Cost cuts and dignified care for elderly are a contradicton, warns Barchester chief Mike Parsons

Interview: Mike Parson, chief executive of Barchester Healthcare, talks about how to get a fair price for care in the face of ever-increasing demand for better services.

It all began with Auntie Ivy and Auntie Lily some 20 years ago. Mike Parsons had been requisitioned by his mother to act as chauffeur while they found a care home for the two women, a task that involved a lot of driving and very little success.

The search, Parsons remembers, proved dispiriting. “A lot of care homes are pretty dreadful today, unfortunately,” he says, but in those days they “really were dreadful”.

Homes were eventually found but it was not just the women’s lives that were changed. Having seen the difficulty of finding high-quality care in pleasant surroundings, Parsons made a big decision too and changed his career.

Deciding to swap his job in advertising – Parsons had worked at Saatchi – he set up Country Life Care Centres and bought a mansion house on an old hill farm in the Cotswolds to convert into a home.

Partly thanks to a chance appearance on the BBC programme, Countryfile, the home took off, proving particularly popular with retired farmers who fancied growing older in the countryside.

Two decades later and the resulting business, Barchester Healthcare, created from a merger between Country Life Care Centres and Eskgrove in 1994, is Britain’s fourth-largest provider of care homes, with more than 200 sites and an annual turnover of more than £400m. This year alone, Barchester plans to develop 14 new homes.

Barchester’s expansion comes at a torrid time for the care home industry. Last year’s collapse of Southern Cross threw into relief the economic difficulties faced by a sector trying to care for an ageing population as local authorities squeeze fees. And as cost pressures worsen, there are concurrent calls to improve the quality of care for the elderly, ensuring that they are accorded the dignity they deserve.

Promoting quality of care has, Parsons claims, been at the forefront of Barchester’s business ever since it was established. Research in America prompted him to see that care could be provided in “nice locations” rather than a home that looks “a bit like an acute hospital ward”, leading Barchester to focus on creating calm environments with a particular focus on gardens and grounds.

Architecture aside, however, staff are crucial when it comes to providing first-class care. “You can provide lovely buildings, nice surroundings, but you’ve got to get great people working in them,” says Parsons. “The problem is the care sector is often seen as a transient thing. People work in it and then go to work in Tesco because they’re offering 50p an hour more. What we try to do is turn it into a genuine career and to an extent, I think we’ve succeeded.”

Barchester runs a ‘business school’, offering management qualifications, and has around 1,000 apprentices on its books. But, as well as professionalising care to promote quality, Parsons is also conscious of giving carers the time they require to attend to the often complex needs of residents with conditions such as dementia.

“You’ve got to be mindful that people are people, even people with confusion, there is still a person in there and the art is to find the person. Maybe do it through music or art, or just spending time treating people as an individual. It comes down to having the time to do that.”

And, it would appear, the money. Sitting in the airy front room of Barchester’s south-west London home, it seems that this model of care does not come cheap. “We have to ask for a high fee rate because you can’t do all that on a low fee rate,” he says.

Local authority fees have been squeezed as austerity measures bite and that, along with struggles to pay back the rent on its homes, spelt the end for Southern Cross.

Parsons stresses that most of Barchester’s property is freehold, meaning it has a very different model. But, the group is not without its own problems.

Just last week, it emerged that the company has hired Goldman Sachs to lead a £1.4bn refinancing.

It is facing complicated discussions with lenders because it is effectively in negative equity due to interest rate and inflation swap liabilities and because much of its debt is with bondholders. But, it is claimed that there is no threat to the residents or the future of the homes because the debt was only attached to the property business within Barchester, while the operating company was ring-fenced.

Barchester believes it has insulated itself from some of the issues faced by its peers by focusing more on residents who are paying out of their own pocket rather than just NHS and local authority-funded residents. “[The private pay market is] still the biggest category, but we now do 20-odd per cent of business with the NHS, working in close co-operation with them,” he added. A similar amount of business is done with local authorities.

While Barchester has sought to diversify its revenues, Parsons remains adamant that a high fee rate is necessary to ensure that carers have sufficient time to attend to residents’ needs. The key, he says, is having “people who see it as a career rather than a way of earning an hourly rate.”

A fair fee rate, he adds, “is probably £100 or £200 a week more [than the current rate] – that sort of dimension”. Even then care in a home is still cheaper than in hospital. “The alternatives are even more expensive. If you have someone trapped in an NHS acute bed, it’s probably £3,000 to £4,000 a week. If they move into a very highly skilled care home, it’s a quarter of that,” says Parsons. “By David Nicholson’s [the NHS chief executive] own admission, at least a third of people don’t need to be in the acute hospital bed. That’s probably 40,000 or 50,000 people at any one time. That’s a phenomenal amount of money.”

That is why he wants to see the Government’s forthcoming white paper on care do more to ensure health and social care work together more efficiently.

Barchester has already taken steps to work with the public sector. It opened two homes in Hampshire last year, where the local NHS trusts had problems with bed blocking. The trusts therefore diverted money to social services so that they could buy beds in Barchester homes. Known as “time to think” beds, these gave patients, their families and doctors time to consider whether their next move would be to stay at home or move into a care home

“That is really good, joined-up thinking,” says Parsons. And he wants to see more of it, particularly as care needs become more complex. Parsons, who believes Barchester will expand further into looking after people with early-onset dementia and lifestyle-driven problems, thinks the care sector is better-placed to deal with these issues.

Pointing out that the NHS is unlikely to have the money to invest in that type of care, he adds that it should focus on “paediatrics, oncology, cardiology, A&E and these lifestyle things are probably better dealt with elsewhere”.

But that is for the future. For now, Parsons is focused on getting a fair price for care in the face of ever-increasing demand for better services. “You cannot preach dignity and cutting costs,” he stresses. “It’s just a contradiction.”

CV: Mike Parsons

Age: 61
Marital status: Divorced with one son
Interests: Cricket, wine, sailing, modern art
Favourite films: Shawshank Redemption, Apocalypse Now, Monsieur Hulot’s Holidays
Education: Economics at Sussex and Oxford