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Staffing Shortages is the Number One Problem for Care Home Operators

Average staff costs have increased 50% over the last decade due to the rise in the National Living Wage. Combined with the difficulty in attracting qualified nurses and carers at competitive rates in the UK this has led to many operators becoming increasingly reliant on agency staff to deliver care, often at extra cost.

The extra costs are directly impacting the bottom line, with average profit margins down 0.9%, and nearly 5% over the last 10 years.

The Knight Frank care home index, which collects data from corporate care home providers across the UK, reveals that the average weekly care home fee has risen 8% in the last 12 months, adding to the trend seen in the last decade. This is due to extra staff costs as well as increasing medical costs as elderly people continue to enter care later and with more intensive medical needs.

Julian Evans, Head of Healthcare, Knight Frank, said: “Demand for elderly care beds remains robust in the UK, however staffing continues to be the main issue of concern in the industry, with many providers affected by the social care funding crisis.

“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.”

Last year’s report highlighted how a lack of capex was a concern for the UK market given the age of stock. Encouragingly, data this year reveals that many corporate operators are now investing more heavily in upgrading their facilities. Average capex increased 15% to reach £1,644 per bed in 2018/19, compared to £1,430 per bed in 2017/2018.

Julian Evans continued: “Despite the challenges the sector is facing, the future for care homes is promising. The elderly population is projected to continue rising and this is already leading to the growth of the private pay market and luxury care homes.

“The senior living property market is one of the fastest growing residential markets in the UK. The sector could prove to be a vital in improving health and well-being for the over 65’s and allow for a smoother transition from family home to full residential care. We expect to see greater synergies between the senior living and care home sector as operators look to provide residents with both low-acuity assisted living and high-acuity care on the same site.”