CEO Chris McGoff discusses New Care’s care model and development plans and gives his take on the care home market in north-west England.
Construction is in the blood for New Care CEO Chris McGoff as his parents founded a successful main contracting business, McGoff & Byrne Ltd, in 1973 and all his siblings have carved out their careers in the building industry. The youngest of four brothers, Chris took a degree in residential development and after graduating took a position at McCarthy & Stone Retirement Living as an Assistant Land Buyer, which in turn sparked an interest in the elderly living and care markets.
Following a year at McCarthy & Stone, Chris went to Linden Homes (North West) Ltd where he quickly moved through the ranks helping the business to establish itself as a key player in the local housing market, where the focus was on smaller scale, high value, brownfield sites in prime south Manchester areas. This model led Chris to starting Villafont Homes with his three brothers which successfully started life delivering sites in the 0.5 -2 acre range. The business is still going strong today, with its flagship scheme of around 400 apartments being sold out to the international market around 18 months before practical completion. However, in 2006-07, success and planning permissions were harder to come by after many local North West Authorities started to impose moratoriums on residential planning permissions in suburban areas in an attempt to drive development towards town and city centres. This caused a strategic shift in the direction of the business as it needed to find alternative uses for the sites it was securing.
“As care homes were not restricted by the moratorium and, given we were being advised that it was only a temporary situation, we thought securing an interim consent for a care home would help our ultimate goal of eventually securing a residential permission,” Chris explained. “The theory being that the care home would establish principles of scale and mass and then smooth the way for a later residential application once the restrictions were lifted.
“However, the moratorium didn’t ease as quickly as we thought and we found ourselves stuck with these consents, with not much of an idea what to do next, but not before long we started getting direct approaches from care operators.”
Having acquired consent for a 66-bed care home in Urmston and a suburban care village concept in Timperley, where the anchor piece of the scheme was an 82 bed care home, Chris was approached in 2007 by Southern Cross and Care UK.
“At this juncture also the residential market started to show signs of cooling off and, given my brothers and I had just started working more closely with the family main contracting business, we identified an opportunity to diversify our collective skill sets into becoming a delivery partner for the larger care operators,” Chris said.
“From the initial approaches, we quickly realised there was a significant disconnect in the process of delivering new build facilities between the operator and builder and sometimes even the developer, who could often be a third party.
“Operators relied on a plethora of consultants to help them in the build delivery, but no one’s interest was aligned for the greater good. There also weren’t many new build homes being built in the area, in fact the last development up until this point had been around 25 years prior. In addition, and from speaking with commissioners, we could see that care provision was vulnerable due to a lack of corporate operators, yet demand was growing significantly.”
Chris’s initial concept was to act as a landlord offering leases to care home providers, but as the credit crunch started to bite, investment yields started to suffer with value being lost, but as the fundamentals of demand and supply were still there, coupled with the identified need of creating a one stop shop delivery of acquisition, planning management, construction procurement and operation, he began to consider options for forming his own operating business.
“We parked the concept of delivering homes for third parties because decisions were hard to come by given the care and property market was going through a lot of turmoil in 2008-09, primarily as a result of Southern Cross defaulting on a banking covenant and a general crisis starting to emerge in the property sector,” Chris explained.
“There wasn’t a true development-led operator in the country, never mind the north-west, who was set up like a house builder who would not only find land, but would also design, build and then operate their own facilities, all under one roof.
“There was a lack of good corporate provision and homes were typically run by husband and wife teams. We could see there was a different and better way of doing things and that if we could harness the operational expertise we could build a business around delivering and operating new build facilities.”
Having identified a shortlist of prospective individuals to lead the operational side of his care business, Chris teamed up with a trained psychiatric nurse who had held senior director roles within the NHS and who had experience of operating his own portfolio of care homes.
From here, Chris and his team sought development finance for the new business, leveraged off the strong track record of build and development expertise. The Royal Bank of Scotland was the chosen funder and Chris and his team then began developing New Care’s first home, The Manorhey Care Centre in Urmston, which had originally been earmarked for Southern Cross to take.
Following the home’s successful launch, Chris quickly moved onto the second site that had been earmarked for Care UK, which then opened in 2012.
New Care has evolved greatly since its early years with a focus now more towards private fee paying clients due to well documented industry issues around local authority funding.
“The affluent areas where we were acquiring land naturally led us into the private pay market,” Chris explained.
Private pay now accounts typically for around 82% of New Care’s client base with local authority taking up 10% and CCGs 8%.
The New Care team was strengthened by the appointment of Cathryn Fairhurst as COO from Barchester, with the trading estate now consisting of six homes with two more in build in Bramhall and Cheadle and a forward delivery pipeline of another five homes currently in planning.
“We respond to the need in the local area,” Chris told CHP.
“We register a home for residential, general nursing and dementia care so we are a true home for life, with residents able to be cared for as their care needs increase.”
New Care recently extended a three-year, 23 -bed, block contract with the Nottingham NHS Trust at The Grand in West Bridgford, Nottinghamshire. Under the SSRU (Short Stay Reablement Unit) contract, the home provides a service for older people who have had multiple falls and hospital admissions.
Some 70% of patients are still at home three months after leaving the service having had no further falls. Easing the pressure on beds in local hospitals, the patients stay no longer than 14 days at the SSRU until they are ready and able to care for themselves at home once again. The success of the scheme has been documented on the BBC and it was a finalist in the HSJ awards this year.
“It’s been huge success and is delivered at a fraction of the cost of what the NHS can achieve,” Chris said.
