FIGURE 2: AVERAGE WEEKLY FEES IN NOMINAL AND REAL TERMS
£s 800 700 600 500 400 300 200
H2 03
H1 04
H2 04
H1 05
H2 05
H1 06
H2 06
H1 07
H2 07
H1 08
H2 08
H1 09
H2 09
H1 10
H2 10
H1 11
H2 11
H1 12
H2 12
H1 13
H2 13
H1 14
H2 14
H1 15
H2 15
H1 16
H2 16
H1 17
The movements in nursing and personal care fees are broadly opposite to the changes in occupancy levels noted above.
Considering both occupancy levels and fees together, the previous peak period, for ‘total income’ was H1 2012, before levels fell in both sectors. However, personal care passed through the previous peak in H1 2015, with nursing following shortly after in H2. Both sectors have generally continued to increase since this date, despite a small downwards correction for the first half of 2017.
KEY POINTS
> Personal care has increased 1.6 percentage points since H1 2016
> Nursing care has increased 0.5 percentage points since H1 2016
> Both sectors under pressure
FIGURE 3: PAYROLL COSTS %
65 60 55 50 45 PC 40 35
H2 03
H1 04
H2 04
H1 05
H2 05
H1 06
H2 06
H1 07
H2 07
H1 08
H2 08
H1 09
H2 09
H1 10
H2 10
H1 11
H2 11
H1 12
H2 12
H1 13
H2 13
H1 14
H2 14
H1 15
H2 15
H1 16
H2 16
H1 17
NH PAYROLL COSTS
Payroll costs including wages and NIC costs are taken from accounts at the time of inspection.
Payroll costs, as a proportion of total revenue in the nursing and personal care sectors, have generally ‘switched places’ this year, with significant increases in the personal care sector but more modest rises in nursing care (see Figure 3). In personal care, payroll costs increased in H1 2017 to 52.3%, an increase in 1.6 percentage points over the year. Nursing homes also recorded an increase, up 0.5 percentage points to stand at 57.4%, albeit that the increase was lower than seen last year.
Whilst the trend over the year shows a more significant impact on personal care homes, when viewed over a two-year period the changes are more closely aligned, with personal care rising 1.5 percentage points and nursing rising 1.3 percentage points. When the percentage payroll costs are applied to the ‘total income’ suggested by the KPIs, the data shows that the nursing sector has been impacted more significantly in terms of actual wage cost increases but has been largely protected by rising income levels.
Whilst both sectors have undoubtedly been impacted by the effects of the National Minimum and Living Wage legislation in recent years, the effect of the well-documented nursing shortage and a greater reliance on agency staff appears to be driving payroll cost pressures further.
NH average weekly fees NH real fees
PC average weekly fees PC real fees
Since the start of the dataset in 2003, personal care fees have increased by 65.7% in nominal terms and 12.1% in real terms. Nursing fees have continued the strong growth seen last year, rising by 5.2% in nominal terms and 1.9% in real terms over the year. Whilst the personal care sector has previously seen stronger fee growth over the period of our dataset, nursing homes have now edged into the lead, rising by 68.3% in nominal terms and 13.8% in real terms (see Figure 2). The rise in nursing fees is likely to be driven in no small part by the recent increase in Funded Nursing Care (FNC) contributions. In July 2016, the Department of Health increased the FNC contribution by over £44 (a 40% increase) backdated to April 2016.
COLLIERS INTERNATIONAL | HEALTHCARE MARKET REVIEW 2017
05
Source: Colliers International
Source: Colliers International
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