We have a major problem in the social care sector. For years care providers have taken in clients for ridiculously low fees.
And because of that not only does the care home struggle to provide the care the residents need but it struggles to survive and does, in the long run, fail.
One clear pressure for accepting a low fee for a client is because it’s preferable to having an empty bed.
If you believe a low-fee client is better than an empty bed then you need to read on and see why that isn’t so.
Clearly, accepting a fee that results in you delivering care at a loss is the equivalent of a company making a product for say £100 and selling it for £70. A loss is a loss and that will only hurt your business.
This is what you’re doing to your business if you accept low fees – you’re killing it.
If you have any doubt about this in any way then download my report, and see why low fees will lead to the demise of your care home.
This is an argument about low fees versus empty beds.
I appreciate you need to fill your beds but don’t be blind to needing full occupancy at any cost.
Yes, a low-fee bed is still bringing in an income, but it’s not making a profit. The care that person needs and the number of staff you need, especially if the client has complex needs, will result in a loss of profit.
And it’s profit that is key to success, not the income.
Fill a bed for a low fee and you could be providing care for that client at a loss for years to come.
Keep the bed empty until you have a client for the right fees and although you may not be receiving as much income for a period, at least you won’t be stuck making a loss for all the time that the low-fee client occupies that bed.
A home that is half full but commands the fees it needs to make a profit and 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.
A half-filled home can reduce its overheads, such as staff numbers, and essentially run like a home half its size. With an empty bed or 2 you can, for example be more creative with shift patterns so that you are less reliant on expensive agency staff.
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 doable.
We did exactly this when we filled a new, previously empty, care home. We increased the number of the different staff we would need as our 50-bedded home filled. The plan was to fill it over a 12-month period and that’s what we did. Even when only 10 out of the 50 beds were filled, monthly profit was maintained because we had enough staff for 10 clients not 50 and we closed off sections of the home to keep utility bills down and so on.
So what would happen if you said no to a taking a client because your local authority refuses to pay the fees you need?
Of course, it’s likely that the referrer would approach other care homes and yes, one of them would be foolish enough to say yes to taking that client for the fee the referrer is willing to pay.
But that home would be burdened with the responsibility of looking after that person at a financial and possibly at a loss for years to come.
At a conference a speaker who previously owned a number of care homes confessed that this is exactly what he did. He undercut other care homes, kept his homes full and eventually had to sell them off at far less than they were worth and get out before he went bankrupt.
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 be back with another person they need to find a bed for very soon. And again they may refuse to pay you the fees you tell them you need and so they place that person elsewhere. Good – again, you’ve avoided managing a client at a loss – possibly for years.
Eventually, these homes that take low-fees in your area will be full your referrers will have no choice but to pay your fees because they have nowhere else to go.
Meanwhile, if you have to reduce the number of care staff you have in order to reduce your costs, then so be it. At least you’ll remain profitable.
And the key point of receiving the fees you need is that you can deliver the care your clients need, train your staff well, pay them better, meet CQC standards and so on.
These care homes that except low fees struggle to do any of this and if they don’t run out of money first they will eventually be closed because they can’t deliver the right care, hire enough staff and so on.
We need to get rid of care providers who accept low fees and then can’t meet the needs of their clients. The client’s wellbeing always must always come first so say no to low fees so you can make sure their wellbeing does come first.
If you say no to low fees and stand your ground to receive the fees you really need, eventually you will receive those fees.
In nigh-on 20 years of delivering care we’ve never said yes to low fees.
If you accept low fees come to our training seminars, Set The Right Fees, and we will show you how to calculate and receive the right fee so that you can deliver the right care and remain financially viable.
