Highlights from LaingBuisson’s Homecare & Supported Living UK Market Report (6th edition):

  • The Covid pandemic increased demand for both homecare and supported living, with market value hitting £12.4 billion (UK, 2022/23); supported living growth is outpacing homecare
  • Market growth is driven by both demographics and local authority commissioners’ preference for care in non-residential settings
  • Covid has accelerated digital adoption, potentially empowering tech-enabled homecare providers
  • But market hurdles persist: public funding shortages, low fees, profitability, recruitment, and retention challenges
  • The austerity years saw a spate of major company exits from homecare, mainly attributable to pressure on fees and margins in the state-funded sector though, interestingly, all the failing businesses continued trading more or less intact under a new operator, and new investors have emerged, demonstrating confidence in the sector’s potential
  • Profitability remains modest at an average EBITDA margin of 6% (2023), having recovered from a low of under 4% during the austerity years, but is still below the pre-global credit crisis average of about 10%.

Social care market intelligence specialist LaingBuisson has released the sixth edition of its Homecare & Supported Living UK Market Report, which explores how lessons learned from the Covid pandemic have strengthened the market. The report offers a description of the market’s evolution, an analysis of the strengths and weaknesses of different business models, a profile of major service providers and investors, plus a section on market potential, providing valuable insights on the long-term trends and future prospects of homecare and supported living services.

The Covid pandemic accelerated the demand for homecare and supported living services, driving the market value to £12.4 billion in 2022/23, though homecare activity measured in contact hours funded by local authorities remains well below the 2010/11 peak. Looking forward, the report projects a 15% increase in the volume of both homecare and supported living demand over the coming decade, due to a combination of demographics and local authority commissioners’ preference for non-residential care services which are viewed as less expensive than residential care and provide greater independence for individuals.

In addition, the pandemic accelerated digitisation among social care providers and triggered a surge of ‘tech’ innovation to support the homecare and supported living sector and social care generally. This has created the potential for tech-enabled independent sector providers to diversify and expand into a more central, and potentially more profitable, role in integrated health and social care systems.

Despite this cause of optimism, the market is not without its problems. The report sheds light on significant challenges, including insufficient public funding, low publicly paid fees, and profitability issues. Chronic recruitment and retention problems persist due to low wages. The current time and task model has been described as ‘bust’. Despite almost universal recognition that the social care system is inadequately resourced, there are minimal prospects for substantial new public funding. While these issues are widespread, it is important to note that they do not apply uniformly across all local authority areas.

Founder and Executive Chairman at LaingBuisson and report author, William Laing said:

“Currently, most major homecare and supported living providers focus on traditional services like visiting domiciliary care, live-in care, and supported living, often provided by low-paid staff. However, it is foreseeable that the business model could evolve to include higher-value services similar to the American homecare model. This could involve offering qualified nursing care and distributing MedTech equipment, alongside the existing administration of medications by UK domiciliary care workers. Additionally, upskilled homecare providers could secure contracts or subcontracts to deliver integrated community-based care services for local authorities and the NHS, as well as participate in the planned expansion of virtual wards and population health initiatives.”