Care Home Finances – Can You Stay Afloat?

Care Home Finances – Can You Stay Afloat?

February 6, 2017

The leading care industry magazine, Care Management Matters has published an article by our Business Risk Advisor, Nick Hood which uses research carried out by Opus Business Services to illustrate the perilous state of the finances of the UK residential care sector.

When the Chancellor closed his Autumn Statement on 23rd November without making any mention of financial help for the embattled social care system, care professionals across the UK were aghast. They deal day-to-day and moment-to-moment with the realities of the financial crisis engulfing the most vulnerable in our society.

They know that every part of the system is at risk of collapse. Increasing numbers of private sector operators are withdrawing from domiciliary care services. The NHS is facing an unprecedented issue with delayed transfers of care, because there is insufficient domiciliary and residential care capacity to deal with patients ready to be discharged from hospital.

Care home operators are refusing to accept local authority funded residents because the fees they will pay are well below the cost of providing care. The larger operators are closing homes on an increasing scale: Four Seasons has closed or sold 51 homes in 2016 and plans to exit a similar number next year. HC-One has disposed of 25 homes this year. The total number of homes in England has fallen from 18,000 in 2010 to 16,600 in July 2016, according to the Care Quality Commission, which is monitoring the situation with understandable concern.

The words of the Four Seasons finance director in their latest quarterly results announcement says it all: they are aiming to have ‘a smaller portfolio of higher performing homes’.

The latest research carried out by Opus Business Services, using the database and analytics of the financial health monitoring specialists Company Watch, reveals precisely why homes are closing. The headline statistic says, ‘Over a quarter of all UK care home operators are so vulnerable that they are at risk of failing or needing a financial rescue.’ This means that some 6,600 care homes could close over the next three years.

Our analysis showed that 1,718 care home operators out of the total of 6,178, whose financial health we analysed, were in the Company Watch warning area, with a financial health rating (H-Score®) of 25 or less out of a maximum of 100. Being in this warning area means that a company is at significant risk of failing.

To read the full article, click on the link below