Barchester Healthcare’s chief executive Dr Pete Calveley talks to Charlotte Goddard about the UK’s second-largest care home company’s growth plans

Since 2018, Barchester Healthcare has built and opened 24 new state-of-the-art developments across the country. Plans are on track to open nine new-build homes in 2023 with another 10 planned every year for the next three years.

“When I came to Barchester in 2014, I saw a great opportunity to expand the business,” says chief executive Dr Pete Calveley. “At the same time we had to improve the performance of the core business, because I took the view that if you put quality first, then you’ll get the best reputation, then you will become the provider of choice, and then you’ll get commercial success.”

Dr Calveley was a GP for 20 years, moving into the care sector as medical director for Four Seasons Health Care after spending time as medical director at a Primary Care Trust. He was Four Seasons chief executive when the company was sold to Guy Hands’ private equity firm Terra Firma in 2013, after which he moved to Barchester, where he has been chief executive since 2014.

Barchester focuses its new builds in areas with a specific under-supply of quality care homes with facilities such as en-suites and spa rooms.

“We started off slowly until we had gained experience in opening new homes, with two new homes in 2018, then two, then five in 2019, then six in 2020, and built up to 10 a year,” says Dr Calveley. “It takes a few years to get the team together to find the land, do the legals, manage the build with the external contractors and so on.

“Barchester focuses its new builds in areas with a specific under-supply of quality care homes with facilities such as en-suites and spa rooms.”

In 2019 Barchester acquired 24 brighterkind care homes from Terra Firma, and in 2020 bought 12 former Four Seasons care homes.

“Some we closed, some totally refurbished and others we knocked down and rebuilt,” says Dr Calveley. Four Seasons put another 111 care homes up for sale last year, but Barchester is not interested in acquiring any of that portfolio.
“None are in locations we would particularly choose,” says Dr Calveley.

Further acquisitions are not off the table though. “We bought a standalone home in Hampshire last year, in six acres of ground – that is going to be one that we knock down and rebuild,” he says.

“We will look at selected acquisitions, ones and twos, over the next three years, and we are in discussions with the shareholders as to what happens in year four and year five.”

Some of the new builds are financed through Barchester’s holding company, Grove Ltd, says Dr Calveley. “However, for the majority we borrow money from our shareholders on a five-year lease with an option to purchase at a fixed price after year five. Usually at that time, because the home is successful, we can get bank financing of 50% to 60%. We have paid rent for five years and we have to pay interest on the bank but essentially, there’s a big amount of equity that is just ours.”

Unsurprisingly, given the relentless pace of new openings, Barchester is constantly feeding learning from previous new builds into future homes, with monthly development and steering group meetings. On the design side, newer homes have more facilities, with orangeries and garden rooms added to cinema rooms and spas. On the operational side, there is now a well-honed process around recruitment, training and marketing.

“In the past, one of the issues with Barchester’s new builds was that they often didn’t get a good first inspection,” says Dr Calveley. “We said if we are going to do this massive programme, let’s make sure we get all those things right first. We have learned every year with a focus on getting the right staff, the right training, the right support, the right manager and the vast majority of our homes when they are first inspected are now receiving a Good rating.”

The need for a constant supply of new managers and staff has its challenges when it comes to consistency across the group. “Whereas some of our managers have been with Barchester for ages, so they know the Barchester way, some of the new build managers coming in have never worked for Barchester before,” says Dr Calveley.

“We make sure they have a very intensive local induction, buddying up with other managers, and we also have a central induction where they go through every aspect of how you run a Barchester home.”

Managers can also access a document called The Barchester Way, which sets out how to do everything from recruitment to marketing to life enrichment. Having an effective recruitment and retention strategy will be absolutely key to Barchester’s successful delivery of its ambitious development programme, given the incredibly challenging workforce climate the sector faces.

“It was a bit tough at the end of last year – I think everyone was finding it tough, not just the care sector,” says Dr Calveley. “Our proportion of agency hours was at 6% at the peak of last year, but now it is down to 1.8% across the whole business – we are virtually fully recruited everywhere.”

He credits Barchester’s internal recruitment team, which runs its own recruitment website as well as using internet job boards and taking a headhunting approach, for its successful recruitment strategy.

“We provide all sorts of career benefits, support, helplines, anything we can think of to make people feel they are working for the right company,” Dr Calveley says.

When it comes to leadership in social care, listening and visibility are key, the care leader highlights. “Once you’ve started building a team with the same values and ambition, you have to go about listening to people and responding to what you are hearing,” says Dr Calveley.

