SPECIALIST CARE SECTOR


This section provides analysis of the specialist care property and business market, focusing on homes catering for adults with long-term physical and learning disabilities.


OCCUPANCY RATES


Occupancy rates in the specialist care sector have seen a significant decline over the last ten years, however levels appear to have broadly stabilised at 91 – 92% in recent years, up from the sub 90% occupancy rates seen in 2012-13. Levels rose modestly in the year to H1 2017 (as covered in our last review) and have again shown an increase, up 0.3 percentage points over the year to H1 2018 to stand at 91.5% (Figure 8). Levels currently stand marginally below their 10-year average.


AVERAGE WEEKLY FEES


The specialist sector has seen the trend of rising fees (noted during our last review) continue into the current dataset. Fees have now risen in the last five consecutive half year periods, to stand at £1,579 pppw in H1 2018 (Figure 8).


Whilst fees have risen by 1.5% in nominal terms over the year, this reflects a 2.0% fall in real terms after allowing for inflation. Over a two-year period, a real term loss was also noted. Since the base year, nominal fees have increased by 49.4% (still by


EBITDAR (PROFIT MARGIN)


Profit margins in the specialist sector have risen 0.8 percentage points over the year to 29.9%, more than reversing the 0.5 percentage points fall seen during our last review. Indeed, during H2 2017 profit levels exceeded 30%, an achievement not seen since 2014. Whilst profit levels have increased this year, they are still some way off the heady days of 2006 to 2009 and reflect the challenges still being faced by the sector.


far the lowest of the three sectors) and have shown a small (c.2%) loss in real terms. This contrasts sharply with the c.14-16% real term increases seen in elderly care and reflects continued fee pressures in the sector, which has a prevalence of individually negotiated fee rates.


PAYROLL AND NON-PAYROLL COSTS


Over the last 10 years, payroll costs have generally risen, increasing from 47.0% (H2 2008) to 56.5% (H2 2015). During the year to H1 2018, levels have remained static at 56.0%, although they fell notably in H2 2017. Rising ‘total income’ levels have counteracted notional wage increases to protect payroll costs in percentage terms.


Non-payroll costs have seen a significant decrease over the last year, falling 0.8 percentage points to 14.1% in H1 2018. This is the lowest level seen since H1 2013 and has positively impacted on the level of profitability noted (Figure 9).


KEY POINTS


OCCUPANCY RATES HAVE RISEN


0.3 PERCENTAGE POINTS SINCE H1 2017


FEES HAVE


INCREASED 1.5 PERCENTAGE POINTS SINCE H1 2017


WAGE COSTS HAVE REMAINED


STATIC ACROSS THE YEAR AT 56.0%


PROFIT MARGINS ARE


JUST BELOW 30% AND BROKE THROUGH THIS


LEVEL DURING H2 2017


16


HEALTHCARE MARKET REVIEW 2018


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