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Archive for April, 2019

It takes a (retirement) village: The new social care solutions shaking up the sector

It’s no secret that the UK’s population is aging, with one in seven people predicated to be over 75 by 2040. Retirees are now thinking about the care they will need in old age earlier and are becoming more discerning in their choices. Some providers are taking inspiration from America, where the variety and scale of retirement care options are far greater, and establishing community style retirement villages in the UK. However, plans for increased regulation of the sector will require investors to consider the practices of individual operators, and whether their business models will be compatible with additional scrutiny of the fees charged to residents and their families.

Often less reliant on local authority funding than standard retirement homes, investors are already swooping in to provide retirement communities with much needed capital to expand and keep pace with rising standards (and demand for beds). AXA Investment Managers, L&G Capital and Goldman Sachs have all entered the retirement living market in the UK in recent years, taking advantage of the scale of the potential opportunities presented by the sector. Retirement villages have captured the ‘luxury’ end of retirement care, offering older people an alternative to conventional care homes or sheltered accommodation. This model is certainly attracting attention, with estate agent Knight Frank predicting that the value of the retirement living private market will increase by over 50 per cent by 2022 to £44 billion.

The model is proving so popular that some of the larger retirement village operators, such as Audley, are now expanding their business to include a ‘mid-range’ offering – the same model of care but with a lower price tag. Their first community of this type is due to open in late 2020. Despite demand, the UK still lags behind other countries. According to Michael Ball, Professor of Urban and Property Economics at Henley Business School, owner-occupied retirement housing represents just two per cent of Britain’s total housing stock, compared to 17 per cent in the US, and 13 per cent in Australia and New Zealand.

Though the risks are lower than conventional retirement homes, this newly emerging style of retirement living is likely to attract regulatory scrutiny in the coming years due to a series of media stories relating to poor practice. Often, residents will buy their own home as a leasehold, then pay an annual service charge to the operators to cover the cost of additional care they require. This model has run into difficulties when occupants or their relatives look to sell the property, with the “exit fee” payable each time the property is sold often being at least 12.5 per cent of the sale price, with some companies charging up to 30 per cent.

The Law Society published the results of a consultation on these exit fees in 2017, finding that there are “major problems” with the fees and recommended that retirement villages be regulated to protect residents from agreeing to pay fees they are not fully aware of. The government has provided an interim response to the consultation, pledging to “align these recommendations and help ensure that they can be fully implemented.” Some in the industry, including estate agent Savills, have said that the delays to introducing regulation are hampering the growth of the sector, as investors and businesses face ongoing regulatory uncertainty.

The details of how the sector will be regulated have not yet been announced and are likely to face delays in the face of pressure caused by Brexit. However, it is likely that a code of practice, potentially accompanied by additional inspection powers, will be introduced to assess the financial responsibility of retirement village operators. While this will affect the way some operators do business, particularly in terms of the contracts offered to potential residents, a clear statement of intent from the government is likely to be positive for the industry as a whole, and in particular for those businesses that operate with residents’ interests at heart. Investors looking to take advantage of this lucrative sector will have to consider whether potential investments will be compliant with likely regulatory requirements, or if they are willing to take on the additional costs of transforming businesses that are set to be subject to regulatory scrutiny.

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Are investors ready for primary care networks?

The NHS Long Term Plan, published in January 2019, identifies newly established primary care networks (PCNs) as important drivers of NHS reform. By June 2019, PCNs will bring local GP practices together into geographical networks, covering populations of between 30,000-50,0000 patients. GP practices have worked collaboratively for years, but the new GP contract, taking effect in April 2019, and the NHS Long Term Plan, have created the more formal PCN structure. According to The King’s Fund, the thinking behind PCNs is that they will allow general practices to benefit from economies of scale through increased collaboration: staff can be shared between practices, estates can be managed more efficiently, and practices will find it easier to work with the wider health system.

PCNs will be expected to provide a wide range of primary care services to deliver the NHS national service specification, and this will be a level of service beyond what individual practices can provide. These services will include access to: a pharmacist, physiotherapy, extended GP services and social prescribing link workers (non-clinical services, e.g. healthy eating advice). From April 2020, PCNs will be required to deliver services including structured medication reviews, personalised care and supporting early cancer diagnosis. By 2021 PCNs will be charged with discovering cardiovascular disease in patients and addressing health inequalities in the local population.