“I run a set of workshops called Pete’s Surgery at our conferences, where the agenda is ‘discuss whatever you like’, whether that is e-care planning, uniform, or difficulty with recruitment. I might listen to 1,000 people, and if I hear 50 people say, for example, that the uniforms aren’t as good quality as they used to be, then I will go to the person who is responsible for that and say this is the feedback from the whole team.”

On top of that, Dr Calveley visits 100 care homes a year to talk to managers, staff, residents and families. “I hear different things from the nurses and carers than I hear from the deputies and managers, so that is really helpful,” he explains.

“You get a very good idea of what is going on in your business if you are seeing so many people at so many different levels.”

As chief executive of Barchester, Dr Calveley has faced his share of controversy, including the company’s ‘jabs for jobs’ approach, which resulted in 200 job losses. While demonstrations outside its head office called on the company to sign up to the London Living Wage at the end of 2022.

“They wanted us to sign up to the London Living Wage,” says Dr Calveley. “We do actually pay at the level of the London Living Wage, but we don’t want to be contractually tied to something beyond our control, where we have no choice in it.”

The sticking point is the fact that potential rises in the Living Wage would not be met with commensurate rises in local authority funding, he says. “Local authorities don’t have to sign up to anything, but we have to use the fees for the residents they are responsible for to pay for any uplift. The London Living Wage could rise by 13% but local authorities might only give us a 3% uplift.”

Barchester currently pays a minimum of 40p above the National Living Wage, but reserves the right to choose not to do so in the future. “All staff recently received a substantial pay rise of 7% or above, so people do not feel we are getting away with paying as little as we can.”

Dr Calveley believes it is important for sector leaders to stand up for what they believe in. “During the pandemic I was pretty visible, I was on TV all the time, often at odds with the government or the CQC about our visiting policy or ‘no jab no job’ policy,” he says.

“We ended up firing 200 people [who did not get a Covid vaccination] after giving them every opportunity, which led to 11 employment tribunals. Only half have been heard but we have won them all so far. While there are competing human rights, we believe the right to life of the residents trumps the right of someone to carry on working despite the fact they have not had a vaccine. The employment tribunal agreed with us.”

Dr Calveley has mixed feelings about the government’s proposed Build Back Better social care reforms, which include a £86,000 cap on the amount anyone in England will have to spend on their personal care over their lifetime.

“Not starting them for 18 months, then pushing it back for another two years, doesn’t strike me as the most serious priority for them,” he says. “I agree with the care cap, I think that is very reasonable, but the trouble is it would never kick in. It would take residents about three years to hit the cap: only 10% of our residents stay three years, and only half of those are publicly funded. So it is an utter waste of time for 95% of anyone who goes into care.”

Proposals to make social care fees more equitable are not feasible, he says. “When you hit the care cap, some people are saying everyone, private or publicly funded, should be paying the same. I don’t agree at all. We are investing millions of pounds into hotel-type facilities, with fine dining, cinemas, and all of that, and they are suggesting someone who has got a converted town house with narrow rooms and no ensuites, should get exactly the same fee as we do.”

The government has also said it will provide £1.4 billion to local authorities to move towards paying a ‘fair cost of care’ to providers. However, Dr Calveley is cynical about whether this will be enforced. “The government will monitor the care cap, even though that will not affect most people, but they will not monitor whether local authorities are paying the true cost of care,” he says.

“There was extra funding for short-term ‘winter pressure’ beds this winter but we saw none of it, the local authorities just kept it. We actually saw fewer placements for winter pressures than we have ever seen, despite all the extra funding.”

Following controversy over the lack of transparency and focus on short-term returns of private equity-run care groups, Labour recently said it would give a National Care Service powers to crack down on private equity providers failing to provide good standards of care.

“Having been owned by private equity when I was at Four Seasons, where I lasted six months before I resigned, I would agree [that private equity is an unsuitable ownership model for large care groups],” he says. “Most private equity firms have a five-year investment return, so they have to make the 20% return a year to sell on in five years. This is not the sector to be doing that. They have a history of deconstructing businesses, selling bits off, and cutting costs, without having a clue about how to go about doing it. In our case, our
shareholders have owned us for 35 years, they have looked after the business and supported me and my predecessors in investing in quality, and growth. I think ours is a good model.”

Barchester’s most recent achievement is beating all other care groups and hospitals to win the Royal Society for the Prevention of Accidents Health and Safety Healthcare Sector award for the fourth time in five years. “For us quality is not just about CQC ratings,” concludes Dr Calveley. “We try to be the best in every area.”