Last week Barchester Healthcare announced that it would be acquiring 24 brighterkind care homes in what may be one of the largest care home deals since HC-One’s purchase of 122 care homes from Bupa in 2017.

Few care home transactions are large enough to give rise to competition-related concerns, and Barchester’s acquisition provides a good illustration of the relatively small competition risk associated with M&A deals in this part of the health and care market. Even the much larger HC-One/Bupa deal (where Aldwych Partners was part of the advisory team) was cleared relatively easily by the Competition & Markets Authority (CMA).

The CMA, in reviewing care home transactions, looks at residential and nursing care homes separately. It does not regard these two types of homes as competing, in any significant way, for the same residents. This is partly a function of older persons who need nursing care being unable to choose a residential care home, and partly a function of older persons who need residential care not wanting to be admitted to a nursing care home. (This is not the entire story and there are shades of grey in this reasoning but, nevertheless, the CMA’s segmentation of the market in this way can be expected to continue for the foreseeable future.)

Barchester’s portfolio is mostly made up of nursing care homes. A quick look at the CQC data indicates that, in England, it has 20-25 residential care homes and nearly 150 nursing care homes. (It also has a number of care homes elsewhere in the UK.) As we understand it, the brighterkind care homes being sold to Barchester include 11 residential care homes and 13 nursing care homes.

From a competition perspective, and taking the residential care homes first, none of the brighterkind residential care homes are close enough to any Barchester residential care homes for there to be any meaningful competition between them for residents.

(When thinking about how close care homes have to be to compete with one another for prospective residents, it is helpful to bear in mind that most care homes have a local catchment area of around 20-minutes’ drivetime from which the vast majority of their residents originate. This drivetime will, in most cases, be slightly larger in rural areas, say 25-30 minutes, and slightly smaller in urban areas, say 15-20 minutes.)

The nursing care home part of Barchester’s acquisition is slightly trickier than the residential care home element although not sufficiently so to warrant a CMA review.

Two out of the 13 brighterkind nursing care homes that we think are part of the transaction are quite close to existing Barchester nursing care homes. In Bourne, a small town in the south of Lincolnshire, Barchester will be (if our figures are correct) operating two of the town’s three nursing care homes. This, of itself, is not any cause for concern from a competition perspective. Older persons, or their families, when considering a nursing care home will typically look at homes over a much wider area. If we apply a 20-minute drivetime to Bourne, this includes the neighbouring towns of Spalding and Stamford (see map below, red diamonds are Barchester care homes, the green square is the brighterkind care home and the blue circles are other care homes).


The CMA, when reviewing a care home merger, looks at the market share of the merged business within its local catchment area as part of its assessment of the transaction’s effect on competition. In the HC-One/Bupa transaction, the CMA decided that where the merger resulted in the combined business having a local market share of more than 35%, this was sufficient to warrant a closer look at the local market. (Where the market share was less than 35% the CMA did not pay any further attention to that local market.)

Applying this approach to the Bourne area, Barchester – following its acquisition of brighterkind – would have a local market share of 37% based on a 20-minute drivetime (i.e. a slightly smaller drivetime than the CMA might be expected to apply). This would be just above the 35% threshold the CMA has previously used, but not sufficiently in excess of this threshold to justify any significant concerns or CMA intervention. Moreover, a larger drivetime could be expected to result in a smaller local market share for the combined business, and which would most likely take it below the 35% threshold.

In Tewkesbury, again the brighterkind nursing care home that we believe is being acquired, is quite close to a Barchester nursing care home (see map below). Again, however, there is no cause for any significant concern from a competition perspective. Barchester, having acquired this care home, will have a local market share of around 23%, which is well below the 35% threshold set out above.

All in all, the transaction is typical of what can generally be expected in care homes transactions. Even where an acquirer has care homes in the vicinity of those that it is acquiring, it is rare for this to result in a local market share sufficient to trigger CMA interest or concerns.