You and your people are battling to care for your residents and keep them safe whilst possibly losing colleagues to self-isolation and fighting to get the PPE you need.
And whilst your people are at the coal face working hard to keep your clients safe and well, as registered manager and/or owner what are you doing? What do your people need you to be doing – aside from getting them more PPE?
What is your top priority?
Your people need to know that you are doing what it takes to ensure your care home is going to be around when this crisis is over.
You are the leader who needs to keep your ship on course. Your people need to know that their future is safe in your hands. Your residents and their relatives need to know that you are doing all you can to ride this storm.
How will you do that? What’s your plan?
I know it’s hard to think about anything beyond getting through the day. But you need to – you need to have faith that your people will do what they have been trained to do, so you can focus on keeping your care home in business.
To survive this crisis and the long-term crisis that the sector has been in for years, your care home business needs to be resilient and, like any business, that means it needs to be financially strong.
This is your top and arguably only priority because if your care home isn’t resilient enough and it goes under…well, nothing else that you did to help your people mattered.
I understand that saying you need to step back from the day-to-day is easy for me to say and so hard, particularly in this awful crisis, to do. But what alternative do you have? If your business isn’t financially resilient and you do nothing about that – right now – then the odds of not getting through this are far higher than if your care home is financially healthy.
Now, more than at any time in recent years you have an opportunity to turn around any financial struggles you are facing.
For years you have struggled with late paying local authorities and low fees. Year after year you have been told that there isn’t enough money. Well, right now there is enough money.
The government has announced a £2.9 billion funding package: £1.6 billion is to help local authorities manage the pressures they are under. “This includes increasing support for the adult social care workforce…” £1.3 billion will be used to help the NHS free up much needed beds – that of course includes getting vulnerable adults into care homes.
So, now your local authorities have the money you desperately need so now more than at any other time they cannot tell you that they don’t have the money to pay you what you need.
I understand not all council’s are passing this extra funding on. According to The Independent, “Birmingham City Council said it would not offer providers extra financial support and Dorset Council told companies it was “business as usual”. The article goes on to say, “Worcestershire County Council has not offered any extra financial support and stuck to the rates agreed in February which one provider said “do not even cover the rise in the national minimum wage””. (Read the full article here.)
Many councils are not providing the help you need which is totally unacceptable, not to say self-defeating when care homes will have to close and send their clients back into local hospitals.
But we all know they have the money, so you have to become a thorn in their side and not accept any holding back of much needed funds. Here are the four key things you can start doing to get much needed funds.
1. Work out how much funding you need to get the equipment you need, more staff and so on and hound them. Email, phone, call your local MP if they refuse – just be a pain.
2. Start chasing debts – if your local authority hasn’t paid you on time then chase the debt and keep chasing. Our sister company’s care homes have worked hard in recent months chasing and debts that are many months old and receiving the money owed. Chase them and chase hard – don’t let up the pressure.
3. Review the care you provide your current residents and if their needs have changed but your fee hasn’t then work out the difference and set up a telephone review session. It’s amazing how much a little extra care costs; do the maths:
- If a resident now needs 20 minutes personal care twice a day from 2 carers, that equates to an extra 19 hours 50 mins weekly care. At the new National Living Wage rate of £8.72 (plus employer on-cost of 30%) that equates to an extra £122.55 a week or nearly £500 a month.
- If a resident now needs help with feeding say for 30 minutes, 3 times a day that’s an extra 10 hours and 30 mins which comes to and extra £137.87 a week or around £551 a month.
I appreciate that right now this effort might not be doable as you need to build and collate evidence and that could divert staff at a time when you can’t afford them to be doing anything but keeping things together. But as soon as there is some time then this should be a high priority.
4. Do not take new residents for anything less than the fee you need.
This last one is the biggie. You must start to set the fees you really need.
You must draw a line in the sand and stop accepting the low fees your local authorities want to pay. They now have extra funding to help you, so get that money. And the fact that many are refusing to pass on that extra funding to you should be seen as the final straw.
