Backing healthcare during coronavirus

Barclays has been supporting the UK healthcare sector for two decades as one of the biggest lenders supporting clients including care home owners, high street pharmacies, dentists, GP surgeries and more. Barclays industry experts Tony Reynolds and David McHattie shed light on how this crucial sector has fared under the pandemic – and why “keeping the lines of communication open” is key to businesses’ recovery.

The coronavirus pandemic has challenged businesses operating in healthcare, and the key workers they employ, in ways not seen in our lifetimes. While those on the front line have been working tirelessly to treat those impacted by the health crisis, others, such as dentists, have been challenged by closures and reduced service, in order to meet government safety guidelines.

There are almost two million people employed in the healthcare workforce in the UK across the public and private sector. Over one million are employed by the NHS in England alone – with healthcare representing nearly 10% of total GDP spending. 

Tony Reynolds, Head of Public Sector and Health at Barclays Business Banking, says it’s important to not make “sweeping statements” about how the sector is faring, and remember that specific areas have faced varied challenges.  

But, for many in the sector, cash flow has been a key issue. Pharmacies have faced these difficulties, Reynolds says, but have been able to stay afloat due to “the retail element of the business” and key NHS contracts, which ensure a regular income stream. However, closures have impacted businesses that require close contact, like dental surgeries, while others that have been able to remain open have found costs for vital PPE and additional cleaning materials a significant demand on resources.

And, even as some businesses in the sector start to reopen, they will face problems – from potential decreases in public confidence in making visits, to reduced capacity in small spaces to adhere to social distancing measures.

Making sure help is on hand

Care homes have faced a multitude of problems, including maintaining necessary staffing levels in the face of the pandemic and obvious concerns around staff and resident safety.

“A lot of the staff are having to stay onsite because it’s not safe for them to return to their families. Their dedication has been incredible,” says Reynolds.

Fraud has also been a major cause of concern: “There has been an issue with a number of operators losing money to supposed suppliers of PPE,” says David McHattie, Head of Healthcare at Barclays Corporate Banking. Alongside health and safety implications, he says care homes are also under cash flow pressure. Put simply, and sadly, many have faced lower occupancy rates at the same time as facing difficulties admitting new residents due to lockdown restrictions.

Those who own care homes have had to adapt their operating models to these circumstances – and also have concerns about how the crisis could impact admissions and staff recruitment in the long-term.

“Our support now is critical to ensure that residents can continue to be looked after safely in their homes, uninterrupted by the pandemic,” says McHattie.

Where businesses have needed immediate financial support to cover unexpected costs or wages while furlough schemes kick in, Barclays has been on hand to help by facilitating government-backed loans through CBILS and CLBILS, and Bounce Back Loans of up to £50,000. The bank also offers capital repayment holidays of up to a year, and short-term overdrafts for those with acute cash needs.

“Necessity is the mother of invention”

Both Reynolds and McHattie are hopeful that many areas within the sector will recover “out of sheer necessity” once normal life resumes and say that Barclays’ role in supporting the sector in the here and now, laying the groundwork for future resilience, has been key.

“What these government schemes allow clients to do is to try to protect a very short period of cash flow and extend that over a period of time that is affordable to repay, without necessarily affecting their long-term strategy as a business,” Reynolds says.

Thinking about how the pandemic has “forced the pace of change”, McHattie cites a revolution in digital healthcare, with the widespread adoption of video conferencing both in care homes and healthcare settings. A recent report by PwC found that the number of GP online consultations has risen from 10% to 85%.

Next steps

As lockdown eases, McHattie and Reynolds say monitoring and protecting cash flow should be a priority for those in the healthcare sector. They also urge businesses to be transparent about how they’re coping, citing communication as an essential part of getting the support they need.

“It is better to engage on these issues in advance of problems,” says McHattie.

“The single most important thing, from a banking perspective, is that it’s critical they stay in touch with us,” Reynolds adds. “If they see any signs of pressure, they should contact us and involve us in the decision making to ensure we are properly able to support them along the journey.

“Those lines of communication should be opened, from the beginning of decision making all the way through to the end.”