The Care Home market has always had it’s winners and losers. Shifts in the economic environment have contributed to some major players experiencing challenging circumstances over the last decade. However, it remains a vibrant and profitable market, especially for those businesses whose product attracts the private client. The winners over the next 10 years will remain the private operators who are able to differentiate their offering from their local competitors.

This report seeks to describe the market and offer a solution for staying ahead.

According to Businesswire, there are 5,500 care home providers in the UK. These operate in a £16.6Billion marketplace (down from £17.3Billion in March 2020). The market is relatively diffuse and fragmented where “economies of scale are limited and there are significant diseconomies of scale” (House of Commons Briefing Paper, 2018).

Over the last 10 years, there has been a decrease of 3,000 homes; and since 2000, there has been a decrease of 55,000 beds. Much of this can be attributed to the in-home care offering which has grown at a similar rate to the shrinkage in residential and nursing care.

Fig 1 – Decrease in Care Homes 2009 – 2020

C4B Care Home Figure 1, a graph displaying care home data
Government data from April 2020 lists 15,517 homes in England with 457,631 beds in total (average of 29.5 beds per home). Nearly 20% of all homes in England are located in the South East and more than 8 out of 10 of the beds are provided by the private sector. Locality is important as most residents book into homes less than 10 miles from where they, or their family live.

Fig 2 – Care Homes / Residential Homes By Region (England, 2020)

C4B Care Home Figure 2, a table displaying care home data
According to LangBuissons 2019 research, average residential care home fees in England were £655 per week, with nursing care at £937. Self-funders or private clients pay a premium of up to 50% over council commissioned care and many providers find that council commissioned rates are less than their average costs incurred in providing that care.

Fig 3 – Price differential by Care Home (CMA, 2017)

C4B Care Home Figure 3, a bar chart displaying care home data

The large differential in rates has led to some two-tier local markets servicing either the council commissioned care or the self-funded residents. The for-profit providers favour the private rates and focus on attracting those customers within their homes’ locality. Consequently, some local authorities are re-entering the residential care market in an effort to fulfil the demand at the rates they have set.

With the market running at 79% capacity (compared to pre-pandemic 87.3%), competition is rife.

Demand is set to increase with the over 85 age group growing by 27.5% per year to 2030. JLL forecasts that this will require an additional 110,000 beds over the next decade.

In summary, the market is stable, demand is growing and capacity exists. Self-funded residents are more profitable and the care homes that attract them can generate good profit margins. Until the challenge of the two-tier market can be resolved, care homes need to differentiate themselves from their local competition to win the more profitable private clients.

One way to differentiate is to use technology to capture prospects early in their buying process. As pretty much all research is carried out online, this is the best place for an early engagement. Though adoption of the internet is mainstream, this last year has seen a forced shift for even the technology laggards to do their care home research on-line. Investment in company websites and online marketing has increased and is seen as more critical than ever for the success of even the most traditional businesses. (See previous blog here)

At C4B, we believe that it’s important for your sales team to engage with target prospects early in their buying journey. They want help to make the right decision and if your sales team can help them before they engage with your competition, it’s good for them and it’s great for you.

C4B provides a unique managed chat service, focussed on increasing care home occupancy by connecting your sales team directly to prospects whilst they are in buying mode.

If you want to find out more about this innovation, contact James Lloyd on 07710 311577, or email