• What are the trends that care specialist operators saw in 2021 and how will management adapt in 2022

What are the trends that care specialist operators saw in 2021 and how will management adapt in 2022?

11 March 2022

Specialist healthcare continues to be regarded as a robust sector that has been managed well throughout the pandemic, with compelling longevity and market characteristics. In common with many sectors, it is facing some challenges around staffing and cost pressures moving into 2022.

However, investors are looking beyond these shorter-term challenges and continue to be attracted to the sector, with a focus on creating platforms delivering care of the highest quality. This offers established operators the opportunity to access additional capital. This capital is being used to develop new technologies, improve ESG processes and invest in the people, technology, and governance to deliver care of the highest quality. This provides management with a number of strategies available to pursue in order to continue to grow and develop their businesses.

By specialist healthcare we mean services to adults and children with learning disabilities and mental health conditions delivered in a home care, supported living or a residential setting.

The trends driving value in specialist healthcare in 2022

Overall, the specialist healthcare sector is driven by demographics, with clear ongoing demand for these services.

This was demonstrated through the pandemic as despite significant operational challenges the specialist healthcare sector remained relatively resilient in terms of occupancy levels (compared to elderly care homes, that are now seeing a return towards pre-pandemic occupancy levels).

As a result, the specialist healthcare sector has continued to attract investment from both existing entities and new entrants, and we have seen a significant number of successfully completed transactions across the sector. Private equity funders seeking to build high-quality, focused platforms have been competing with existing operators with buy-and-build mandates for appropriate acquisitions. Meanwhile, smaller operators sought the opportunity to support growth and obtain new investment or become part of a larger organisation.

We expect to see these trends continuing into 2022, albeit there are some headwinds facing the sector, which we touch on below.


Staffing has been an underlying issue for a number of years in some areas of the UK but it has now become an acute problem across the healthcare sector. Both Brexit and COVID-19 have affected the availability of qualified staff. Competition for labour from across the economy is also attracting staff away from the sector. In addition, the sector is yet to feel the impact of upcoming increases to National Insurance and the National Living Wage in April 2022.


Overall inflation in overheads, including increases in energy costs and insurance premiums, are expected to impact performance in 2022. PPE and COVID-19 testing, which have protected workers and service users, are likely to become embedded going forward with associated costs.

The Infection Control Fund grants have alleviated some of the cost pressures of PPE and COVID-19 testing requirements, but in due course these costs will need to be factored into budgets. 

Funding for care

Local authority funding was under pressure throughout 2021 and into 2022 as local authorities continue to respond to the challenges faced by care operators and other pandemic-related challenges. Care operators are likely to be facing difficult negotiations with local authorities to reach agreement on appropriate levels of annual fee increases.

Environmental, Social and Governance (ESG)

Environment, social and governance areas are rightly receiving an increasing focus across the sector. In the short-term at least, these may drive up costs, albeit will drive longer term sustainable value.

What are the right strategies for specialist healthcare management teams in 2022?

So how should management teams respond to these trends over the next 12 months, alongside a relentless focus on quality?

There are a number of actions that management teams will want to consider in response to changing market circumstances in 2022. Some of the actions that we are already seeing and predict for the rest of the year are:

Accelerated acquisition strategies

M&A in the wider specialist healthcare market experienced high levels of activity in 2021, which we expect to continue throughout 2022 as smaller operators grapple with the increased cost burdens, whilst larger operators are seeking to grow portfolios.

The homecare market, in particular, has experienced significant recent growth as increasing numbers of customers are treated in their own homes rather than in a clinical environment. There are a number of operators and new entrants that see the current homecare market as a growth opportunity and have brought forward plans to invest in the sector.

New investors in the specialist healthcare sector

As a direct result of resilient market dynamics, we expect new investors to continue to be attracted to the sector in 2022. Management teams understand this change too and we are already seeing early discussions with potential new investors taking place. Infrastructure funds continue to view the sector as robust over the medium and long term and are seeking opportunities in the sector. They have the funding to support significant levels of investment and are a potential exit route for some private equity-backed platforms.

Debt refinancing

The cost of debt remains comparatively low albeit there are signs of rising interest rates. Operators in the care sector should consider moving early and ahead of their current scheduled refinancing dates to take advantage of relatively cheap debt. This should not be limited to refinancing but also to create facilities for acquisitions.

Strategic divestments

As some providers review their cost base, especially in light of rising costs, we expect more rigorous strategic reviews, and some operators will seek to divest specific divisions of their operations that underperform against established sector benchmarks. 

Technology in specialist healthcare

Technology is becoming one of the keys to providing high-quality care to a growing number of people. Technology not only improves care services but drives efficiencies - especially important at a time when compliance is heightened and requires significant resource to manage.

Data analytical tools are playing an increasing role in care delivery too. The volume of data captured in the care setting is growing and driving improvements in productivity.

Some care operators are exploring acquisitions in assistive technology and enhanced communication services to deliver stronger pathways of care – a trend that we expect to see throughout 2022 as care operators become more specialist and seek to deliver the highest standard of care possible.

Get in touch

Our M&A healthcare team works with several care providers with private equity-backing as well as commercial operators and the not-for-profit sector. For more information, contact Helen O’Kane.