After training as a liver transplant surgeon, Sanjeev Kanoria started private care operator Advinia Healthcare with his wife Sangita. Two decades on, he speaks to Anna Cole-Bailey about the state of the care market, robots and growth strategies.
How did you come to work in social care?
SK I got into social care by default. I trained as a surgeon when I came to the UK from India and obtained my fellowship from the Royal College of Surgeons of England when I was 28. After training as a surgeon, I wanted to go back to India in 1994 but decided to do an MBA at the London Business School as I wanted to start a hospital chain in India.
However, global management consultancy McKinsey offered me a job and I decided to get some experience with them first. I worked in their London office for three years, focusing on the social care services where Bupa was one of their clients.
This is how I was introduced to the industry and saw how fragmented it was and identified opportunities for creating value.
I began to miss surgery so left McKinsey and returned to training in liver transplants at Kings College Hospital and complete a PhD in the field.
To support our young family my wife and I decided to buy our first care home in Barnet in 1998 through equity released from mortgaging our house. We wanted to see if we could successfully create a portfolio of care homes by focusing on the right systems and processes.
By the end of the year our efforts resulted in improving profitability and ratings. We were getting good recommendations and the financial institutions supported us to acquire more homes.
What attracted you to the Bupa portfolio and what changes have you made?
SK In 2011, frustrated with the NHS, I decided to build a multi-speciality hospital in Mumbai, India, and then in 2014 went on to buy the Hypo Alpe Adria Bank in Austria. I became very busy with these projects and did not want to grow my care home portfolio too aggressively.
In 2016, I was seriously considering exiting the care market after the turmoil of the financial crisis. However, in October that year I was introduced to the Bupa opportunity, where they were selling approximately 12,000 of their care beds. I visited some of the homes with my team, and we felt there was a huge amount we could do with them – Bupa had spent a lot of money, but we felt the operations and quality could be improved significantly.
Along with Macquarie, we put in a bid for the full portfolio which was initially accepted by Bupa in July 2018. However, they changed their mind to proceed with HC-One and an offer which broke the portfolio. Bupa approached us to see if we would be interested in the smaller portfolio of 2,700 beds and 22 homes. I was initially not sure, but the team and I later felt that we could improve the homes.
We’ve made a lot of changes by implementing clear systems and well-documented flow charts. We’ve reduced the agency cost within the homes by 20% and worked hard to make the IT system more efficient.
Many large providers such as Southern Cross have one regional director managing 25-30 homes and have a heavy head office cost whilst the operational and regional teams are leaner. Our strategy has been the opposite. It has been about keeping the head office efficient while keeping operations strong.
We mark each region into eight to nine homes roughly and then for each region we’ll have a regional team with five people, with different roles including a peripatetic manager to replace and assist any poor performing manager or someone who suddenly leaves.
What are Advinia’s growth plans?
SK There are not a lot of high-quality operators in the sector. Some providers are also nervous about the Care Quality Commission (CQC)’s market oversight function in light of the recent Allied Healthcare incident, which raised concerns about the guidance under which the body operates that allows them to issue damaging notifications with limited evidence.
Advinia has the necessary skills and experience to use this opportunity to grow in the sector. But for any individual operator, managing the whole sector is going to be difficult because, in my view, after 8-10,000 beds any economies of scale benefits begin to disappear.
We’ve lost about 15,000 beds in the last three to four years in the sector, which already has reduced supply. There needs to be a reasonable number of players for healthy competition.
What are your thoughts on the CQC?
SK The CQC has a lot of responsibility as a regulator. It has many experienced inspectors, however standardisation of evidence and balancing expectations is crucial in the sector to provide the necessary service. It is important to separate poor quality operators and failing ones.
Using objective criteria from the banking sector and hiring of experienced risk professionals would further help to maintain the trust and respect that operators need to have in the CQC. The regulator has to maintain a fine balancing act without disproportionate reactions.
Are there similarities between running a bank and a care home?
SK In both sectors you need high integrity. In banking, one is responsible for other people’s monies and in healthcare for people’s health and care needs. It is extremely important in both sectors to work closely with the regulator to reduce financial and operational risk and maintain quality.
There is also a pressure in both sectors to manage cost effectively. Being cost efficient is really important – I call it waste management rather than cost management.
If every organisation is particular about managing their ‘waste’ it creates a surplus which can then be used for the growth of the organisation and that is a message we try to communicate to our own employees.
How are your robotic trials going and what findings have been reported so far?
SK Our trial is an evidenced-based scientific trial and it’s fully-blinded, so we have not reported any findings yet.
The pilot has already been carried out in one of our homes which gave us key information to further program the robots ahead of the full trial, which will start this month. It is really important to avoid any bias or prejudices in the trial hence we have a team of scientists from leading universities working on the project.
Data is programmed into the robots so that they have an information base to work from when they interact with residents in care homes. Programming them has not been easy because a large amount of data is required for the robots to use as a basis for learning.
How important is it that the sector embraces technology?
SK Nearly every country has an ageing population problem; the pressure on manpower is enormous. When you have such a fast ageing population, younger people as well as healthcare services struggle to meet the demands of care so it is important to use technology efficiently where it is needed.
I think the healthcare services industry is just at the beginning of the technology revolution. Up to now, people have been very careful with technology because of the sensitivities around healthcare but now I think people are more trusting that technology can protect people’s data. So far Pepper has been used almost as a gimmick in the sector but what we want to show is that these robots, with AI and facial recognition software, can see emotional changes in humans therefore help the quality of care.
Robots can’t replace care workers but they can help in providing continuity of care, since they have information about the residents and can communicate this to an agency or a new shift worker.
What can operators do to attract care workers to the sector?
SK We are competitive with our salaries, and after the Bupa deal increased a number of the salaries of the people brought over. We also believe that every employee should at least make a living wage as opposed to minimum wage because if not then it’s not productive for the economy.
It is important to pay people well, but it is also important for the social care services and for people to realise that there is a cost of care and every organisation needs to generate a surplus to be able to invest in the care homes itself and in the training of the staff.
What impact do you think Brexit will have on the care sector?
SK The sector is dependent on manpower and the number of nurses and carers in this country is limited so if we suddenly stifle the supply line from Europe it will create problems.
Many nurses and care workers in Europe have a high standard of training and when we bring workers here from other countries the training standards might not be the same as those in the UK. For instance, bringing nurses from the Philippines and India takes much longer and, further, it takes longer for them to go through the certification programmes than nurses from Europe, which adds to costs and delays in engaging them completely.
I also think that if you bring people from the East, they need to get to grips with the Western culture which again takes time. They also may not want to work in rural areas and prefer to be in larger communities. These are real issues that the government needs to consider.
If you could change one thing about social care what would it be?
SK [I’d change] the mindset of the government in helping them to realise that this is a dynamic cycle. Lower fees and higher costs will have an impact on the government’s budget for healthcare.
To encourage good quality private sector providers, a fair fee for care needs to be paid and the regulation needs to be well balanced to ensure quality and safety of all stakeholders.