Recruiting and retaining care home staff is still biggest challenge

Staffing remains the number one challenge for care home operators both in terms of cost and recruitment, according to global property adviser Knight Frank.

The report 'Care homes trading performance review - 2019' found that difficulty in attracting qualified nurses and carers at competitive rates in the UK had led to operators becoming increasingly reliant on agency staff to deliver care, often at extra cost.

The average staff costs have increased 50 per cent over the past decade, rising to £25,938 in 2018/19 on a per resident per annum basis. The rise is down to increases in the national living wage, which is £8.21 for people aged over 25.

Both the Conservative and Labour parties have pledged to increase this if they were to win the next general election.

'Demand for specialised nursing care, such as dementia, has never been greater'

Julian Evans, head of healthcare, Knight Frank, said: “The shortage of nurses is a huge concern, given the demand for specialised nursing care, such as dementia, has never been greater. A comprehensive solution is needed to address this and increase the number of registered nurses available to the care sector.

“Demand for elderly care beds remains robust in the UK, however staffing continues to be the main issue of concern in the industry. Many providers continue to be affected by the social care funding crisis, especially those drawing incomes from budget constrained local authorities.

“The green paper hoped to address the funding problem has now been delayed several times, but Brexit negotiations and leadership changes have taken precedent.”

The Knight Frank care home index, which collects data from corporate care home providers, revealed the average weekly care home fee has risen eight per cent in the past 12 months, adding to the trend seen in the last ten years.

The income per resident has increased to 4.5 per cent to an annual price of £40,922. However, this is less than the 4.7 per cent increase in staff costs per resident.

This is directly impacting the bottom line, with average profit margins down by nearly five per cent over the past 10 years.

This was due to extra staff costs as well as increasing medical fees as older people enter care later and with more intensive needs.

Property costs rose 15 per cent over the past year, averaging £2,316 per bed per annum in 2018/19. Increases have occurred in all regions of the UK, with rises in utilities, council tax, insurance, repairs and maintenance.

Food costs grew eight per cent to reach £1,578 per resident per year or £4.32 per day. However, inflation is at its highest rate in five years and a weakening pound sterling has also made imported goods more expensive. The report stated operators are also making significant efforts to improve the quality of produce they provide, adding to the level of spending.

'Operators have done superbly well to maintain high standards of care and we should recognise this'

The report concludes that year-on-year fee increases have not been enough to counteract escalating staff costs and protect profit margins. Operators also endured significantly increased property costs in 2018/19, and many of these are unavoidable if care home managers are to ensure the smooth running of homes.

Despite the challenges, Mr Evans said: “The senior living property market is one of the fastest-growing residential markets in the UK. The sector could prove to be vital in improving health and wellbeing for the over 65’s and allow for a smoother transition from the family home to full residential care.

“Despite the funding challenges, data shows that operators have done superbly well to maintain high standards of care and we should recognise this achievement.”

To read more about the trading performance review - 2019 click here