Elderly care home occupancy

A care home business, I was told many years ago, has few moving parts. The key areas being residents, staffing and the rest. The model has not changed and the two key areas remain caring for service users and deploying a quality trained staff team, the rest remains the rest.

In this article I will look at occupancy expectations and bring together the many conversations we have been having with customers and specialist valuers across the sector. I won’t be looking at staffing, NHS transfers, death rates, negative publicity, insurance, lock downs, visits, PPE or any of the other areas which has placed addition strain on our care homes.?

My expectation at the end of 2020 was that by the end of the first quarter this year we would have seen an uptick in occupancy, with normalisation at 89-90% by year end. Talking to our customers and a number of valuers revealed a real mixed picture. The sample of homes I have access to is of a significant size and showed occupancy at the end of May from mid-seventies to early nineties. Overall occupancy was lower than I had anticipated.

My initial assumption was that high acuity local authority care home providers may have suffered a greater impact from Covid entering homes than private pay, however looking at the detail it is more mixed.

Clearly being able to visit your relatives has had an impact where care is a choice, placing a loved one in a home and not being able to see them probably impacted and continues to impact private pay care homes to a greater extent. Local authority funded residents, referred having met some level of need, is a more consistent source for a home. Here again I am hearing that the local authorities are referring service users later, with higher acuity and there stay in a care home that much shorter.

The prospect of having to self-isolate in your room for two weeks may also deter those who have a choice not to move into a care home. We have seen an increase in private pay home care which may be being used to delay a move to residential care. Whilst there is a real mixed picture on occupancy, those homes with a local authority and private pay appear to be doing better. There is also a differential in occupancy with corporate and family owned enterprises with the family (however big the business) tending to perform better.

We also fund a number of new build homes and occupancy is at times behind forecast, here we have seen some owners review their pricing or welcome local authority funded residents.?

If we assume a home can typically attract somewhere between one and three residents a month this will point to when normalisation of occupancy will return. ?There is a level of positivity in the market and a general view that occupancy is slowly improving. The general consensus is that this is a needs based business, that occupancy will strengthen and that by early 2022 we will be back to previous occupancy levels.?