The funding for PCNs is in the form of a directed enhanced services (DES) payment. This payment will be worth £1.8 billion by 2023/24 and includes money to support the working of the network, and up to £891 million to support the hiring of additional staff. As part of the new GP contract, the funding from NHS England for primary care and community care will put the total increased investment into general practice at £4.5 billion by 2023. GP practices will not have to join a PCN; but if they choose not to, they will miss out on the extra funding provided by NHS England.

The creation of PCNs, while providing the foundation for a more efficient and better-integrated system of primary care, brings with it both challenges and opportunities. One particular challenge concerns how PCNs can take advantage of the efficiencies that could be realised through reform of NHS estates. Greater collaboration between GP practices raises the possibility of consolidating existing property assets to achieve efficiency savings. By grouping key services in one location, PCNs will be able to cuts costs by reducing the replication of facilities and enjoy economies of scale related to administrative savings. However, in many instances, to achieve these savings PCNs will need new purpose-built centres that can provide a host of primary and community care services. This represents an opportunity for private firms that specialise in the provision and management of healthcare facilities. As PCNs become more established, there is likely to be increased demand for facilities that can improve outcomes for patients and help the NHS work more efficiently.

PCNs require GP practices to work more closely with each other, as well as with other primary and community care providers. To ensure this communication occurs effectively, there will need to be significant investment in digital technology to facilitate record sharing and appointment booking. Also, it is a key element of the NHS Long Term Plan that, over the next five years, PCNs will have to offer patients telephone or online consultations. NHS England is also planning to use digital technologies to expand the GP workforce by offering more flexible working conditions to part-time GPs. It was announced in the Long Term Plan that NHS England would “create a new framework for digital suppliers to offer their platforms to primary care networks.” There is a clear need for increased use of enhanced digital technology to help administer the new network of PCNs, and it is a need that many firms will be looking to fulfil.

However, there are some risks to the private-sector from the reforms in the new GP contract. Under the new contract, GPs will not be allowed to advertise private healthcare services in their surgeries, nor will they be allowed to permit private GPs to offer services in their practice. These rule changes mean that practices will not be able to charge patients to see a doctor more quickly and patients will not be able to be charged for services that are offered for free on the NHS. The aim is to create a stricter divide between NHS GP care and the private sector. There is the suggestion that this is the first step by NHS Chief Executive Simon Stevens towards reducing the privatisation of NHS services, as NHS bosses are concerned that privatisation undermines the ability of the NHS to provide ‘joined-up’ care.

The NHS is undergoing significant reform, and with this reform the NHS is taking on a Janus-faced approach to the private sector. In many areas, the NHS will not be able to move forward without working closely with the private sector, yet stricter rules could be on the horizon that will limit the involvement of private firms in the supply of NHS services. There is certainly room for the private sector to thrive working with, and alongside, the NHS, but there could be some twists in the road ahead.

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From chaos, comes order, but how? Looking ahead to urban mobility in 2040

Time to shift gear

The publication of the Urban Mobility Strategy was, in many ways, the final piece of the jigsaw. From future mobility being framed as a “Grand Challenge” to delivering goods more sustainably as part of “the last mile”, there’s nothing left to do but act.

If government is serious about fully realising the opportunities that urban mobility presents us, there can be no more strategies, no more consultations. Now is the time for genuine delivery.

However, exactly what and how is up for debate. Given the sheer number of competing players now active in the market, this area has become more intractable than ever. What is clear is that bringing order to this seemingly chaotic environment will require a balanced approach to regulative, legislative and political action.

Key to realising urban mobility’s potential is to look to the future, working backwards from a desired endpoint. What needs to happen with X to get to Y? Below are some of the key trends influencing urban mobility, each with a desired end point and some thoughts on how we might get there.

From X to Y, but how?

Vehicle ownership to vehicle usership

What was once a dominant behaviour or aspiration, owning a car is increasingly no longer considered necessary by a growing section of society. Though it has brought substantial benefits to society, high levels of ownership have also brought serious challenges. Take safety, for example. Human error was involved in 85 per cent of all road accidents in 2017. Air pollution, though having improved since 2010, remains a serious risk to public health. Congestion too. The time lost as a result costs the UK economy around £2 billion per year.

Vehicle usership is a key principle upon which the concept of urban mobility is based. Arguably, we’re already nearing our endpoint, but there are still things that can be done to push usership over the line as the new dominant form of transport. A shift away from ownership means regardless of age or whether someone has a disability, people are able to access the same transport. However, equally, with the rise of MaaS platforms and different types of sharing models, there’s a danger these groups of people might be excluded from the new urban mobility, especially as transport information, booking and payment functions are modelled through digital platforms.

