Guide to setting up a care home

To give you a clearer idea of your obligations, we look at what setting up a care home entails and why care home insurance is an essential part of registration.  

Initial considerations for opening a care home 

As with any business, it’s important to consider its viability. If you’re applying for a business loan, your lender will expect to see a comprehensive business plan that supports your idea.  

When it comes to care homes, you’ll need to explore: 

Local demographics  

If you want to open a care home for older people, check what demand there is locally. 

Competition  

Review local competition and ask yourself if there’s room for another provider. If you’re confident there is, think about what might make your home stand out.  

Type of care provided  

If you’re considering adult social care, be clear about the type of care you provide, for example, residential, respite, nursing or dementia care. You can provide different types of care, but think about whether space allows (for example, dementia care providers usually have separate units for people living with dementia).  

Essential qualifications and skills 

Care homes must be run by a registered manager who holds a level five diploma in health and social care. For deputy managers, this qualification is the next step in their careers and helps them develop the skills needed to manage a care home.  

Senior carers are usually expected to hold a level three diploma in health and social care, while care workers should have a level two diploma. First-time carers are often supported by their employers and given study time outside of work to complete their level two, or can be offered apprenticeships for on-the-job training. 

Navigating CQC registration 

All care homes must be registered with the CQC as a ‘new provider’, and you’ll also need to register the ‘new manager’.  

It’s free to apply, but you’ll need to pay an annual fee to keep your registration active. You’ll also need to provide details of where the home will be and the type of care that will be carried out (for example, nursing care).  

Not registering your care home can lead to heavy fines and, in some cases, you can be imprisoned.  

CQC fundamental standards

As part of the registration process, you’ll have to agree to meet the CQC’s care standards, known as the ‘fundamental standards’. These are the minimum levels of care residents should expect, and include: 

• Person-centred care – care must be tailored to each person, with their wishes taken into account. 

• Visiting and accompanying – care home residents should be able to go out without difficulty and can expect to be accompanied if they need to see a doctor or go to a hospital.  

• Dignity and respect – residents must be treated with dignity, respect and as an equal, including their privacy. 

• Consent – residents or their legal representatives must give consent for treatment.  

• Safety – residents must not be put at risk, and as the provider, you must carry out health and safety risk assessments.  

• Safeguarding from abuse – residents should not experience poor treatment that can be considered abusive, such as neglect or unnecessary restraint.  

• Food and drink – residents must receive food and drink to maintain good health (this includes modified diets for those who need it). 

• Premises and equipment – this must be clean, properly maintained, and fit for purpose. 

• Complaints – there should be clear processes for making, investigating, and managing complaints.  

• Good governance – there must be a clear system for ensuring quality of care. 

• Staffing – care homes need to be properly staffed so that employees can carry out effective care and support these fundamental standards.  

• Fit and proper staff – you’ll need to implement good recruitment practices to employ qualified and competent staff.  

• Duty of candour – the care provided must be transparent so that if something does go wrong, it is acknowledged and addressed.  

• Display of ratings – homes must show their CQC rating where it can be seen.  

CQC inspections 

The CQC regulates health and social care in England and inspects services to ensure they meet standards. Inspections are either comprehensive or focused. 

Comprehensive inspections look at five key areas: safe, caring, effective, responsive, and well-led. Focused inspections are shorter and don’t always cover all five areas.  

When the CQC visit your care home, they’ll observe the care provided and speak to residents, their families, and staff. They can also review any policies you have, care plans, resident risk assessments, and other records (such as winter contingency plans).  

Using all this information, they’ll assemble a report of their findings and identify any steps you need to take to improve your service. The home will also be given a rating of ‘outstanding’, ‘good’, ‘requires improvement’, or ‘inadequate’.  

Legal and regulatory requirements for care homes 

All care homes must ensure they meet their legal obligations, which are set out in a number of different pieces of legislation, which include: 

The Health and Social Care Act 2008 (Regulated Activities) Regulations 2014 

This is the central set of regulations that you must meet and includes the fundamental standards. 

