You don’t need me to tell you that the social care sector, your sector, is in crisis. You’ve been hearing it for years.
But, the news report I saw this week put how bad things really are, into shocking perspective.
This week, on 14th May, 2018, the press reported that a record number of care homes have become insolvent.
In the financial year ending March 2018, 148 care homes became insolvent.
That’s an 83% increase over the previous year of 81, which was an increase over the year before that of 72, which was more that the year before that of 59.
But that’s just the number who finally called it a day because they simply couldn’t afford to make it work. How many more than this are struggling to get by and how many of these, if nothing improves soon, will be added to this year’s insolvency statistic?
This time last year, The Guardian reported that the business advisory firm, FRP Advisory, said, “Care homes were the only industry in the UK to have suffered from rising insolvencies over the last seven years.” I would probably make that eight years now.
Why is this happening? Well that’s the easy bit – the fees your local authorities are willing to pay are way to low.
It’s been like this for years but in recent years the situation has worsened because of the introduction of the national living wage and the Government’s aim to gradually increase it to £9 by 2020.
And so your costs took another dramatic rise in April when the national living wage rose by another 5 per cent. The previous rise was 8 per cent.
Now, with staff cost making up over half the total costs for the average care home, that’s a big increase. I gave an example of how big this is in monetary terms in my last post.
But staff costs make up over half of a care home’s turnover and with the rise in April, the cost of delivering care is clearly rising whilst the fees paid by local authorities stay too low.
According to William Eichler, writing for localgov.co.uk, “Professor Martin Green, chief executive of Care England, recently described the fees offered by councils to independent providers as ‘paltry’.”
The news report goes on to paint a terribly worrying picture of the state of the care industry… According to the Competition and Markets Authority (CMA), there was a £1bn shortfall in public sector funding of care homes in 2017.
According to the Associate Directors of Adult Social Services, local authorities in England and Wales have intended to cut back further in funding and aim to make savings of £824million.
The point is that unless we as care providers, stop this trend and say enough is enough, who knows where the care sector will end up or who will be providing care to the increasing number of vulnerable adults who need it.
So, what can you do? Well, it’s quite simple in principle but will take time and courage in reality.
What you and ALL care providers need to do is to stop accepting clients from local authorities for the low fees they insist they will only pay.
“But we can’t afford to pay more.” They will say. To be perfectly blunt – that’s not your problem, that’s their problem to sort out. And they could find the money if they had to.
But until care providers stop accepting the low fees that local authorities pay then they and the Government will have no urgent incentive to sort it out.
In fact, you have a responsibility to charge the fees you really need in order to deliver the right care and stay solvent.
Because, if you don’t, you will either become another insolvent care home or one that, to survive, had to reduce their costs of staff numbers, training and the like to the detriment of the quality of the care being delivered.
Either way you end up closing down your care home, your residents uprooted and found new homes and your people are unemployed.
Why should you subsidise the care you deliver your residents? Why should you help your local authorities by paying for a percentage of the care that they should be paying for? What other type of business does that?
If your care home is to survive then you need to be the business leader it needs and be firm in your resolve that you are running a business and not a charity.
You must stop accepting these low fees – you have no choice if you are to survive.
Get your mind-set right, charge the right fees and only then will your care home be the best it can be. Only then will it be the care home relatives want their loved ones to live in, that people want to work in and that has any chance of being financially viable.
And if you’re thinking, that this is easy for me to say, well I can back this up because we always calculate the real fees we need for our nursing homes and we never accept the fees our local authorities want to pay. And our beds don’t stay empty for long.
I could go on, but instead, if you have any doubt that what I’m saying is true, or if you agree but don’t know how to change your situation, then first download my eBook, The Secret to Running a Successful Care Home where I’ll take you through all the arguments and show you the 4 steps you need to take when calculating your fees.
And if you’re not sure how to implement the steps I outline then attend one of our training sessions, How to Set the Right Fees.
Don’t hesitate, this is too important get wrong.
Our training sessions are fairly small, interactive sessions and so when you leave your details you are essentially registering you’re your interest so that when the next session is available we will let you know first.
That way you have a chance to act quickly and secure your place.
In these sessions we not only show you exactly how to calculate the right fees (we even give you a an Excel-based tool that we developed and use to calculate the fee you need), but we go through the whole process of what to do when your local authority initially rejects your fee, how to present your argument and how you over time receive the right fees for all your residents.
By-the-way, this isn’t a sales pitch – we barely cover our costs – this is us trying to help you and this sector. That’s what QoC is about.
I cannot put it any clearer than this –
Set the fees you need and survive.
Accept the fees they want to pay and become insolvent just like the 148 that did last year.
If you are not receiving the fees you need or if you don’t know how to accurately calculate this fee then do join our training session and we will show you how.
And, if you are not convinced by anything I’ve said here, then please do read my report, The Secret to Running a Successful Care Home.