Country Court Care believes that the future of care homes is a tiered market that operates like the hotel sector; with premium prices being charged for top end services, styling and staffing. Its newest home, Rose Lodge in Market Deeping, puts this theory to the test with £950 per night rates for a home that would not look out of place on the pages of a luxury travel magazine. Care Home Professional met the visionary behind this revolution, Country Court Care’s managing director Alykhan Kachra, to hear more about his ambitious plans to transform the care industry.
Care Home Professional: Country Court Care is widely promoted as a family business with family values at its core. Tell me how that all began.
Alykhan Kachra: My family moved here from Tanzania in 1966 and my parents started a grocery shop. It’s a funny story, but one day in the late-70s my father noticed an article in a newspaper in which he was wrapping up a chicken that was offering a nursing home in Coventry for sale. His wife, my mother, was a nurse, so he made the extraordinary leap of thinking: my wife is a nurse, so why not buy a nursing home? It sounds ridiculous, but that is exactly how he describes it.
That was the very beginning, and to cut a long story short, they built a bit of a reputation at that time for buying up struggling unfashionable care homes and turning them around before selling them on.
Over time they acquired homes, retained them, and started running them rather than selling them – building up an estate of seven or eight properties.
That is how the business looked up until around 2005 when I started in the business. A big shock to me was just how dated the entire industry looked when I joined it. So, we have set about changing the entire philosophy by investing not just in the environment of the homes, but also in terms of our staff, our culture, our senior management. We wanted to retain the family values, but give the company more of a corporate outlook.
We looked at the homes that were bought in the early 80s and started really investing in improving them. For example Beach Lodge, which was the care home where my family actually lived, has just completed a major renovation costing £750,000 to bring it up to our standard.
Our vision has always been very clear. We want to change the perception of the market from what people think of as old, dreary, rundown properties. We see a real opportunity providing homes for people that want to have a better quality of life into their old age.
CHP: Who typically makes the decision on which home to choose? Is it more often the family that makes the decision, or the resident? If the decision-maker is one generation younger than the actual resident, that must give you a conundrum in terms of how you design the environment.
Alykhan Kachra: That is an interesting question, because we are always trying to pitch to two generations, which is why our environment here at Rose Lodge is a blend between the modern and the traditional, although favouring more modern, which will appeal to the relatives.
We have worked with a number of interior designers to find the right balance, and we think we have achieved this in a way that really makes us a leader in the industry. The partner we now have for our interior design, Samantha Lord, is one of the best in the industry at finding that balance really well.
CHP: Would you say that what you have achieved here at Rose Lodge is setting a new benchmark for what you aim to deliver across the Country Court Care estate?
Alykhan Kachra: Absolutely. Every renovation we do, and every new build, we aim to get better because we are always learning new things. If you look around the homes that we have renovated, for example one that we did in Sheffield, what we did at Beech Lodge in Holbeach, and what we have done here. You can see that we keep getting better and better.
CHP: The baby boomer generation is just about reaching the age now when many of them will require care homes, and this is a generation that has amassed enormous wealth in their lifetimes, and their expectations are so much higher than their parents who experienced war and food rationing.
Alykhan Kachra: You are right. That generation thinks entirely differently to their parents. For example, if my parents were ever to need a care home, they would not expect meals to be served at fixed times. They would expect to be able to order whatever food they want from a menu, whenever they want it. They will expect things to do all day. They will expect people to spend time talking to them and understanding them. They will want to select what they want to watch on television at any time. Previously, care homes have been very task-oriented where everything is done at a certain time. Here we are far more flexible. Lunch, for example, is something like 12-3pm and it is like restaurant service with a waiter serving residents.
CHP: How do you calculate return on investment for a £3 million pound project like Rose Lodge?
Alykhan Kachra: We finance a home like this over a 25 year profile, but we don’t really look at it like a corporation. We are a family business so we don’t think about shareholder profits, dividends and all that. As a family, we invest in a property, but the return is not set in stone.
We take a simple view: we own all of our properties. We borrow to invest, but as long as we meet all the reasonable targets we set for ourselves, our banks are happy to keep backing us.
CHP: So, you would describe Country Court Care as conservative in terms of its gearing?
Alykhan Kachra: Absolutely. We don’t have any of those racy financing arrangements. We are very sensible about our gearing ratios. This is really important because ultimately we are looking after nearly 1000 old and vulnerable people. The last thing we can afford to do is be neglectful in terms of our financial arrangements.
CHP: Looking at that policy more specifically for a property like Rose Lodge, your investment in a luxury home like this must be at the top end in terms of cost per square metre, or cost per resident. That must mean that between you and your bank, you are agreeing some assumptions about the price you can achieve per resident, which naturally affects your return on investment.
Alykhan Kachra: That is absolutely right. We believe that at Rose Lodge, there is a market for those people that want the best; those people that want above normal staffing levels; those people that want three course lunch and dinner service; those people that want this sort of environment; that want bedrooms that are bigger than average, that have en-suite showers in each room. All of that comes at a price.