The Care Quality Commission (Registration) Regulations 2009 

These regulations set out the need to register your care home and what you must do if there are any changes to this. 

Mental Capacity Act 2005 

This provides guidance about how to support residents who may not be able to make decisions themselves.  

The Care Act 2014 

This document provides safeguarding guidelines, ensuring that there are policies and procedures in place to keep vulnerable adults safe and how to identify and manage concerns.  

Food Safety and Hygiene Regulations (England) 2013 

This provides clear food health and safety regulations in England, giving local authorities the power to ensure food safety.  

Data Protection Act 2018 

This sets out how people’s personal information can be used and processed. It describes the rights of individuals whose data you hold and your responsibilities for keeping it safe and secure.   

Employment Rights Act 1996  

This act governs employment rights in the UK, including the right for employees to have a clear contract and the rules around time off, dismissal, and redundancy.   

Developing essential policies and procedures 

Your legal and regulatory responsibilities will need to be interpreted into day-to-day practices, which should be set out in policies. Within each policy, there should be a clear process that identifies concerns and the steps you’ll take to resolve or manage these issues.  

Policies to consider drafting include: 

• Safeguarding 

• Medication management 

• Complaints 

• Health and safety for residents and staff 

Staffing your care home

Your care home needs to have enough staff to ensure you meet all your legal obligations. You also need to put in place clear recruitment policies to make sure potential employees undergo all the necessary checks and have the correct qualifications.  

It’s also your responsibility to ensure staff have the tools and training to do their jobs. Apprentices or newly employed staff should also be properly supervised (a comprehensive induction process can help here).  

Regular appraisals should be in place too, so that employees have clear guidance and feedback on how to improve performance.  

The importance of care home insurance

Care home insurance isn’t just about cushioning financial risks; you’ll need to show the CQC that you have suitable insurance. The CQC can provide you with a list of the minimum insurance features you’ll need, but policies should be tailored to cover your specific activities.  

Features to consider as part of your care home insurance package include: 

• Buildings, contents, and residents’ property – provides compensation for insured events (for example, fire, flood, theft, vandalism).  

• Employers’ liability – you must have this by law if you employ anyone, even on a part-time basis.  

• Public liability – this covers costs if a third-party blames your business for injury or damage (for example, if a resident’s relative tripped and fell while visiting).  

• Medical malpractice – covers costs if your home is accused of medical negligence.  

• Loss of registration – if you risk losing your CQC registration but have justification to challenge, this will pay for your defence (there may be a limit to what you can claim).  

• Business interruption – if your care home has to close due to an insured event, this covers your loss of income and pays any additional expenses related to the closure.  

• Fleet insurance – vehicle insurance for any cars or minibuses owned by the business.   

• Fidelity cover – covers misdemeanours carried out by employees (for example, stealing). 

• Abuse cover – this is typically a ringfenced amount under your public liability policy. For example, your public liability cover might be up to £5 million, but abuse cover may only be up to £1 million.  

Mitigating financial risk with care home insurance 

Providing care services is considered a regulated activity, which means you must follow strict legal and regulatory rules; if not, you can be fined and imprisoned.  

Nearly half a million people live in care homes, but the UK’s ageing population means an additional 144,000 beds will be needed over the next ten years to meet demand. But, setting up a care home still needs careful business planning and involves key steps: 

• Understanding local demographics and potential demand 

• Registering as a new provider with the CQC 

• Finding qualified employees 

• Meeting the fundamental standards of care and setting out policies to support this 

With so much to consider, it’s easy to forget the role business insurance can play in helping support your business. Not only can care home insurance compensate you for property, contents, and equipment damage, but a comprehensive policy can also help minimise other financial risks, such as business interruption.  

The fine lines between different liability covers (for example, professional liability versus medical malpractice) also means care home insurance is a complex and specialist policy.