh Off Acquisition, UK Nursing Home Chair Predicts Trouble for Industry
The United Kingdom has a new largest care home operator, and a former U.S. senior housing heavyweight will soon be at its helm. But the company’s chairman still sees dark clouds on the horizon for the industry as a whole.
HC-One on Wednesday announced its intention to acquire 122 care homes from Bupa, a London-based health care company that comprises care home operator Bupa Care Services, Bupa Health Clinics, Bupa UK Insurance, Oasis Dental Care and Bupa Cromwell Hospital in London. HC-One, based in Darlington, currently operates 231 care homes, at which seniors can receive various types of publicly funded services, including nursing care, dementia care, residential care and specialist care.
Still, despite the blockbuster move, HC-One chairman Chai Patel expressed concerns over the state of the elder-care industry in the United Kingdom, telling The Times of London that funding pressures from the National Health Service could lead to serious problems.
“There is no question that the sector itself is on the edge,” Patel said, according to the Times. “The impact of chronic under-funding of social care will result in catastrophic failure in the NHS.”
Patel, who up until April also served as HC-One’s CEO, implied that only major chains will survive into the future due to their better economies of scale, and the Times noted that 144 homes — operated by smaller providers — closed in the UK last year, taking 2,000 beds off the market.
But as in the United States, demographic pressures require a solution: The nation will need 70,000 beds within 10 years, Patel said, a scenario that “is not happening.”
With the acquisition, HC-One will surpass Four Seasons and Barchester Healthcare to become the largest care home company in the UK, the Evening Standard reported. The purchase price was approximately £300 million, according to a press release from Bupa. The equity was provided by StepStone Real Estate and Safanad, and the debt funding was arranged by Deutsche Bank and Apollo Global Management LLP.
Starting October 1, HC-One will be led by Justin Hutchens, who most recently served as the president of Irvine, Calif.-based health care real estate investment trust (REIT) HCP Inc. (NYSE: HCP). Hutchens announced his intention to join HC-One as its new CEO in April, but stayed on at HCP through June 1.
At the time of Hutchens’ hire, Patel said Hutchens would “lead HC-One through the next crucial phase in its journey from turnaround to transformation.”
When pressed for further comment on the Bupa transaction, HC-One pointed Skilled Nursing News to two press releases on the deal.
Written by Mary Kate Nelson