With the requisite political will, fewer privately-owned cars will bring opportunities to radically redesign urban areas and the environmental benefits will be self-evident. New mobility models can reduce dependency on car ownership. However, closer integration of our infrastructure and vehicles with communication networks could lead to increased vulnerability to cyber-attacks. As new transport modes and services are introduced, it will be important to consider how they can be safely integrated into the transport system and vulnerable users can be protected.

Limited choice to lots of choice 

Once limited almost exclusively to cars, urban mobility in the future will be defined by a diverse range of modes, from bike sharing to autonomous transit, as well as more traditional options like rail and walking. When all these models co-exist with cars, and are connected in an urban environment, mobility options and utility can be enhanced significantly. To ensure the UK continues to foster new mobility innovations, the environment in which they would operate must be a fertile one, facilitated by a flexible and responsive regulatory system that works with cities and provides them the tools necessary to innovate. Key to this will be ensuring the regulatory review promised by government asks the right questions and involves the right parties.

Government funded transport to public-private transport

This was always inevitable and the only way in which the future of urban mobility can be realised. Key to getting to our endpoint here, however, is working together, not competing. Although the media and large parts of the public seem to be enthralled with the idea of driverless cars and flying taxis, the idea that these types of mobility models will replace government funded transportation misses the point entirely.

Public and private transportation can complement one another. Public transit hubs, for example, could offer a steady stream of customers to new mobility service providers and, in turn, they can make public transit a more attractive door-to-door experience. However, such systems must be coordinated for efficiency purposes and to reduce congestion in cities. Cities and their respective transport agencies may need to take more control over how and where services are offered to avoid areas being overburdened with new services thus causing gridlock, and to ensure access is available to all cities and groups of people.

Unconnected transportation to on-demand and connected transport

As identified in the Urban Mobility Strategy, a key principle of success is the need for “new mobility services to be designed to operate as part of an integrated transport system combining public, private and multiple modes of transport users.”

For a truly integrated system, we need a more inclusive transport system. This should be one that adopts new mobility technologies as its default position, widening the affordability, availability, and accessibility of transport and narrowing existing transport inequalities in the process.

The current regulatory and commercial barriers that have left the urban transport market fragmented must be addressed, be it as part of the regulatory review, legislation, or other means. In any case, the current environment means the barriers to entry for organisations wishing to integrate transport provision are too high and are threatening consumers with a lack of information to plan or buy integrated journeys effectively.

2040 and beyond

Of course, these are only a selection of many factors shaping the urban mobility revolution. Talking about what needs to be done to get to certain endpoints for certain elements of urban mobility’s future is easy, but how we get to a final endpoint, encompassing all these factors, is the hard part.

WA Communications will be hosting its “From chaos, comes order, but how? Looking ahead to urban mobility in 2040” event on Wednesday 24th April to try and answer this question. For more information about attending this event please contact Stephen McLoughlin at stephenmcloughlin@wacomms.eprefix.com or by calling 0203 102 3628.

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NICE’s HTA methodology to undergo long anticipated review

At a recent meeting of the All-Party Parliamentary Group (APPG) on Access to Medicines and Medical Devices, NICE’s Chief Executive, Sir Andrew Dillon discussed the long anticipated NICE methods review. Here are five key takeaways:

  1. Explicit recognition of NICE’s role in the wider system

NICE has always stated that it is accountable to the Department of Health and Social Care (DHSC) but independent from government. Whilst Sir Andrew looked to reaffirm this, he was clear that NICE has to work within the wider system – there is clearly no point in creating a system that works for NICE and industry if the DHSC and NHS England can’t or won’t deliver it. The NHS’ restructuring over the past decade, including the creation of bodies such as NHS England, has reduced the autonomy and ease at which NICE can make decisions. NICE will have to collaborate more closely with these bodies to receive buy-in from across the healthcare system.

As a result, the first set of discussions will be within the health system rather than external, with the initial scope of the methodology review determined by the DHSC, NHS England and NICE.

  1. There will be a need to balance industry views

Meindert Boysen, Director of the Centre for Health Technology Evaluation (CHTA) at NICE, confirmed that the Working Committee tasked with setting the scope of this methodology review will initially only invite representatives from the Association of British Pharmaceutical Industry (ABPI).

This decision raised some questions from industry partners who felt the ABPI may not be able to represent all views. Some industry representatives may not appreciate being unable to influence to scope of the methodology in its early stages. Boysen was quick to stress that following the initial working group, there will be technical groups looking at specific topics, involving representations from a whole range of the pharma industry.

