A medical mystery: Public-sector involvement keeps revenue down despite growing demand
London, United Kingdom (PRWEB) August 29, 2013
The Residential Nursing Care industry provides accommodation and intensive nursing care for those in need. People aged 65 and over constitute the largest market for these services, since residential nursing care becomes increasingly necessary as old age takes its toll. This means that the ageing of Britain's population suggests demand for the industry's services will rise. Strong growth in the number of establishments over the past five years provides evidence that demand has already expanded strongly. This is a trend that is expected to continue over the five years through 2018-19.
Despite solid demand, industry revenue has not grown substantially, managing meagre compound annual growth of only 0.2% in the five years through 2013-14. The current year is expected to close with industry revenue of £5.7 billion – a decline of 2.0% on 2012-13. This is the result of government spending cuts. According to IBISWorld industry analyst Robert Scotton, “as the government has sought to tackle public debt levels, the public sector, the largest consumer of the industry's services, has placed sustained downward pressure on industry revenue”. Prices have been kept artificially low and operators have been compelled to absorb more than their fair share of costs. Profit has suffered and some major players have been forced out of the industry as a result. Scotton adds, “enterprise consolidation is expected in the next five years as government cutbacks bite deeper still”. There is no foreseeable respite, so revenue projections remain stubbornly flat over the five years through 2018-19.
Operating conditions have been hampered by bad press and legislative uncertainty. In 2012, the BBC's Panorama programme exposed care home abuse that stunned consumers. The scandal strengthened the government's resolve to reform the industry and introduced uncertainty over the extent of future intervention. Under new proposed policies, this already highly regulated industry would be exposed to more public interference. Some changes, like a care cost cap to be introduced in 2017, are sure to squeeze margins. Others, like new nursing labour laws, may ease costs and enhance service quality by making staff more affordable. The recent shake-up of the National Health Service (NHS), which handles public-sector spending on care services, is compounding the industry's woes, since it is currently unclear whether reform will help or hurt industry revenue.
The Residential Nursing Care industry exhibits a low level of market share concentration, since the top four organisations only account for 27.5% of industry revenue. The industry has fragmented over the past five years as new enterprises launched to meet rising demand. However, difficult operating conditions and high barriers to entry have kept enterprise growth fairly low relative to booming demand. Major companies include Four Seasons Health Care, BUPA Care Home and Barchester Healthcare.
For more information on the Residential Nursing Care industry, including latest industry trends, statistics, analysis and market share information, purchase the full report from IBISWorld, the nation’s largest publisher of industry research.
IBISWorld industry Report Key Topics
Operators in this industry provide combined residential and intensive nursing care. This combination is what differentiates the industry from others.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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