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UK care homes robust despite government underfunding: KF

[Photo: Georg Arthur Pflueger, Unsplash]

Staffing issues continue to be the most critical challenge for UK care home operators both in terms of cost and recruitment. But the problems are not all attributable to Covid-19 according to property consultant Knight Frank. However, the pandemic has exacerbated the situation and staff costs have increased by 3.7% and other costs are growing too.

According to the latest edition of Knight Frank’s UK Care Homes Trading Performance Review 2020, the cost burden has resulted in average weekly care home fees rising 6% in the last 12 months, accentuating the trend seen in the last decade.

The report is based on the Knight Frank care home index, which collects data from corporate care home providers across the UK, representing 112,000 beds in 819 UK towns and cities.

Although occupancy fell by 8.5% during Q2 2020, Knight Frank said recovery has already begun with the occupancy rate up by 1.2% in the third quarter.

But many providers continue to see staffing as a major area of concern, the report said. Staff costs represented 58% of income in the 2019/20 financial year. The effects of this are acute owing to the UK’s social care funding crisis. However, the Adult Social Care Infection Control Fund, which was introduced during the pandemic to support infection control and related costs, is set to last until March 2021 and is providing a buffer for operators.

Staffing a continual challenge

“The UK care home sector has adapted immensely well to the challenges posed by Covid-19, resulting in a resilient trading performance, despite the continued challenges around staffing,” according to the review.

The pandemic has actually had limited impact on care home profitability, according to Knight Frank. The firm said that earnings before interest, taxes, depreciation, amortisation, rent, and management fees (EBITDARM) have declined by only 0.6% so far in 2020.

This is as a result of the care operators and the social care workforce who have rallied to protect residents, support the wider healthcare system, and made significant personal sacrifices in the process, Knight Frank said in a statement.

“This crisis has demonstrated the resilience and capability of our residential care sector and shown the outstanding collaboration between the private sector, social care sector and NHS at this time of need,” said Knight Frank’s head of healthcare Julian Evans.

Pandemic highlights lack of government investment

“Unfortunately, the pandemic has also highlighted the lack of investment by successive governments into the sector, and therefore the urgent need to prioritise preventative and crisis funding. Covid-19 has merely accelerated trends to scrutinise those buildings that are not fit for purpose whilst emphasising the insufficient funding available for reinvestment into existing care homes, which has therefore expedited the number of potential care home closures.”