In Focus Commercial Credit
Care home finance remains in the spotlight
The lasting financial and operational impact of COVID-19 may adversely affect a number of businesses
Benjamin Wiles Managing director, restructuring advisory, Duff & Phelps
While new admissions to care homes are beginning to return to pre-lockdown levels, they likely remain sensitive to further restrictions while COVID-19 is brought under control with the widespread vaccination programme.
Tight margins Prior to the outbreak many providers were operating with incredibly tight margins, so any reduction in patient numbers was going to have a dramatic effect at a time when care homes are seeing additional cost pressures associated with personal protection equipment (PPE), staff sickness and costly agency staff. The government launched an ‘infection
control fund’ to offset the additional costs incurred by service providers, and this has subsequently been topped up with an additional £546m and extended through to March 2021. While this is welcome news for the sector,
it does not address the lower occupancy levels which underpin financial viability.
Winter Plan The government’s ‘Winter Plan’ has requested an end to all non-essential movement of staff between care homes, resulting in likely adverse operational and cost consequences for some homes. In addition, local authorities were
requested to identify homes “that are safe for people leaving hospital who have tested positive for Covid”. These so-called “hot homes” are designed to be separate standalone units. For their
February 2021
www.CCRMagazine.com 17
stakeholders this means increased risks will need to be carefully assessed and managed. In December the government announced
an additional £149m for the sector to speed up care home testing, partly in response to
the rise of the more transmissible strain of COVID-19. Staff are now being asked to take rapid
tests twice a week, in addition to weekly PCR tests. Despite the short-term pressures, many
However, smaller independent care homes are likely to remain sensitive to the continued financial impact of lower occupancy rates and the increase in operating costs imposed on them as a result of the pandemic
expect the long-term outlook for the sector to be robust, mostly because of the baby boom generation entering old age. However, smaller independent care homes
are likely to remain sensitive to the continued financial impact of lower occupancy rates and the increase in operating costs imposed on them as a result of the pandemic. Financial pressure such as this could lead
to reduced investment in staffing, facilities and therefore care, possibly resulting in safeguarding concerns. CCR
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 |
Page 49 |
Page 50 |
Page 51 |
Page 52