Over the past 10 years, payroll costs in our dataset for both personal and nursing care peaked in 2010 and 2011, since when both have seen a generally declining trend. However, since last year the gap has narrowed with falls of 1.4 percentage points from the peak for the personal care sector but only 0.4 percentage points for the nursing sector. Wage cost pressures continue to be the subject of scrutiny for the sector.
KEY POINTS
> Personal care has remained static since H1 2016
> Nursing care has fallen 0.3 percentage points since H1 2016
> Food costs have fallen across both sectors
> Energy costs have increased on a combined basis
NON-PAYROLL COSTS
Non-payroll costs are calculated by dividing total costs, excluding payroll costs by total revenue. Figure 4 shows the element of non-payroll costs for the nursing and personal care sectors.
FIGURE 4: NON-PAYROLL COSTS %
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The elderly care sector experienced generally falling costs during the early years of our dataset, before starting to rise between 2010 and 2012. Following on from these increases, the picture more recently has been generally positive. Over the last year, non-payroll costs in the personal care sector have remained unaltered at 17.0%, following the small decline seen in 2016. Nursing care has fallen 0.3 percentage points to stand at 14.6%, a larger fall than was noted last year.
Over the last three years both sectors have fallen 0.5 percentage points. As noted in the payroll section of this review, with nursing homes in particular, due to rising ‘total income’ levels, the percentage movements noted mask the true underlying cost increases seen.
When measuring cost pressures in the long-term elderly sectors, we take a mean of the average food and energy costs for our base year (2002) which has been adjusted in relation to the relevant CPI Indices. To clarify, CPI represents a broader population than RPI and produces weights for items in the shopping basket using a breakdown of household expenditure taken from the national accounts.
FIGURE 5: LONG-TERM ELDERLY FOOD COSTS NH actual £s
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The CPI Index shows the trend based on average food costs in 2002 (base year). 02 03 04 05 06 07 08 09 10
11 YEAR 12 13 14 15 16 H1 17 PC actual CPI Food & Non-Alcoholic Beverage Index
Average food costs per person per week have fallen across both personal care and nursing care from 2016 to H1 2017 (Figure 5). The average food cost across the elderly care sectors stood at £24.30 pppw in H1 2017, down from £27.00 pppw for 2016. There had been a relatively static picture previously, with 2015 being only marginally lower at £26.90.
The movement in food costs appears to have lagged behind the CPI Food & Non-Alcoholic Beverage Index, which fell by 6.4% between 2015 and 2016 but remained broadly unchanged into 2017. Whilst it remains to be seen if food costs will stay lower across the whole of 2017, we have generally noted increasing food costs in our dataset, despite a falling CPI Food Index.
06
HEALTHCARE MARKET REVIEW 2017 | COLLIERS INTERNATIONAL
Source: Colliers International, Haver International
Source: Colliers International
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