Today, 12th February 2018, CQC announced that it wants to know that your care home – your business – is financially viable.
This is a new addition to the registration guidance and therefore currently applies to “…new providers submitting a new registration application.”
My immediate reaction was that surely they will extend this to all providers at some point in the future.
Then if you continue reading, you see that CQC goes on to say…
“However, it may also apply to some existing providers seeking to make changes to their registration (for instance for increases in scale) or when we have intelligence that suggests a provider does not have the financial standing to provide the services set out in their Statement of Purpose.”
Aahhh – there you go. It applies to all care homes. So, what does this really mean for you?
I suspect ‘intelligence’ is a more formal word for being given the heads-up and won’t necessarily be based on any real intelligence. As such ‘intelligence’ could come from an inspection, a disgruntled employee whistleblowing or a resident’s not very happy relative.
However the ‘intelligence’ is received, CQC can come to you and demand to know that you are financially viable.
By that they want to know that you “have the financial resources needed to provide and continue to provide the services as described in the statement of purpose to the required standards.”
As with most things from CQC, there is no specific detail or recommendations such as your need to hit a minimum profit or to have a certain level of liquidity. (Money to cover things that could go wrong without harm to your business.)
Basically, they want your ‘financial specialist’ to tick that you either have the means to provide the services or that they don’t have enough information to confirm, and then sign that declaration. What CQC then do in the latter case is anyone’s guess.
I don’t know why there isn’t a box to tick to cover that you don’t have the financial means and are hence not financially viable but there might be some legalese that says they can’t.
Your ‘financial specialist’ must be a qualified accountant or bank or regulated financial services firm and their details must be included. This of course is to ensure that they receive an accurate response.
But, how accurate can the response be? Provided you make a profit at the end of your financial year, how will your accountant know that the income you earned and profit you made was enough to provide the individual care that your residents’ need?
How will your accountant know that the amount you spent on training, or on maintenance, or on equipment, or on the number of staff was enough?
And therefore, how can they tick the box and sign to say that you do have the financial resources to deliver these services?
Despite the usual ambiguities that you get from CQC, I support the principle of this because being financially viable is vital if you are going to maintain a long-standing, sustainable care home and if care homes across the UK are going to stay open.
Financial viability, with any business, comes from receiving enough income to cover the development and delivery of your products and services, to cover all the extra costs of running a business and to return enough profit to be able to invest in your business and to give you and any other stakeholders the return you need.
So, the question is, do you receive enough income to cover your costs and generate enough profit?
And do you have enough in the bank to cover any unexpected costs, such as broken equipment, or loss of income because a local authority took several months to pay their bills. (One LA took just over a year with one of our residents.)
In your case, your income comes of course, in the form of fees. So, the question now is, do you receive the fees you need to deliver the right care and return enough profit and to be deemed financially viable?
You must be financially strong or your care home, your business, is vulnerable. So, if you don’t receive the right fees or you aren’t sure what fees you should be setting in order to be financially viable then make finding out, and acting on your findings, your number 1 priority.
When you read it you’ll hopefully see why this is so important and how we can help you accurately calculate and then receive the fees you really need to be financially viable.