It is likely that NICE will also continue to face pressure from other industry representatives, such as the Ethical Medicines Industry Group (EMIG), as it pushes for a say on the scope of the methodology earlier on in the process.

  1. Is this what long grass looks like?

NICE has not yet set an anticipated date for the completion of this methodology review, and it is likely to be a complex and consultative task. For NHS England and government, there is a distinct upside to having an extended review which keeps everyone occupied in a holding pattern – putting off difficult decisions until further down the line. While the review was certainly positively received, many regard it as long overdue given the rapid advancements in medical technology over the last decade.

  1. Clear focus on highly specialised technologies

Unsurprisingly, there were many questions around the system for appraising treatments for rare diseases.  Sir Andrew recognised that this is clearly an area in need of consideration and stressed that one of the key things the review will look at is the criteria used to put products in the highly specialised treatment programme.

A holistic look at the challenge of how to balance limited resource with costly treatments for very small patient populations will be welcome, but Sir Andrew made it clear that there were no easy answers.

  1. APPG launches its own call for written evidence

Anne Marie Morris MP, Chair of the APPG, has launched a call for written evidence on NICE’s review of its methods for appraising treatments for use on the NHS. The consultation document offers industry representatives an alternative route to have their say on the methods review. However, the APPG are only accepting submissions until 29 April 2019. It will therefore it will be important for industry partners to determine the key messages and requests they want to highlight to the APPG, before it submits its findings to the CHTA.

So what next?

Appraisal and access routes have developed somewhat organically over time. For example, there are now around 10 access routes in the medicines process so a streamlining and sharpening of processes is vital.

While the review will seek to address challenges currently faced, this is also an exciting opportunity for NICE to have a longer-term vision and prepare for the future. As innovation in treatments accelerates at pace, will we now see a genuine consideration of new access models such as value-based or variable pricing across multiple indications? Or will the risk of undermining ‘a QALY is a QALY is a QALY?’ win the day?

 

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Buy low, sell high street?

In recent years the high street has not been a happy hunting ground for many private equity firms. Competition from online retailers and high rents and business rates have combined to create a difficult trading environment. These pressures have come to bear on several private equity-backed high street names, including Toys ‘R Us, Debenhams and HMV. The government is well aware of the problems facing the high street and is introducing plans to revitalise an important element of the national and local economy.

In December 2018, the High Streets Expert Panel published its independent report into the future of British high streets. The High Street Report made three separate recommendations: the creation of a High Streets Task Force, the establishment of the Future High Streets Fund, and various short-term measures to support town centres. The task force aims to facilitate collaboration between local stakeholders and provide expert help and support so that high streets can be revitalised from the bottom-up, rather than having top-down solutions imposed on them. This will be achieved through improved data sharing, allowing town centres to assess their performance and compare their progress to that of other towns, and the provision of expert help in areas such as communications and project management. Streamlining the planning system is also within the remit of the task force, and it will play a role in encouraging planning decisions to be made more quickly and in line with local strategies. However, the task force has yet to be officially launched, and there has been no announcement on who will be part of it.

The report also recommended the creation of the Future High Streets Fund to provide local authorities with the resources to improve town centres. The government has allocated £675 million to the fund, with towns able to bid for grants. The money from the fund will be used for two broad purposes: to support the development of long-term strategies for high streets and to co-fund projects to improve physical infrastructure, such as transport links and physical spaces in town centres. Bids for grants from the Future High Streets Fund will be undertaken in conjunction with the High Streets Task Force; the Task Force will support the bidding process and ensure any regeneration involves local stakeholders. The report also proposed measures to make town centres more visually appealing and reduce the number of empty shop fronts, as well as suggesting local authorities need to be mindful about providing adequate parking to encourage shoppers to travel to town centres.

The government has deliberately avoided creating a plan that must be applied uniformly to high streets up and down the country. Towns will have different consumer profiles and be able to exploit different advantages (geographical, historical, cultural etc.). As such it makes sense for local areas to set the terms of their own regeneration.

The Institute for Place Management echoed this sentiment in its report High Street 2030: Achieving Change, which was released in conjunction with The High Street Report. The High Street 2030 report presented evidence to support the development of policy towards town centres, based on the experiences of towns that had successfully achieved change. The report concluded that towns need to avoid being identikit copies of one another and that people value independent shops, community atmosphere, cultural venues, heritage and unique features.

