Meeting the challenges for Care Homes needs forward-looking planning. The cost of care seems to be constantly in the news at the moment, with many homes struggling to make ends meet.
In readiness for the year ahead budgets are being prepared, care home owners need to project the true cost of care looking forwards so that this can be built into the service offering and new contracts.
Julie Hopkins Head of Care at Accountants Albert Goodman comments, “Indeed care providers I am sure will be having increased conversations with commissioners since fees at the current rates provided by social services do not match the growing cost of the care provision leading to an increase in closed care offerings.”
Although there are several business structures for operating a care service from sole trader and partnership to a company with shares or limited by guarantee, all business entities need to project forward to make a profit. This is essential information when looking at future reinvestment and attempting to predict market forces.
And ‘How do you make a profit’ in such challenging times?
- Look at your PR and marketing
- Do you have good contacts who will effectively sell your business for you by word of mouth?
- This can be your own team as well as community contacts
- Look at the balance of private rooms to social services
- Are you able to access the private market?
- What is Capital Expenditure needed?
- Have you prepared departmental ‘ownership’ budgets for each facet of the business from laundry to kitchen to training and employment costs?
- How much time does the owner spend in the business?
- What would be the going rate for their time? Does the business reflect this?
- Is the business able to repay debt as it falls due?
- For future growth do you need to consider a financing restructure?
- Can the business fund occupancy variables and how does this link with the staffing structure?
- Do you have real-time reporting information to interpret business performance?
Julie continues, “At Albert Goodman, we help care home owners construct a forward-looking, sustainable plan. This then needs to be prepared and compared to actual results in real time. Do you have accounting systems to address this?”
Although there have been ups and downs with care home occupancy during 2017, with an ageing population, families struggling to juggle home life and look after elderly relatives the demand for care will undoubtedly increase and it will be forward-looking, invested providers with good planning that will survive the many challenges ahead.