Ensure solvency of parent’s care home
In today’s economically uncertain times, the financial collapse of care homes is unfortunately a fairly common occurrence
For residents, and their families, this can cause worry and concern. For instance, another suitable care home will need to be found, they may be moved away from their existing circle of friends, or even further away from family; all unsettling, and unwelcoming situations
To avoid choosing a care home at risk, and help spot the early warning signs of a home in financial difficulties, here are the key aspects to consider:
Quality scores
The CQC (Care Quality Commission) should be the first point of call. The CQC inspects care homes to ensure they meet essential standards of quality and safety at least once a year. The findings are published online, so it is possible to check whether a care home is meeting national standards by visiting its profile page at www.cqc.org.uk Issues of quality may be symptoms of wider problems, or may in the worst cases lead to closure of the home by the commission. Although not a perfect guide to any wider issues, it is a good place to start
Occupancy levels
Residential homes are like hotels, a half full home may provide the same level of services but will be run at a loss, and in the long run this will have a detrimental effect on its finances. Just like a hotel, it is the last few beds filled in a care home that ensure the home is achieving the right income levels
Don’t feel afraid to ask the manager what the occupancy levels are, or if they are not forthcoming, consider the choice of rooms available with open eyes. Bear in mind also that all homes have a budgeted void level for residents who need to go into hospital or for the natural turnover that will occur, however this will be a small percentage of the residents
Fees
As an individual purchaser in any market, it is common to pay a higher price than a ‘bulk buyer,’ and the care home sector is no exception. The prices quoted to self-funding residents are higher than volume purchases made by Councils and the NHS
So what if the quote received is very low? There may be good reasons. For instance, the home may be more efficient than others in the area. Alternatively it may be newly opened and looking for its first set of residents, or needs occupancy levels to break even. However with most things in life, if it is looks too good to be true then it probably is!
The main challenge for people here is recognising whether the fee is too low; after all it isn’t an area that most people are familiar with. It is however possible to understand what is a reasonable cost for a residential home in the area by using a fees calculator tool
The décor
This is a double edge sword. First impressions count, and most relatives would like to see their loved-ones placed in a homely and nicely furnished environment. However first impressions of a tired looking care home may be misleading, and need to be considered with a balanced approach
It may be the home manager is directing as much resources into caring staff as possible, and simply doesn’t consider the aesthetics important. The advice is, try to make a judgement on the difference between ‘tired’ and ‘needing a refit.’ However if significant defects are visible it may be a sign that the home cannot afford the upgrades and may be stretched financially
Staffing levels
The main cost element of running a home is staffing, and each home needs to maintain a minimum staffing level to meet minimum CQC standards
Visit the care home and ask questions relating to staffing levels, training levels, staff turnover rate, staff to resident ratios and so on. This should provide a better picture of the efficiency of the care home
Financial status
A care placement can cost up to £40,000 per year, and over the average lifetime of a placement it can total between £80,000 and £100,000. For any purchase at this level, ensuring that the company you are buying from is financially sound, is essential
Check the care home’s accounts at Companies House, or alternatively enlist the help of an expert such as an accountant or a care fees negotiator. The latter will guide you through making the right choices in negotiating the right home at the right price
Selecting a care homes is a large and important purchase. It is therefore crucial to do your background research to help you spot the danger signs and avoid choosing a care home that may be in financial difficulties
Valuing Care FM is the market leader in analysing and negotiating value for money costs for care packages. With extensive experience in purchasing, analysing and negotiating care rates with the independent sector across all aspects and health and social care, the company provides a range of services for both self funders (people looking for care homes for friends and relatives) and purchasing organisations (local authorities looking to purchase care home places)