Retirement and senior living: care and regulatory

Over the last thirty years, NHS acute-care hospital bed numbers have fallen by almost half. This is driven by the closure of beds for the long-term care of older people, but the numbers of those being or needing to be treated has increased. The UK's ageing population is only set to grow in the coming years, and so it is important that the supply of care services can keep up with demand.

The provision of care is highly regulated in the UK by the Care Quality Commission (CQC) – the independent body in charge of regulating and inspecting health and social care providers. 

However, an independent report carried out by the Department of Health and Social Care earlier this year found significant failings in the internal workings of the CQC. There has been poor operational performance in recent years instigated by the COVID-19 pandemic and subsequently by the introduction of a single assessment framework (replacing the previous system of inspections and assessments). The report found that there is a huge backlog in applications, with over half of pending applications for things like the first registration of new CQC regulated services being more than 10 weeks old. Additionally, 7,000 inspections and assessments were carried out in 2023 to 2024 in comparison to 16,000 inspections conducted in 2019 to 2020. These delays are having an impact on overall care capacity – it delays the setup of new care homes and the ability of existing care homes to improve their CQC rating and so improve their local reputation and their relationships with hospitals and local authorities to secure residents. 

An Integrated Retirement Community (IRC) has the potential to plug the gap here.

Whilst an IRC in itself is not regulated, the care services provided at the IRC may be regulated. Residents can choose to buy into these care services and receive the care in their own home, and the regulatory category for an IRC is (unsurprisingly given people buy or rent a home of their own) the same one as for home care provided into any other residential house or apartment. This is quite different to a care home, where both the care and the accommodation are regulated by the CQC.

An IRC should be considered a choice for those considering their options for retirement and later life, as opposed to the necessity of a care home for some. Whilst a care home is designed for residents who need help on a daily basis and who will benefit from the availability of 24-hour care, an IRC is designed for older people who want to live with more independence but may need some help or support. One way of looking at this is that a care home is increasingly focused on very high acuity levels of need, whereas an IRC can offer residents with no or very low personal care needs to live independently but flex that up (or indeed down) to ensure residents can continue to live in the IRC setting and enjoy the wellbeing benefits it offers. In many cases this will mean that someone who may otherwise have needed a care home setting at some point will not. There are demonstrable savings to individuals as a result but also evidence of significant potential savings to public health and care services as people living in IRCs present less often to GP surgeries and NHS acute services.

Although many IRC investors and operators are cautious about CQC regulation due to the regulatory (and reputational) risks associated with providing personal care, there are clearly benefits to this being a core part of the underlying offer for residents, and for wider society. There are also a range of approaches that can be taken to manage any perceived risks. Whilst within the IRC sector there are many operators who deal with care services in house (usually by setting up a ringfenced group vehicle to deliver the services), they can also buy in the necessary care services by contracting with partners who are regulated to provide them, thus ensuring the standard and quality of care offered to their residents through focused expert provision. This can also be an appealing option for investors wishing to manage CQC regulatory risk away from the operator itself. The operator's role is to facilitate access to a regulated provider of care services and the actual land asset remains outside of CQC regulation.

Presentationally, to a customer, the ability to live in an IRC independently and buy into different levels of care packages as one's care needs develop is a huge appeal of the model. A natural add on to this is the ability to eventually transition to being provided with full time care in a care home at the same location. This "continuum of care" is common in other jurisdictions. It provides the customer with some piece of mind that they have secured their future care needs and have invested somewhere they can permanently reside.

Operators are approaching this consumer want in different ways. Some operators such as BEN and Richmond Care Villages are choosing themselves to offer their residents the full spectrum of their care needs by having a care home attached to the IRC. Others such as Belong Villages Limited offer to provide 24-hour care within the IRC in small households of around 12 people. For operators and investors who are concerned by the CQC regulatory risks, another option is to source sites where there is already a care home adjacent to the IRC.

Whilst operators are exploring the models that work for them, it is clear that an IRC is a different asset to a regulated care home but can ease the pressure on health and care services in the UK. With people opting for IRCs as an alternative and choosing to remain in their home, participating in community life eases the burden of loneliness, allows people to live independently for longer and relieves the pressure on the NHS to provide long term care for an ageing community.