Funding


The Care Quality Commission (CQC) is currently in catch-up mode due to the lack of inspections carried out throughout the pandemic. The body will, however, prioritise inspections for businesses that have presented a higher risk or that have previously received an ‘Inadequate’ rating. Due to the CQC’s backlog, it is now more challenging for operators in the ‘Requires Improvement’ bracket to achieve a ‘Good’ or ‘Outstanding’ rating. Historically, lenders have taken a pessimistic view of poor CQC reports. They have now, however, developed their approach and take more time to review and understand reports, looking for either consistent themes or recognising potential ‘one off’ situations against an exemplary record prior to any downgraded ratings. Over the years, we have witnessed


several advisory reports from regulators based on staffing ratios, room sizes, en suite statistics, and, most recently, on vaccinations for staff, which have caused lenders to take a more rigid approach and have also stimulated potential difficulties regarding communication with other lenders and a limited understanding of new perceived policies due to the lack of guidance. Operators should have no concerns with


evolving regulations particularly if they are rated ‘Good’ or ‘Outstanding’; however, it is beneficial to understand the new guidance and also to ask yourself – are you prepared for any future changes?


24


If there are issues within your CQC report,


the next steps are always about planning and acting on how you will rectify such issues, in addition to placing them into perspective, while bearing in mind that these issues can sometimes be a challenge for frontline staff, so it is important to reassure them that everything is in hand. Issues can be oversighted on the day of inspection as well and can take years to solve due to the current timescales of re-inspections. Holding a regulatory issue is not an instant reason to dismiss opportunities on expanding or refinancing – they just need to be considered and tackled head-on. In these circumstances, negotiations with lenders can take more time, but this can be overcome once they understand the challenges. Lenders with experience of regulatory issues can help build confidence during the process as well as a common-sense approach to accompany your robust plan.


Income When seeking funding support, there will always be a focus on the wages line within accounts, analysing if they are within market averages of between 60 and 65 per cent and, if not, why not? Lenders will also consider the demographic of the area that the home sits within; can you attract staff locally; do you rely on overseas employment; what will be the consequences of any future increase in national living wage, and can the income buffer this?


Historically, care homes had just one income stream, which was weekly fees, with these being split between private, local authority, or a mixture of both. But throughout the pandemic there has been further grant support and subsidies to support increase in costs. The driving force behind income streams in the care sector revolves around occupancy levels. The sector appears to be recovering from the low level of occupancy in June 2020 of 78.8 per cent to 80-82 per cent in the first quarter of 2021, with ONS expectations to be back up to 87.8 per cent in May 2022. These lower averages serve as a contradiction to the pressure and sentiment with operators in the sector. There has been increased demand for care services throughout the pandemic due to transfers from hospitals. Operators took varied approaches in managing their businesses. While some operators remained in a lockdown environment, not accepting new residents for extended periods, and suffering from an increase in deaths due to Covid-19 pandemic, others were experiencing increased occupancy levels as they attempted to keep up with the demand. The overall occupancy reduction


has caused some operators to see lower turnover margins, despite margins generally remaining relatively strong. These effects could be due to grants offered by the government that have been deployed throughout the pandemic. As we move


www.thecarehomeenvironment.com June 2022


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48