Closer collaboration and, in the right circumstances, merger could create more resilient organisations, better careers and a more continuous experience of care.
Charitable hospices and not-for-profit care homes often serve the same communities, employ people with overlapping skills and support individuals at different stages of the same care journey. Yet they commonly operate as separate systems, with different funding models, leadership structures and public identities. In a period of sustained financial pressure, these organisations should no longer take that separation for granted. Working together more closely could improve resilience, extend the reach of charitable resources and, most importantly, deliver a more coherent experience for people and families.
Two complementary financial models
The financial case begins with complementarity. Many charitable care homes depend on private fee-paying residents to make their operating model viable. Good occupancy, disciplined pricing and a suitable mix of care are consequently crucial. Hospices, by contrast, typically draw on a broader but less predictable portfolio of statutory funding, retail income, fundraising, donations and legacies. Neither model is inherently stronger; each faces a different pattern of risk.
Recent sector benchmarking illustrates the urgency. A broad sample of hospices reported a substantial underlying deficit excluding restricted capital income. A clear majority were operating at a deficit, payroll represented the largest component of expenditure, and a significant minority held limited free reserves. Statutory funding covered only a modest proportion of total expenditure, while fundraising and retail remained essential to sustaining services. These findings point to a sector absorbing rising costs through reserves, vacancies and service reductions rather than through a funding settlement that keeps pace with demand.
A combined group could spread those risks. Recurring fee income from care services could reduce dependence on volatile legacy receipts and annual fundraising performance. In return, a hospice’s trusted local brand, fundraising expertise, volunteer base and relationships with commissioners could strengthen a care home’s market position and social purpose. Diversification would not remove financial risk, but it could make the overall organisation less vulnerable to a shock in any one income stream.
Continuity of care, not organisational convenience
The strongest argument is not financial engineering; it is continuity of care. People do not experience neat boundaries between home care, residential care, nursing care, dementia support, respite, rehabilitation and end-of-life care. Families can find themselves navigating multiple providers precisely when circumstances are most difficult.
A hospice and care home working as one system could offer earlier palliative input, better advance-care planning, shared clinical records and smoother transitions as needs change. Hospice expertise could support residents and care-home teams before a crisis develops, while care-home capacity could provide respite, step-down or longer-term support where an inpatient hospice bed is neither necessary nor desirable. A mixed model can also allow people to remain within a familiar organisation as they move from personal care to nursing or specialist dementia support.
Local market analysis demonstrates how such a model can work commercially as well as clinically. In one relatively prosperous regional catchment, the analysis judged a proposed medium-sized charitable care facility capable of supporting a mix of personal, nursing and dementia care, with strong mature occupancy and a high proportion of self-funded residents. The analysis also identified unmet demand for modern dementia and self-funded provision. While every locality is different, the lesson is transferable: a hospice’s estate, reputation and care capabilities can form the platform for a viable broader care offer where robust evidence demonstrates local demand.
Making better use of scarce staff
Workforce pressure is a shared constraint. Hospices face rising payroll costs and recruitment gaps; care homes compete for the same nurses, care assistants and allied professionals. Closer integration could support joint recruitment, rotational roles, shared clinical education and clearer career pathways. A nurse might develop experience across community, residential, dementia and palliative care without leaving the organisation. Specialist hospice teams could train and advise care-home colleagues, while care-home staff could provide a flexible pool for respite and community services.
This is not a case for stretching the same people more thinly. Integration succeeds only if it improves deployment, supervision and development. In areas where the available workforce is already limited, a larger charitable employer may be better placed to offer competitive pay, benefits, training and dependable hours. Scale can also reduce agency reliance and create specialist posts that either organisation could not sustain alone.
Economies of scale with a purpose
There are also genuine economies of scale. Shared finance, payroll, human resources, IT, procurement, estates, compliance and governance can reduce duplication and improve capability. A larger organisation may secure better purchasing terms, use buildings more intensively and justify stronger systems for data, risk management and workforce planning. Fundraising, communications, volunteering and retail infrastructure can serve a wider range of charitable services rather than a single institutional model.
Reserves could also be managed more strategically. Hospices often draw on reserves to cushion recurring deficits, while care-home expansion may require substantial capital and working capital before occupancy matures. A group structure could enable more balanced capital allocation and stronger treasury management. However, reserves are not simply a pool of cash to be redeployed: trustees must respect restrictions, designated purposes and the interests of present and future beneficiaries.
Collaboration first, merger where it adds value
Merger is not the only route. Organisations can begin with joint training, shared procurement, a common staff bank, hospice outreach into care homes, pooled back-office services or a jointly operated facility. A formal group, shared-services subsidiary or strategic alliance may capture much of the benefit while preserving distinct brands and accountabilities. These arrangements also allow partners to test culture, systems and decision-making before considering full integration.
Where organisations contemplate merger, due diligence must go beyond the balance sheet. Trustees should examine care quality, regulatory history, property liabilities, workforce terms, pension exposure, data and technology, funding dependencies, charitable objects and the realism of occupancy and fee assumptions. They should also be clear about governance, which outcomes will improve, how local identity will be protected and how beneficiaries’ voices will influence the combined organisation.
A strategic opportunity
Hospices and charitable care homes face different pressures, but their missions are closely aligned. One brings deep expertise in palliative and end-of-life care, community trust and fundraising, the other can bring recurring income, residential capacity and a platform for longer-term care. Together they can offer a broader continuum of support, make better use of scarce people and assets, and build greater financial resilience.
The opportunity should not be reduced to cost savings or balance-sheet strength. It is about designing charitable care around the lives of people rather than the boundaries of organisations. For boards willing to look beyond traditional models, closer partnership, and sometimes merger, could be one of the most important strategic choices available.
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