These findings present a problem for those looking to either make a success of their existing assets or are trying to find new avenues for investment on the high street. The success of many high street brands is founded on their name recognition and the guarantee of a particular standard of good or service at a consistent price nationwide. This recipe for success is at odds with the approach to regeneration successfully adopted by towns such as Altrincham and Shrewsbury, where the focus has been on independent retailers and unique local features, such as historic market places. Investors will need to come to terms with a new era where consumer demands for authenticity and individuality are matched by government policy that aims to establish a new breed of high street.

The government has neither the will nor the ability to compensate for the huge shift in consumer behaviour away from the high street and towards online shopping. A tax on online retailers has been discussed, but if it was to be introduced, it would not be imposed at a rate that would level the playing field, especially given the cost advantages enjoyed by online retailers. Such a tax could also be illegal under EU rules. Business rates have been blamed for much of the high street’s malaise, and there have been calls to reform the business rates system. However, according to the Institute for Fiscal Studies, there is little evidence that reducing business rates would help the high street over the long-term. Any decrease in business rates is likely to be matched by an increase in high street rents, leaving businesses no better off.

When it comes to making a success of a high street business, it appears that small really is beautiful. The challenge for investors is to find businesses that can engage with local stakeholders and become part of the fabric of a town or city. There will always be room for brands that can use their economies of scale to provide consumers with good value products; however, the product itself is no longer enough to sustain a high street presence. On the high street of the future, businesses aren’t just selling goods and services; they are selling themselves.

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Growth and client success sees WA rise into top 5 PA agencies in the UK

WA has been ranked in the top five in the PRWeek top 150 UK Public Affairs Consultancies 2019, rising from tenth spot last year.

WA’s Managing Director Dominic Church said:

“We are delighted to be recognised as one of the five leading public affairs agencies in the UK.

“This is thanks to the incredible talent and dedication of our team, and reflective of the real results we achieve for our clients.”

WA has continued to build on its significant growth over the past 24 months and was also ranked 77 on the PRWeek Top 150 UK PR consultancies 2019, rising from the 89th spot in 2018.

“We are continuing to expand our wider corporate communications offer and we look forward to providing our clients with a more integrated service for all their communications and public affairs needs,” he said.

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Brexit delayed

In the early hours of this morning it was confirmed that the United Kingdom will not leave the European Union on Friday. The remaining EU members states have granted the UK a six month extension to Article 50 to 31 October 2019 with minimal conditions attached. The strong indication is that a further extension will be granted if there is still no deal at that point.

This allows MPs to stagger into the Easter recess to rest and recover from what has been an exhausting few weeks. Meanwhile, cross party talks continue between the government and Labour to try to break the Brexit deadlock, albeit with little hope on either side for a positive outcome. So what happens next and what does this mean for the Brexit process, the future of the government and for businesses and investors?

Firstly, there is still little prospect in the near future of securing a majority in the Commons for any specific form of Brexit and the pressure of the ticking clock has now been removed. No deal now seems extremely unlikely to ever happen. If the EU weren’t willing to contemplate this last night when the UK requested an extension without presenting any clear plan for what it would be used for, they probably never will.

Parliament now has more time to try and find a resolution and, while it is hard to see consensus emerging any time soon, the most likely long-term outcome still appears to be a softer version of Brexit, though it could take quite some time to arrive at this point.

Meanwhile, Theresa May is planning to stay put as Prime Minister until a deal is agreed. There remains a clear appetite among many Conservative MPs for her to go sooner but they lack a formal mechanism to oust her. However, her tenure does appear to be in its final days. If a Brexit deal is not in sight soon then the collective mood of the Party, expressed via the 1922 committee and/or the Cabinet, may eventually force her from office regardless of whether a Brexit deal is secured.

Indeed, the next Conservative leadership contest has essentially already started. Multiple leadership hopefuls have been brazenly setting out their stall at events with think tanks that look very much like hustings (see Matt Hancock and Penny Mordaunt speaking at an Onward event earlier this week) or via set piece interviews in the media.

Brexit will continue to dominate the political agenda for some time to come, with a Queen’s speech is now unlikely to be brought forward until the Autumn. But this extension provides breathing space in which these leadership hopefuls will continue to set out their vision for the future. It will also allow diligent ministers to return some focus to their day jobs and move forward domestic policy initiatives that have been starved of political attention in recent weeks (as long as they don’t require primary legislation).

This remains a hung parliament with no party holding a majority, while half the Cabinet are openly auditioning to be the next Prime Minister. Power and decision making is more diffuse than ever and this presents unique opportunities for businesses and investors seeking to influence policy. But capitalising on these opportunities will require detailed understanding of the political drivers in a fragmented and complex environment.

The Brexit question drags on but there is plenty of work to do for those seeking to influence the UK political environment.

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