Orchard Care Homes has more than doubled in size following the acquisition of 44 homes from Southern Cross. Lizzie Murphy met chief executive Paul Mancey
IF he’d made a different decision in 2005, Paul Mancey would now be living in a beach house in Australia.
But instead of accepting a job on the board of a leading retailer, based in Adelaide, Mr Mancey decided to stay in Leeds and become chief executive of a small northern care home operator.
“We’d chosen schools for the kids, a house in Brighton Beach and we were going to Australia,” he says. “But then a local entrepreneur I know made me an offer I couldn’t afford to turn down.”
That entrepreneur was Lawrence Tomlinson, founder and chairman of LNT. Mr Mancey was brought in as chief executive of LNT Properties, a group of eight companies which included Orchard Care Homes.
“It was a very difficult decision to make,” he says. “I’ve spent quite a bit of time in Australia – I love it over there – and there was a very interesting job to be done.”
And so we find ourselves sitting in the headquarters of Orchard Care Homes on a Leeds business park on a cold and wet October morning.
So did he make the right decision? “Clearly not,” he laughs. “Or not today, at any rate.”
Mr Mancey, 48, is leading Orchard Care Homes through a period of rapid growth. The company has more than doubled in size after taking over the running of 44 care homes across England, Scotland and Northern Ireland following the collapse of Southern Cross earlier this year.
The firm is already one of the largest providers of elderly care in the north of England but the acquisition makes it the 11th biggest care home operator in the UK.
“Our heartland has always been the North of England but taking on these homes extends our reach into the Midlands, Scotland and Northern Ireland,” says Mr Mancey.
The move has more than doubled its turnover to £90m and taken the number of care homes it operates from 35 to 80.
Mr Mancey has ordered a £5m repair and renewal programme across the homes and over the next month he will go round and meet all the teams.
The company now has 3,500 staff in total after transferring over 2,000 staff from Southern Cross. It has also recruited an additional 25 staff at its head office at Thorpe Park, Leeds.
Occupancy across the care homes has declined by about three per cent over the last year. “We need to re-establish the confidence of the teams and the local authorities and healthcare professionals before we start building occupancy again,” he says. “One of the good things about care is that if you do a good job you have a good business.
“The biggest issue for Southern Cross was that the care homes weren’t run very well.”
The care home sector is in turmoil amid increasing costs and Government spending cuts. The main challenge for Orchard Care Homes, according to Mr Mancey, is increasing the quality of life for people in care homes while finding new ways of stripping out unnecessary costs.
Although high care home fees are a serious issue for many elderly people and their families, Mr Mancey says the majority of residents are funded by local authorities, leaving care home operators with many of the cost burdens.
Orchard Care Homes receives a fee for running its homes from landlords plus a performance bonus whereas previous business models would see the firm both lease and run the home.
However, Mr Mancey adds: “The fees paid by the local authorities don’t cover the true cost of care. Our private fees are going up in line with inflation but that doesn’t cover the effective reduction in margin through local authorities holding their fees when our costs are going up.”
Orchard Care Homes is rolling out a number of specialist care programmes, including dementia care, and is working with disability charities, such as the Royal National Institute of Blind People, to find new ways of improving the quality of life for these groups.
The company recently appointed Mike Lake, former director general of Help the Aged, as a non-executive director for the company. “He has been invaluable in helping to open doors with the charitable sector,” says Mr Mancey.
Orchard Care Homes also has a partnership with Boots to trial electronic medication, which is already up and running and will be rolled out into the new homes.
The tough economic climate is also presenting the company with new opportunities. “There are many other care businesses that are in financial trouble,” Mr Mancey says. “The care industry is in such a state of turmoil that as and when opportunities arise we will be looking for them.”
He adds: “There is almost a once-in-a-business cycle opportunity now to grow and companies that can step change the quality of service can seize that opportunity.”
However, Orchard Care Homes has had its own share of problems during the financial crisis.
In 2007, Mr Mancey led a £175m deal management buy-out, part-funded by a £70m sale and leaseback transaction. The company underwent a rapid growth programme, opening one in four new care homes in the country.
But the sale and leaseback market effectively closed following the fall-out of the banking crisis in 2008 and the company went through a company voluntary arrangement (CVA) in 2010.
Mr Mancey says: “Because we did so well operationally, we got 100 per cent support from the creditors and we emerged from the CVA debt free. We have now got one of the strongest covenants in the sector.”
The company handed back a number of care homes to landlords, reducing its bed-count from 2,200 to 1,600. It now has 3,745 beds.
Mr Mancey grew up in Brentwood, Essex, the son of a ships planner. After leaving school, he decided to become a chartered accountant and went to Nottingham University to study for a degree in industrial economics.
However, he says he quickly realised that accountancy wasn’t his calling and decided to go into marketing instead. He began his career in Chelmsford as a graduate trainee for the soft drinks division of Bass, which went on to become Britvic Soft Drinks.
He went on to work for Colgate-Palmolive and then worked his way up the corporate ladder at Tesco from marketing manager to setting up and leading Tesco Home Shopping and launching tesco.com.
“When I joined Tesco, I think you would have been certified if you’d thought that Tesco could be number one grocer in the UK because Sainsbury’s was so far in front,” he says. “I had a brilliant time there. I really felt part of the Tesco story.”
Mr Mancey, who is separated with three teenage children: Ed, 18, Kate, 16, and Georgina, 13, moved to Yorkshire in 1998 and, in 2002, he was headhunted by rival Asda where he became trading director of food before moving to LNT Group.
The plan was to develop 2,000 care beds over two years for a sale. But after two years Mr Mancey says he saw the opportunity to do the management buyout.
The excitement of doing new things has been the main driver throughout Mr Mancey’s career and also his hobbies.
“I love sports and I like having something to work towards,” he says. “I did the Oxfam trailtrekker this year and the next challenge will probably be climbing Mont Blanc.”
He adds: “I love change, I love new things and implementing new things. Now I’m really excited about what we can do to care in the uk.”
Paul Mancey Factfile
Title: Chief executive of Orchard Care Homes
Date of birth: December 1, 1962
Education: The Coopers’ Company and Coborn School in Upminster
First job: Barman
Favourite song: My favourite album is Dark Side of the Moon, by Pink Floyd
Car driven; Porsche
Favourite film: The Big Lebowski
Favourite holiday destination: Cornwall
Last book read: The Strange Case of Dr Jekyll and Mr Hyde, by Robert Louis Stevenson. I read it with my daughter for her English literature A level.
Most proud of: My children