“We have tried to do this on numerous occasions and this is the first time we have pulled it off. We found a lot of the commissioners we tried to work with got caught up in bureaucracy. There’s a lot of sense to partnering with the NHS as when we open a new home, we have a lot of beds to fill and hospitals have a lot of pressures that we can help them with.
“There is an opportunity if we can do a block contract of 25-30 beds on day one as if we have to fill naturally, we carry overhead and start-up costs for a longer period of time. If we avoid this by partnering when the home opens, the otherwise start-up losses will be mitigated and we can in turn reduce our aspirations on fee rates and everybody wins.”
Chris said New Care had taken a proactive approach with commissioners and local authorities but had received a lot of knockbacks.
“We almost get there and somebody changes their mind, or the administration changes,” he said.
In terms of new builds, New Care has begun work on site in Bramhall and Cheadle, while homes opened in Chester (Grosvenor Manor) and in Formby, Merseyside (Formby Manor) this year and the year before.
“They are all quality locations where there is a real lack of new build facilities,” Chris said.
In an exception to normal practice, New Care’s second home, Ruddington Manor in West Bridgford, Nottingham, was acquired from and built by LNT.
“New Care tends to want to self-build utilising our group main contracting business, McGoff Construction, but we had another home in the area so it made sense for us to control the market, even if it was at the expense of another builder,” Chris explained.
“New Care worked with LNT to tailor some of its specification and design to ensure the home was more in line with our brand standard, but other than that things remained largely unchanged and LNT was a pleasure to work with and we achieved another successful delivery.”
While New Care has seen steady growth in recent years, Chris said the opportunity for further developments in the north-west was limited.
“There’s a limited number of locations in the north-west where you can achieve a fee that is commensurate with the cost of the developments we are delivering,” he explained.
This finite level of demand in the north-west may inevitably lead to New Care expanding its footprint further afield with the business tentatively considering opportunities in Yorkshire.
“As time progresses and the group matures, I think it’s inevitable we will have to spread our wings further afield,” Chris said.
“Our model has been to grow from a strong local base and bolt on to that. We have built a good footprint in the north-west.”
While stressing the dearth of high end, private fee pay markets in the north-west, Chris said there was an increasing need for replacing existing, ageing stock that would fail to meet modern CQC registration or building regulations.
“A lot of these properties are effectively dangerous and substandard from a fire and sustainability agenda perspective,” he stressed.
The CEO said care home developers such as New Care were being hindered from replacing ageing stock by local government politics, however.
“We have to take a very stern approach with the planning system because it’s not for the faint hearted,” Chris told CHP.
“We have to date invested millions of pounds in needless planning applications.”
While having had numerous knockbacks on planning applications over the years, Chris said New Care boasted a proud, 100% record of secured planning approvals on all sites contracted for development, but with many having to challenge their merit through the costly appeals process, which burdens not only the developer, but the local council tax payer.
“On one current application we now find ourselves running a second appeal at the expense of the local tax payer and are now submitting a third application to cover the bases if the appeal goes down,” Chris highlighted.
“We have won most appeals but I always feel it is positive whether you win it or lose because it will give you direction as to how win the planning battle ultimately.”
The New Care boss described the whole planning system as “flawed” and “too political”.
While highlighting his good experiences with some local authorities, Chris said there was an anti-development sentiment at many councils.
“There’s a massive disconnect between the commissioners and the planning side of local authorities,” Chris added.
“You have to start very robust from day one and be prepared to take it out of the local decision making process and win the appeal. It’s sad that we have to go down that route. We have got to quicken the process up also.”
New Care has had its share of high profile spats with local authorities over planning applications.
Chris was withering in his assessment of Cheshire East’s planning committee’s refusal of an application in April this year.
The application for a 65-bed home was refused planning permission at committee stage after initially being recommended by the council’s planning officers.
Meanwhile, New Care has sought to allay local residents’ concerns over the scale and potential impact on traffic and parking of a new care centre in Hartford, Northwich.
“None of our current residents in our homes owns a car,” Chris pointed out.
“Half of our staff travel to work by public transport and the number of people on site at any one time is typically only 20-25, so we find it strange that people should be concerned about traffic impact.”
Chris said New Care took a “very flexible” approach in terms of design in order to complement the surrounding area.
“We tend to treat every home as though it was situated within a conservation area,” he stressed.
“We try to bring in positive elements from my residential background in terms of kerb appeal and design.”
Each home is designed with gardens, outdoor space on the first and second floor and bedrooms all sized around 20 sq metres, including wet rooms. Ground floor rooms also incorporate open out-doors onto patio spaces.
The developer and care provider is also soon to launch its first multi-generation development in Lymm that includes a care home, retirement apartments and a nursery on the same site in a village setting. The development will comprise a 66-bed new generation New Care care centre, a number of Villafont apartments for those aged 55+, plus a natural, child-led nursery with a large outdoor garden space from Back to the Garden Childcare, also a McGoff Group business.
The first development of its kind in the north-west, the development brings together the best of care for both the oldest and youngest members of the community and offers the potential for old and young to spend time in each other’s company on a regular basis, which has many proven health-related benefits.
In addition to an increased understanding and appreciation of each other’s abilities and limitations, regular inter-generational experiences are important in building compassion and tolerance and also helping the elderly remain more mentally and physically alert.
Chris concluded: “This is something we believe passionately in, and have wanted to do for a long time. We are excited to see how the development takes shape and becomes part of the local community and hope it can set a new blueprint for future schemes.”