Care Home Management

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Did you know that staff wages account for 55-70% of care home costs?

With the costs of operating a care home continuing to soar, prices of residential care are following the same trend. Per year, the average cost for a room in a care or nursing home is £30,000. To reduce the budget pressures, healthcare providers are looking for ways to save money without compromising care.

But what is the basic staffing structure in a care home? How can your care home structure its fees? What other costs need to be considered? This guide will help to answer those questions and more. Let’s get started.

Staffing Structure In A Care Home

The minimum staff you’ll need in your nursing home staff structure will include:

  • Home Manager
  • Deputy Manager
  • Nurses
  • Carers
  • Administrator
  • Chef
  • Housekeeping and laundry
  • Maintenance

What Staffing Costs Need To Be Considered?

Think about your care home and the basic costs. The previous list above shows the minimum staff you’ll need. However, there are some additional costs that may be easily overlooked. Some of these include:

  • The rise in the UK minimum wage.
  • Increase in staff shortages such as (unpaid leave, maternity leave, ad hoc sickness, and others).
  • Higher use of agency staff due to shortages.
  • Increase in nurse wages.

This small list of ways staffing costs can increase details that you need to have a sharp eye and a well organised team. There are plenty more reasons why costs can rise, so ensuring you have cooperative staff and good staff management will help reduce the risks of losing money.

A way to stay on top of this is to ensure your staff are treated well, making your care home a great place to work and being supportive towards your employees.

When Do Care Homes Use Agency Staff?

There are times when care homes may need to use agency staff. The benefits of using agency staff are that staff aren’t forced to work 24 / 36 hours, 10 days straight, with tasks passed onto an already overwhelmed short staffed team. Some of these reasons for using agency staff include:

  • Local recruitment issues
  • Lack of transport to the care home
  • Team issues
  • Management issues

The bigger the dependence on agency staff, the tougher it is for existing staff to cope. Once you begin to use agencies, usage will likely increase, possibly leading to service and safeguarding issues due to unfamiliarity with residents. Add in serious cost issues if responsibilities aren’t carefully managed.

Why Using An Agency Can Damage Your Budget

With up to 55-70% of care home costs coming from staff costs, this makes up the largest proportion of your budget. For example, if you have a 50% occupancy in your care home and a budget for 2,000 hours per week, you should be using half of your budget (1,000 hours).

If you do this, costs can be controlled. But if you are using agency carers for the 250 of those 1,000 hours, the costs change. You could be paying an additional 65% premium for those 250 hours, adding extra hours to your already increasing budget.

Costs can easily begin to spiral out of control if a higher percentage of staff are from an agency.

How To Be A Successful Small Independent Care Home

There are only a handful of providers in the UK that have 1 or 2 homes. Given that there are more than 15,000 care homes in the UK, only a third of these organisations have 1 or a couple of homes.

There are unique challenges in the healthcare sector that make it harder to attain funding or the expertise that larger companies can easily attract. This can range from expert social care consultants, better IT systems to even up-skilling staff.

From studies in 2018 to 2019, of the 6,500 beds that were removed from the healthcare sector, the majority were from homes with the description “Requires Improvement or Inadequate”.

Many of these care homes were smaller groups or those who are single home providers. These organisations haven’t been able to update their facilities, invest in better services and have fallen short of the ever growing demands of compliance from the CQC.

Of course, we all want higher standards and they should be welcomed. Higher standards for care must always be required. However, there is a point where we have to think about these smaller care homes and how they are meant to meet these higher standards. We should support them, but right now, it isn’t available.

The CQC and Local Authorities are requesting higher standards such as better facilities, food, quality of staff and training, meanwhile, they cannot pay the required fees that would fund these improved services.

Social care is currently an issue, with fees not matching aspirations. Smaller care homes are being asked for more and more, all with being given less.

Why Are So Many Care Homes Closing Down?

With more than half of care homes currently operating at a loss, the statistics are frightening. Almost one in five beds now going unused. In addition, since COVID-19, nursing homes have been hit the hardest, with 97% losing revenue due to rising costs of infectious disease equipment, training, testing and labour costs.

What About Nurse Hours?

Let’s take an example.

Your care home has 20 nursing residents out of a wing of 30. There is a registration requirement of having a nurse on 24 / 7 without exception.

So, if we take a look at those numbers, there is a requirement to have nursing cover for 84 hours on days (average 8 am to 8 pm shift) and 84 hours nights (average 8 pm to 8 am shift).

 Per week, we are taking that as 168 hours, typically covered by around 3 to 7 nurses who will all be on different contracts.

 Over the last five years, there has been a rise in the nurse wage per hour, from £11 to £19 in the West Midlands alone. Across the UK, similar rises in wages can be seen.

 However, even though we welcome the rise in nurse wages, the fees paid to care homes have remained the same, not matching the increases in wages. This is a major factor that is resulting in serious implications for care homes.

 In a week, an example of 168 nursing hours would require an uplift of £1,008 per week. Per year, this equates to an extra £52,416. Now you can see why care home management is necessary.

 Somewhere, the books will need to be balanced to match the costs from fees not increasing with wages. With nurses already in short supply, care homes being understaffed and competition from the NHS, it is tough for care homes to be managed.

 Nurses can easily change jobs, so to combat this, staffing agencies are used, which as we saw earlier on, can be extremely expensive. If just 50% of your nurses aren’t on contracted hours, you can expect to pay £25 – £30 per hour through an agency.

 An example – for 84 hours per week paying those premium rates of £10 per hour, we are looking at an extra £840 per week or £43,680 per year to locate.

For Amateur Care Homes Can Social Care Provision Be An Option?

Most care home providers have traditionally had a medical background such as ex GPs and nurses. This is usually welcomed due to having the required knowledge and understanding of the CQC.

However, if they still need to be trained and up-skilled, there are added costs involved for those that will discharge their responsibilities effectively. There are examples of care homes being run by the board of a charity without any knowledge at all about the laws of social care.

In these cases, there needs to be a serious reality check as to whether this is a viable option. There will need to be up-skilling for amateurs, as well as rules and systems in place to ensure progress is monitored.

They will need to be taught about the responsibilities that come with running care services, from recruitment to finance management to retention, as well as dealing with safeguarding, families and all aspects of care.

Can A New Entrepreneur Create A Successful Care Home?

There are larger organisations that are disposing of their care homes due to being unprofitable. Some of the reasons for these organisations selling their sites are:

  • Outdated facilities
  • The number of beds didn’t match occupancy levels.
  • Issues in recruitment, leading to inflated agency bills.
  • Compliance issues
  • A reliance on Local Authority funded residents.

With more homes being sold off, it has led to a rise in entrepreneurs moving into the healthcare sector. Many of these entrepreneurs believe that owning and running a care home is an easy business.

However, many haven’t done the checks and research to see how much effort is required. There are factors such as minimum wage rises, carer staff shortage and compliance standards that need to be thought about, often overlooked by starry-eyed entrepreneurs.