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Thursday, February 16, 2017

The desperate situation of the UK Care Industry. The perfect business case study

The state of the care industry in the UK is desperate and fascinating. Desperate, if you are one of the poor sods seeking care and fascinating because of the business decision it faces. It would make a first class business school case study.

Summary of the case study

Around 45% of care home residents pay the fees themselves.

The local authority pays all the fees of 36% of residents. The remainder are mix of state and personal payments.

Because local authorities are unwilling or unable to pay the full rate it forces the care home to overcharge the private paying residents £100/week for exactly the same service.

The upside for the care home is that selling to local authorities is B2B but the private payer is B2C. So there will be a difference in the cost of acquiring customers.

This is a quote from one of the experts in the care home industry

“The entire care home sector for older people is being kept afloat through cross subsidies from . . . residents that pay privately,” said William Laing, founder of the consultancy. Self-funding care home residents were in effect being charged an additional £8,000 a year “care tax”, he said.

Read this press comment for a summary of the situation.

So marketing director what do we do?

Change to only accepting private payers?
Try and increase the percentage of private payers?
Put out head in the sand and hope for the best?

At the moment the care industry is adopting the last of these options plus appealing for more money to be spent by central government on care. At best this will be too little too late. At worst it will not happen.

An interesting dilemma. If you want to see the 'model answer' to the case study then read my new book This I Know. Dick Stroud

Wednesday, February 15, 2017

Fake news takes many forms. Misrepresenting or omitting facts is widespread in the Ageing Industry

The headline in the Guardian newspaper reads : "Pensioners now '£20 a week better off' than working households."

Blimey, you think to yourself. Here I am working away and the retired couple, living next door could be £1,000/year better of than me.

Needless to say the source of the data is the Resolution Foundation who has taken it upon themselves to be the voice of Millennials against their nasty parents. To be honest, that was a bit of fake news as well, although it is not far from the truth

If you read past the headlines then you discover this "£20 a week better off' is after taking into account housing costs. Mmmm, what exactly does that mean?

You then read a bit further and find this statement.

The report shows a sharp divide in wealth levels among pensioners. The top fifth of pensioner households account for 74% of employment income, 66% of investment income, and 52% of occupational pension income. In contrast, the poorest fifth of households are almost entirely reliant on benefit income.

Now this is the real news in the report. The top 20% of pensioners own the lion's share of the wealth and income. Another headline could be that "20% of pensioners are reliant on the basic state pension that is one of the lowest in Europe".

We all indulge in fake news and select the 'facts' that support our views and suppress or hide those that don't. Dick Stroud




Monday, February 13, 2017

One in 16 retired households will enjoy £1m of spending over their future lifetime. That's a fact you should know



Tilney is a company of financial advisers/investors. I think it is fair to say that you must read their research findings with that in mind. That said, their analysis of the future spending of different age groups is fascinating. I have never seen anything like it before.

You should definitely read this report : The cost of tomorrow - Forecasting our future spending

The findings are based on the latest ONS Family Spending Survey. The researchers calculated how much a household would spend at each stage of life based on the typical life expectancy for someone of that age.

The researchers calculated the spending for the top and bottom quarter of households in each category according to the income characteristics of each age group. Additional insight came from a survey of 2,007 adults aged over the age of 45 years.

Here are some factlets for you to consider.


From the age of 65, the top quarter can expect to enjoy spending £683,000;
the average over-65 household £420,000

Housing costs diminish with age – so a typical retired household can
expect to spend £99,500 on having fun, £41,000 of which is on holidays

One in 16 retired households will enjoy £1m of spending over their future
lifetime, and is able to devote disproportionately more to the finer things
in life

Not as if you need telling, but this data spells out the magnitude of the consumer spending by older people. It illustrates the huge regional differences and the differences between the most affluent and least affluent 25% of the age group.

Well done Tilney for producing such a good research report. Dick Stroud