The severity of the pandemic’s spread across care homes in the UK has meant that occupancy numbers have fallen - with deaths in care homes reaching 19.5 per cent above the five-year average (ONS) and families taking loved ones out of nursing homes to care for them privately.
Even before the pandemic, occupancy rates have tended to fluctuate across the country on a regular basis. In 2019, occupancy rate held at 87.9 per cent and during Q2 of the pandemic, that slumped to 79.4 per cent. Although neither suggest a drastic decline, it’s evident there is a sporadic pattern of movement in occupancy rates which can naturally make revenue difficult to track.
When occupancy drops, care homes have very little way of plugging the gap in revenue, and with rising costs, falling income and added staff shortages, many care homes are at breaking point. And it is predicted that care homes may not return to their pre-Covid-19 occupancy levels until as late as 2028.
Finance professionals working in the industry have a fundamental role to play in the management of funds – and cash flow remains one of the biggest challenges for these employees, because of factors like the economic climate and staff skills shortages, according to results from our survey.
However, in order for them to remain agile, it’s important they have the tools at their disposal to enable them to forecast and report ahead to predict how the business may be impacted as occupancy rates and other variables shift.
Recognising the challenges
For the most part, many care homes in the UK are privately owned and funded primarily by residents’ fees, and as such, with the decreasing rate of occupancy in the last year, comes a fall in funding.
With various other demands pulling at the purse strings - including increased staffing costs due to sudden sickness and the subsequent added expenditure of bringing in temporary agency workers at higher fees – finance teams have almost no safety net to fall back on.
And therein lies one of the main problems, as noted above – staff skills shortages have played a big role in cash flow challenges in care homes in the last 12 months. Fully-trained agency workers, who on average are paid up to 40 per cent more than a permanently employed staff member, are being drafted in to cover for staff who aren’t yet fully trained. Creating bigger holes in the company’s revenue.
And adding to their challenges, many finance professionals are still relying on a manual financial management system that not only slows down their productivity, but also hampers their ability to remain a step ahead. Others, like UK-based care home provider SweetTree Connect in 2019, found that their finance system became quickly outdated when demand for their services and plans for growth expanded. Many care home finance divisions like SweetTree simply lack the robust digital financial solutions to aid operations, and therefore they naturally restrict their team’s ability to supply a richer level of financial reporting.
Overcoming the challenges
Automated accounting, however, could help them manage these regular challenges by giving them access to real time data in order to provide them with clear cash flow visibility immediately.
Certainly, what finance teams don’t want is to be rifling through receipts, invoices and lengthy email chains to source financial data all held on multiple manual applications and across various teams – not only would that be a drain on productivity, it’d also mean that the data you’ve spent hours collating is already likely to be out of date.
In any sector, a finance professional’s time is precious. But in the care sector, when you’re juggling payments for medicine and PPE suppliers, to cleaners and employed chefs, as well as all-important equipment like hoists for residents, delivering regular social activities and managing a team of in-house and agency workers, time is critical and keeping a turbulent ship like this afloat can be an ongoing battle.
For that reason, it’s crucial they have immediate access to data that is easily retrievable, up-the-minute and accurate, so that they have full visibility on where the company’s financial performance lies.
From there, finance pros can begin to build up a picture of how the finances may look in a month’s time, and start to recognise various patterns or changes in cash flow. With that foresight, they can then plan to pause, push back or reign in any unnecessary outgoings that might potentially disrupt the cash flow. The ability to plan for a number of possible scenarios will ensure they feel prepared for anything, including a sudden reduction in occupancy levels or staff shortages.
Having a full overview of the entire business’ operations – from hospitality to maintenance - all on one single platform, will enable the finance team to drill down into the company’s cash flow. From there, they can identify areas of overspend by working with the various teams to streamline functions and cut back costs. Or alternatively, indicate potentially profitable yet unexplored avenues for the business to venture into that could, in the long-run, prove a smart investment.
While the state of the pandemic is improving in the UK, and the roadmap towards ‘normality’ is gradually getting clearer, things in the care home sector can change quickly. So, it’s vital finance teams have the right tools at their disposal to remain agile and prepared for whatever expenses may come around the corner in order to maintain a healthy cash flow and keep the facility running smoothly.
Find out more about how The Access Group’s financial management system can help your business preserve its cash flow.