The bottom line is that
You cannot accept their fees and be financially resilient.
If you are afraid of empty beds, well do the maths and see how many empty beds you can actually manage. And also, know that there are only so many empty beds around. They need your beds and so demand the fee you need to deliver the care the person needs.
This isn’t about exploiting a terrible situation, it’s about saying enough is enough. You [LAs] have the funding so pay us the fee we need. And provided you can justify that fee then they can’t morally or legally take it back. They cannot knowingly reduce your fee that results in reduced care.
If all care providers say no to low fees and submit the real fees that they need to be able to deliver quality care and keep their care homes viable, then the LAs will have no choice but to pay them.
And it does all boil down to maths – you can accept their fees and eventually run out of money and have to close or you can set the right fees that means your care home survives.
Which path will you take?
Well, of course you want your care home business to survive, which means you need to receive the right fees. It’s that black and white. Seriously, if you have a counter argument, I’d love to hear it. (And if it’s the argument that a low fee is preferable to an empty bed – a low fee, where you’re losing money for the care you deliver, is never preferable to an empty bed. Worst case is to break even.)
Do you know how to set the right fee? It’s not as stupid a question as it sounds; for years care providers have, either directly or through bidding systems or crappy contracts, been told what fees LAs are willing to pay.
So historically, calculating a fee that you know covers all the care a person needs and returns the profit your business needs might be something you’re not used to doing. But do it you must – and yes, I am advocating that you submit your own fee rather than sign-up to a contract that allows your LA to continue to pay you way below what you need.
The fee you need should comprise the following elements:
- Set basic costs. Each resident should cover a share of your running costs – your fixed costs (commercial loans, utilities, fuel, food, etc) and staff costs. Divide your monthly running costs by your bed capacity and into weeks and you will have a starting figure to charge each of your residents equally. Within that running cost, very basic care (help with getting up and dressed, providing meals and snacks, keeping care plans updated, etc) can be provided to each resident.
This cost may cover a person in a residential home but either way you need to calculate how much daily care each resident can receive. (This would be based on your care costs divided by your care average hourly rate (plus on-cost – employer cost of around 30%). Any more than this and you will be paying for that care delivery. If this basic cost does cover the care needs of a person then on top of that you would simply add your profit.
- Extra care. If a person needs extra care beyond this basic care, then you need to accurately cost all the individual care the person needs based on the average hourly rates of your carers and nurses (if you have them). If the person needs medical sundries or specialist equipment, then that weekly cost needs to be included too.
- Impact analysis. Assuming this person will be with you for a number of years your running costs (food, fuel, National living Wage, etc) will increase whereas their needs may not. You can’t increase your fee to cover these running costs increases. You should therefore add a future contingency or “Impact Analysis” percentage. We usually add around 2%-3%.
Now you have your costs covered and have a figure for your final breakeven point. A fee below this figure is a loss.
Next you need to add your profit. 30% is a decent profit for a healthy business. Some companies in other sectors can have profits that are double that but 30%-35% is about right for this sector and not the derisory 8%-10% your LAs want you to earn.
Now, calculating all of this is a lot of work but that’s what you need to do to get to the right fee.
Your care home needs money. If you are not getting the money you need then as the owner/registered manager this is where you need to focus your efforts because this is the only way you can ensure you survive this crisis.
Do the four steps I laid out above and anything else you think will bring in much needed income and funding.
Yes, it’s time consuming and you may well feel that you need to be helping your staff with their current daily issues, but if you don’t sort out the constant under-funding that you’ve struggled with for years then soon there may be no residents for your staff to look after and no jobs for them because you’ve had to close your home.
Leave your staff to do what they need to do and focus on making your care home business resilient. Do this for the future survival of your care home, for the jobs of your people and for the wellbeing of your residents.
If you need help with how to calculate the right fees, then check this out. The Quality Care Calculator will help you create the right fees in minutes.