The care sector is caught in an interesting position at the moment, and there are regular news stories about care homes under financial pressure. On the one hand, it is faced with unprecedented financial and staffing pressures leading to a squeeze in profitability. On the other hand, it is a time when demand is growing and according to the property agents opportunities are abundant. Many care homes need to be assessing their situation both for the short term and into the future. Julie Hopkins, care home and care at home specialist at accountants Albert Goodman suggests: “It has never been more important for care businesses to work with specialist advisors who understand the opportunities and issues that the sector is facing”
To understand the dichotomy a good starting point is to understand the difference between publicly funded care and that which is paid for privately. Despite the government increasing the pot by a couple of billion very little seems to have come through to independent care homes who can be left with an income that barely covers costs. Compound this with the reducing number of overseas workers and the rising Minimum Living Wage it is not surprising that many care homes are really struggling. For some homes, which Albert Goodman has been working with, the answer has been to very closely examine monthly outgoings and to increase the proportion of privately paid for beds. However, many are not comfortable with the idea that private clients are then in effect subsidising those funded by the local authorities.
In order to assist with care in the community, there are funding opportunities for ‘not for profit’ and social enterprise ventures, but attention needs to be paid to application deadlines so they are not missed. Particular areas where this is being looked at focus on home care, day care, supported living and community care. At Albert Goodman, we have regular insights into the funding opportunities out there and are quick to respond.
With an aging population profile and pressures on caring for the elderly in traditional family structures where there is a need for all adults to be out to work the situation is not going to get any better. This, in turn, will increase demand for care services whether in a Care Home setting or the persons own home.
Why are care homes under financial pressure despite an ever growing demand for their services?
If the Property agents who specialise in care homes are to be believed opportunities are rife, care home property yields are rising and investors are queuing up for a piece of the action.
Part of this is based on an assessment of growing demand and an assumption that some of this will come from private individuals who will be happy to pay for quality service in the mid to upper service tiers. A superb level of care is seen as the driver of commercial success. There is interest in building new retirement villages and in both new build and major refurbishment of existing care homes. Part of this is because by utilising modern building standards and energy efficiencies they can be cheaper and easier to run, they can also be more appealing to recruiting and retaining staff. But, it is just as much about being attractive to the more profitable privately funded clients.
There is still a place for the traditional independent residential home operating as part of small groups, but they do need to be alert to the shifts in the market. For some of our clients selling in a reasonably buoyant market may be an attractive option but most are in it for the long term. Albert Goodman can help manage the existing financial pressures and this can be helped by introducing real time financial performance monitoring alongside benchmarking and the help this can give in really understanding the underlying business. Albert Goodman can look closely at your business and assist with forecasts and financial control to ensure ongoing future success, using our knowledge of the care sector to add value to the businesses. Our Corporate Finance team can provide very constructive advice on both the option to sell – or just as importantly – purchase of another home. Would this be able to help with economies of scale? Our Tax Advisory team will ensure that any sale or purchase is conducted as tax efficiently as possible.
If ever there was a time for both strategic and current financial advice it is now – and Julie is someone who can really help. First consultations are always free and without obligation. If you would like to contact Julie please phone her on 01935 423667 or email at Julie.email@example.com