The Global Healthcare Note - April 2020

Knight Frank's Global Healthcare team, spanning five continents, annually advises on £150bn of healthcare and senior living assets, has collaborated to provide a succinct overview of the COVID-19 pandemic.

Measuring the global impact of C-19 is no easy task

Data and numbers are emerging every day as we look to measure the impact of COVID-19 and it is easy to become overwhelmed. However, accurate reporting of data has never been more vital in helping epidemiologists, businesses and governments to collectively assess the situation and take appropriate action. The first concern as the pandemic unfolded was how many people will contract the virus and the number of fatalities. Best estimates of globally recorded cases of the virus (across 210 countries and territories) reached 2.5 million on April 21st and the global death toll stood at circa 180,000 (Source: Worldometer), subject to revision and likely under-reporting. 

The World Health Organisation estimates that 3.4% of recorded COVID-19 cases have died, but summarises that the real mortality rate is likely lower, as we don’t know the number of unrecorded infections. The National Health Commission (NHC) of China stated a case fatality rate of 2%. Initial estimates suggest a mortality rate of circa 15% for those over the age of 80, with even greater risks reported for those with acute care needs and/or underlying health conditions. These estimates should be approached with caution but are a clear signal of the severity of the virus.

The emerging data is a natural concern to a huge variety of healthcare organisations and operators who need to adopt heightened levels of infection prevention to protect residents, patients and the workforce. From a commercial perspective, healthcare operators and investors need to understand the potential hit to their revenue streams during the pandemic – something we will do our best to monitor and analyse as more information unfolds.

Acknowledging the role of the independent care sector in the UK and Europe

In recent weeks and days, we have seen a change in the narrative for the crisis in the UK. The initial focus in the first few weeks of lockdown was on the NHS, specifically the monumental efforts of our NHS workforce and the rapid creation of 30,000 extra critical beds via operation Nightingale and other means. However, the attention is increasingly switching to the adult social care sector and the independent care providers that have received minimal support thus far in the effort to protect elderly and vulnerable residents. 

The UK’s adult social care sector employs around 1.6 million and around 1.3 million of these are employed privately by a particularly dominant independent care sector. A mixture of profit and non-profit providers operate around 11,700 care homes in the UK, providing care to close to half a million elderly people. The pivotal role of the private sector in the pandemic is now being recognised but more support is urgently required in the form of adequate testing and protective equipment to ensure that residents and businesses survive. Care home ownership across many other European countries is also dominated by the private sector.

Insights from across our global network

Europe & UK

In the UK, operation Nightingale is delivering 8,000 ICU beds across UK, while the NHS has block booked a further 8,000 ICU beds through a deal with the private sector. The government have now promised the care home sector testing and PPE for staff and residents after supplies were initially prioritised for the NHS. As expected, new development has come to a temporary freeze – something particularly relevant to the UK senior living sector, which is undergoing a rapid phase of supply growth. 

Germany has more critical care beds than any other country and this could be reflected in the number of deaths with the country seeing circa 60 deaths per million compared to 400 deaths per million in Italy and 265 per million in the UK. Large pan-European operators, most of which are headquartered in France were mostly prepared for this crisis. Korian Group, activated Level 2 of its Epidemic Alert Plan for all its facilities in Europe on 25th February, moving to level 3 across its network on March 13th. Spain and Italy are ahead of the curve and seeing the highest death tolls. Both countries rely heavily on informal care delivered within multi-generational households, which could adversely impact their ability to protect the elderly. Furthermore, much of Spain’s residential care sector is focused on the personal care end of the acuity spectrum with nursing facilities less common.

North America

The East coast of America and New York State has been worst hit thus far, posting death toll numbers on a par with some European countries and there is particular concern surrounding the homeless population. The more sparsely populated West coast is reportedly adopting stringent isolation measures, with reports of 80% isolation. New development is expected to take a significant pause, as in Europe, but leasing activity is still in motion in the seniors market and sentiment remains cautiously optimistic. Operators in Canada report a severe shortage in protective equipment, not helped by a slow move to lockdown and the initial exportation of equipment to China in the early days of pandemic. The North American seniors market is anticipating a huge legacy effect of COVID-19 with impact on management processes, a swifter adoption of technology, and revisions to new build design.

Asia

India is not long into a lockdown compared to elsewhere in Asia, but there are reports of strong policing measures and the use of mobile software applications to track the progress of the pandemic. The government is in the middle of a huge investment campaign to provide healthcare to the regions, targeting 1.8 million new hospital beds by 2025, combined with the introduction of universal health insurance (Modicare). Despite this, there remains a shortage of critical care beds and quarantine zones have been set up to service poorer communities. The situation looks calmer in Singapore, which has so far reported circa 10,000 cases and only 11 deaths. A lockdown is in place until 4th May.

Middle East

A smaller number of deaths have been reported across the region so far in the pandemic but only because the region is behind the curve. At the time of writing there have been circa 11,600 cases in Saudi Arabia, 7,750 in UAE and 6,500 in Qatar. The UAE has the power to introduce a range of measures at speed – these have so far amounted to a ban on elective surgery, the immediate conversion of hotels into quarantine sites, on-the-spot fines and disinfecting of urban areas. Real estate professionals report increased interest from prospective investors looking at hospital development off the back of COVID-19 and the imminent undersupply of medical beds.

Australia & New Zealand

The Australian Government have passed a $130 billion job keeper support scheme to support businesses during the pandemic. The crisis has added to the delay of a current government review of the sector, led by the Royal Commission into Aged Care Quality and Safety. This review had already softened overall activity in market. Real estate transactions are largely on pause, much like elsewhere, but retirement village concepts were selling on strong terms prior to the outbreak. New Zealand adopted early and strict lockdown measures and this seems to be paying off with only a handful of deaths reported. The government have also announced pay cuts for top public officials, including Prime Minister Jacinda Ardern, for a period of six months to cushion the economic blow.

Should you have any further questions please contact Julian Evans- Head of Healthcare.

For specific research queries, please contact Joe Brame from our commercial research team.