We have a major problem in the social care sector. For years care providers have taken in clients for ridiculously low fees.
Not only does the home then struggle to provide the care the residents need but also in the long run it struggles to survive.
Why do care providers accept clients for low fees?
I can only think that the answer is that if you don’t then another home will and you’ll be left with an empty bed.
This implies that having an occupied bed at a low fee is better than having an empty bed. If that’s what you believe then I’m afraid you’re wrong and here’s why.
Accepting a fee that would result in you delivering care at a loss is the equivalent of a company making a product for say £100 and selling it for £70 or even £99. That company is making a loss and unless it increases its price, that loss will eventually kill the business.
This is what you’re doing to your business if you accept low fees – you’re killing it.
“But Chris, I have no choice it’s what my local authority says they’ll pay and I need to fill my beds, because surely a low fee is better than no fee at all?”
Well, no it’s not – if your home is filled with low fee paying clients then, potentially for years to come, each month they will increase the financial burden on your home and eventually contribute to its downfall.
A home that is half full but commands the fees it needs to make a profit and to be able to deliver the right quality of care, is far more sustainable and healthier than one that is fully occupied but receiving fees that are too low.
Firstly, that half-filled home can reduce its overheads, such as staff numbers, and essentially run like a home half its size. Of course it’s not as straightforward as that because you’ll need some extra staff to be available to care for the next resident you take on. It’s a balancing act but one that is manageable. (We did the equivalent when we filled a new, previously empty, care home.)
And secondly, the home isn’t stuck with low-paying clients but instead it has beds that are available for the right fees and which could be filled at any time.
If you said no to taking a low-fee client what would the referrer do? Well, they would of course approach other care homes and yes, one of them would be foolish enough to say yes. And that home would be burdened with the responsibility of looking after that person at a financial loss for years to come.
But if you don’t take that person then your bed remains empty. Well, sure it does – for a time. But the demand for beds is outstripping supply. The authority will soon be back with another person they need to find a bed for. And again, they may refuse to pay your fees and so they place that person elsewhere. Good – again, you’ve avoided being burdened with another client at a loss.
But, because demand is high and continuing to increase, your referrers would eventually have no choice but to pay your fees because they have nowhere else they can put this person. They may even be back with a client you previously refused and who was placed elsewhere but whose relatives demanded be moved because the care being delivered was so poor.
Meanwhile, if you have to reduce the number of care staff in order to reduce your costs, then so be it. At least you’ll remain profitable.
If you stand your ground and say no to low fees, eventually you will receive the fees you need.
And if you don’t believe this can happen then contact us and talk to my wife – it’s exactly what she does.