There is a lot of talk at the moment about local authority spending. Now, unfortunately, the local authority spending per person coming into a care home in Lincolnshire is around £420 per week.
Compare the care home market to the hotel market. I will give you an example: I went to a wedding in Norfolk recently and paid £60 for a night in a hotel and the wall was cracked, there was mould, the bed was tiny, the room was horrible, the breakfast was awful. If I stayed there for a week, it would have been £420, which is effectively what the council would pay care homes per resident.
Yet we, on top of what a hotel offers, provide all meals for residents, we provide personal care, we provide 24/7 services and utilities and we need to provide a much better standard.
Our fee here is £950 per week, and the reason for that is simply the level of service we have to provide. Like I said earlier, staffing levels are above the average, the environment is above average. Everything is at the high end and that is why the price is at the premium end.
What I am finding more and more is that the generation entering the care home world now, and we are getting close to the baby boomer generation needing care, is that they have more money and do not qualify for council funding. What we see is that, if you are funding your own care privately, you don’t mind spending a little more as long as you feel you are getting value for money.
You would be surprised at the level of demand we have here ahead of opening. We must have had 35 enquiries here in the past couple of weeks. That shows the level of interest, despite the fee, in people who want better.
Alykhan Kachra: The greatest challenge is operating in parts of the UK where private funding isn’t accessible because it means that it puts pressure on us to compromise. I will not compromise on standards, so the quality you see in this home, I would expect to see across the estate.
To give you an example, we operate homes in Sheffield where the population is not as affluent as other parts of the country. I feel that the whole industry is creating a sort of North/South divide where the North is going to receive poorer quality care because private providers like us have to pull out because they are not receiving the same level of income to support facilities like this.
We have been successful in the North at acquiring homes that have gone into administration, and turned them around, but the only reason we have been able to do that is because we have acquired them at a price that allows us to invest properly in the business and still generate a return.
Somebody has to come up with an answer to the question: why are majority of homes that go into administration in the North?
The other major challenge for care home operators like us is that there is a massive shortage of nurses. There are simply not enough trained nurses to be able to service the NHS hospitals and the care home market. I believe there are something like 65,000 vacancies for nurses in the UK right now.
CHP: You said you were bringing in modern management techniques and structure. How does that work in terms of procurement? Do you have a team that handles different aspects such as business acquisitions, new build, project management, renovations and upgrades, new furniture, fixtures and equipment?
Alykhan Kachra: We have made a number of changes over the past few years and rely less on thinking that we have all the skills within the family to be the best we can be. We have brought in a new financial director about 18 months ago, who has reshaped the financial department. We have also just hired a new head of group functions, which takes care of central services such as HR, recruitment and IT. Part of his remit will be looking at procurement, so this person will oversee that on each project as they arise.
Historically, a lot of our procurement has been based on working with suppliers with whom we have had relationships for a number of years. But, as we grow, we need to become more professional in that process.
I know larger groups will have central teams for procurement. We are not at that level yet, but equally we need to ensure that we have a level of detail on it so that we can ensure that we are getting value for money with every purchase.
CHP: You have 16 properties in your estate today. What are your plans for growth?
Alykhan Kachra: We have a number of acquisitions that are at the legal stage at the moment. That means I can’t give you too much detail, such as where they are, but I can tell you that by the end of the year, we will have acquired a further nine homes. We will have at least exchanged contracts, if not completed by the end of the year. It is all planned for late October to middle of November completions.
We are also on the verge of agreeing funding on four further new build properties, which again are spread across the country. So, by the middle of next year, we will have grown to approximately 1500 beds. Not all of those will be built, but we will be close to completing them by the end of next year. They will all be in the development pipeline.
Because we know the size of estate we want to reach, we assess every asset very carefully in terms of the upfront purchase price, cost of renovation and the ongoing operating costs, and we factor that into the offer. This means that every acquisition can sustain itself if we get it at the right price.
CHP: Are you seen as saviours of these distressed homes when you acquire them, or is your reputation more as a bunch of sharks who attack at the first scent of blood in the water?
Alykhan Kachra: Earlier this year, we won the Health Investor Residential Care Provider of the Year award. When we are competing with groups like Barchester and Bupa, that is quite an achievement. So we feel that is acknowledgement for the work that we do.
CHP: To what extent are you able to leverage your group buying power to get the best possible value for money when approaching suppliers and contractors for a new project?
Alykhan Kachra: This is something we are working towards. For example, our interior designer might come up with a wish list of fixtures and furniture. We might then want a specialist to take on the task of procuring everything on the best possible terms.
CHP: What about particularly expensive equipment such as special commercial equipment for your kitchens, your bathrooms, your laundries. Surely it makes sense to purchase the same equipment in volume from the same suppliers so that you can secure the best terms?
Alykhan Kachra: That is something we have been looking at with [contract catering partner] Elior, because they can take a lead in specifying the kitchen equipment that we need and then negotiating the best deals. We are looking at how we do that efficiently.