Barchester plans to open 20 new private nursing homes

Barchester Ireland's expansion plans include developing specialist care services for people with chronic illnesses, writes David Labanyi.

PRIVATE NURSING home providers in the Republic are rapidly increasing their capacity but few, if any, have growth plans as ambitious as Barchester Ireland.

Just weeks after opening its first 100-bed care centre in Trim, Co Meath, the company revealed plans to become the largest residential care provider on the island of Ireland by building up to 20 more within five years.

Barchester Ireland managing director Gary Watson concedes that the main shareholders are better known in the Republic than the company itself. Bloodstock magnate John Magnier, his associate JP McManus and financier Dermot Desmond have been significant shareholders in the Barchester Group for at least five years. Barchester is chaired by Denis Brosnan, former Kerry Group chief executive.

In the midst of a credit crunch, while banks are turning their noses up at previously valued customers, having shareholders with the financial muscle of Magnier, McManus and Desmond is not a bad starting point for an ambitious expansion plan.

Although the provision of long-term residential care is central to Barchester's plans in Ireland, it also intends to develop specialist care services for people with chronic illnesses - for example, those severely injured in a road crash.

Despite the opening of 970 new nursing home beds last year, bringing the total to about 19,000, Watson believes the Republic needs another 10,000 beds. In his view, the provision of care services in the Republic is about 15 years behind Britain in terms of quality and regulation, although the proposed HIQA standards aimed at safeguarding the rights of older people will play a "significant role" in improving this.

Barchester is now the fourth-largest nursing home operator in Britain, where it has been operating since the early 1990s. Watson says Ireland is going through a similar transformation as the State withdraws from providing direct care and changes the funding system.

Concern over the quality of existing nursing homes in Ireland is one of the main reasons Watson believes it is unlikely Barchester will follow its British expansion model and take over an existing operator.

"Leas Cross is the tip of the iceberg. I have been in Leas Cross and it is a fine physical facility. You could argue that the regulators almost facilitated that because of the inconsistency of standards.

"We are looking at existing operations and for the right ones we will acquire. [But] it is a more frustrating process than the UK because of the standards, or lack of. In some cases it is more cost-efficient to acquire sites," he says.

The difficulties finding sites for long-stay residential care homes, particularly in the eastern region, is a problem referred to in recent weeks by Minister for Health Mary Harney.

The high cost of development land in the east means building nursing homes is extraordinarily expensive. This factor could inevitably lead to a severe shortage of such facilities.

As a developer and chartered surveyor with more than 10 years' experience, Watson, who was born in the Republic, is familiar with the challenge of sourcing sites. "Land prices have come back. Vendors' expectations were in some cases unrealistic [and] they have further to come back," he says.

"The difficulty in Ireland can be planning and appropriate site locations", although he says that, because it plans to integrate each of its faculties with the local community, as is the case in Trim, the group expects few planning problems.

Barchester is in negotiations over sites near Limerick city, Dún Laoghaire, Rathdown and west Wicklow and expects all three to open by the end of next year.

Watson feels the State cannot continue in the role of service "provider, funder [and] holder of the estate" because "they do not have the resources to do all three".

The issue of resources is equally pressing for residents and their families who are worried about how they will meet the rising expense of residential care.

The average weekly cost of long-stay private care is now €778 - which can rise to over €1,330 in Dublin. These costs are expected to rise as nursing homes upgrade to meet new HIQA requirements.

According to a report from Nursing Homes Ireland, an umbrella body for private nursing home operators, HSE subventions accounted for almost half the income of private operators, an increase from one-third in 2006.

The Government is also grappling with the issue and Harney is working on the so-called "fair deal" Bill which will fund nursing home care from people's estates.

This will see the Government take 80 per cent of a residents' disposable income and 5 per cent of their assets - capped at the cost of care and for three years. She has promised legislation before the end of the summer, although drafting the legislation has proved difficult.

Watson says the reasoning behind "fair deal" is a tacit acceptance that people will have to pay for services as the State moves away from subvention.

A consequence of this change will be that residents will increasingly decide where they wish to stay, according to Watson. He says this is why Barchester has invested heavily in the quality of its buildings and settings, and plans to exceed standard staffing levels. The company invested €50 million in developing its centre at Trim.

Because of this level of investment the company will charge a "premium on the local market" with basic nursing home care in Trim starting at €1,100 a week. For its nursing homes built near to Dublin, Barchester says the weekly cost will be €1,300-€1,500.

"Let's be clear, this is a stressed purchase at the end of the day. People don't choose to go into a nursing home. But if you are paying for a facility out of your estate, it will increasingly become a consumer-type offering: where do you want to go?"

Looking forward five years, Watson believes the residential care sector in Ireland will be quite different, but is confident Barchester will be at the forefront.

Facts and figures of nursing home care

•The average cost of private nursing home care in the State last year was €778, according to a Nursing Homes Ireland (NHI) survey. This ranged from €485 in the northwest to €1,330 in the greater Dublin region.

•The survey found there are about 19,000 private nursing home beds in the Republic, accounting for more than two-thirds the total number of long-term residential care beds.

•Last year, 48 per cent of private nursing home income came from the HSE in the form of subvention, up from one-third in 2006. Maximum State subvention stands at €300 a week for those eligible.

•To meet the rising cost of nursing home care, the State is proposing the "fair deal" Bill that would see people pay 80 per cent of their income towards their stay and, in the case of a shortfall, a maximum of 15 per cent of the value of their homes.

•The average length of stay in a nursing home is 3.7 years, according to the NHI.

•Last year, 20 new private nursing homes were granted planning permission.

•Barchester is the fourth-largest care home provider in Britain with about 11,000 beds in 160 different care facilities.

•Its revenues in Britain to the end of December 2006 were £328 million.