The Rising Costs of Care Homes
The COVID-19 pandemic has taken its toll on so many sectors of the country, particularly social care services. With the increasing costs of care homes brought about by the crisis, they “could go to the wall.” This is because many are finding it difficult to handle the expenses needed to protect both the staff and the employees.
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Care sector leaders are dealing with hundreds of thousands of pounds of protective equipment, additional staffing costs and more. It has always been a constant battle for care homes and nursing homes to get the help that they needed. Add the pandemic, and they are struggling to keep up.
Based on the analysis of the Local Government Association (LGA) and Association of Directors of Adult Social Services (ADASS), the estimate that care providers could face for potential additional costs is £6.6 billion between April and September. That's a lot, and it comes as no surprise since the elderly are at most risk of the virus, and those who make use of assisted-living. They are the most vulnerable in these trying times.
The past few months have been gruelling for care sectors leaders as can be seen from the statistics above. According to Age UK, the rising costs only add insult to injury to those who've been through a lot during the pandemic. This is especially relevant for residents who have been paying their own fees. These care home residents have funded themselves and have effectively subsidised the care system for years. They are paying a lot more, and now they see an increase in the costs of care homes. If this goes on, many care homes won't be able to manage their services anymore. That's why it is vital for them to look for effective ways of saving on operating costs.
How much are the costs of running nursing or care homes?
Recent research has shown how to calculate the operating costs for care homes. This is quite helpful since, through the study, care providers would know the estimate for the full cost of operating an efficient and reliable care home. They would be able to meet the standard required, which is at least £459 per week for nursing care and £353 per week for residential care.
For an in-depth understanding of the costs of nursing homes and care homes, you need to know each of the costs that are needed for running them. There are three main care home costs: staffing, non-staffing and capital costs.
This holds a big chunk of the costs of care homes. This usually absorbs 45% to 60% of care home fees. These involve the care staff, laundry and cleaning staff, catering, and administration and reception staff. To calculate the costs, you need to multiply the volume of resources needed by weighted average hourly pay rates. Then you add the staff on-costs, which includes the following:
- Holiday pays under working time regulations
- Employers' National Insurance contributions of 11.8% of gross pay above the threshold
- Assumed sick pay on-cost of 2%, which is based on private-sector group operator norms
- Zero employer's pension contribution on-cost
The non-staffing costs of nursing homes and care homes include costs on utilities, registration fees, grounds maintenance, provisions and capital expenditure maintenance. This is the second portion that holds 12% to 16% of care home costs. You can compute them on a “per resident basis” using the benchmark date from major care home providers based on the study.
These are the costs that are complicated to calculate. This involves the account for the balance of care home costs, which includes the investor's and operator's return. According to the research, care service providers need to use a simple formula when it comes to computing these costs. The formula should be applied regardless of the capital structure of the home.
Cutting the Costs of Care Homes
Leaders and social care providers are having difficulty in meeting the escalating costs, while at the same time, they are even seeing their income level fall. Although the extra-funding that the government has provided has been helping so far, this will still fall short of what is expected to be needed in the coming months.
With that being said, care homes are looking for effective means of shortening their costs. One of the best ways to do this is to focus on non-staffing costs. These costs involve a variety of things such as utilities. One of the major ongoing high costs for nursing homes and care homes is the cost of heating. See our article here on how to manage business energy bills during covid-19.
Heating is responsible for at last 70% of a care home's energy bills. This is because care home facilities have large boilers. In order to help reduce the costs, one of the things you can do is to check with energy suppliers to see if you have any choice as to who can supply your building. In this way, you'll get specific quotes depending on your assumed energy consumption level.
Another thing to consider is to utilise central heating because this will make huge savings on your energy bills. Consider taking care of insulation as well to reduce your heating bills. This can include using double glazing windows. Likewise, electricity bills will also be high because of the large number of residents who have various lighting needs. You can lessen the cost by using devices such as motion sensors that automatically turn off the lights when a room is unoccupied. For more tips on reducing post-lockdown energy bills, check out our article here.
Being energy-efficient will increase your care home's performance in the industry and with the residents being generally older or ill, making sure that the temperature and the lighting of these facilities are an absolute must. Moreover, care homes are such high-energy users because they are 24-hour facilities, which means that residents and staff use the energy sources for most of the day and night.
Reduce Utility Bills and Switch Energy Providers
The costs of care homes and nursing homes won't be going down soon. That is why you need to consider your options and choose what will be best for your services. You should choose an energy company that will help you in cutting the running costs of your care home. To achieve this, we at EnergyBillKill can assist you through the switch. The process would be a hundred times easier and less time-consuming with our help. You can compare business energy contracts on our websites, or download our app ( for Android and iOS users) and get instant access to suppliers who can provide you with different quotes!