The true financial reality of your organisation could have been impacted by COVID-19, but also artificially inflated by government support schemes.
Over the last 12 months, we've worked with all areas of the healthcare sector. This experience allows us to offer you a true perspective on your financial situation and support in optimising the structure of your organisation.
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The state of the healthcare sector
The underlying performance of care homes in the last 12 months has been flattered by various government support schemes and grants provided to the sector in the face of rising staff, insurance, PPE, agency costs and lower income where outbreaks of COVID-19 have impacted the occupancy levels.
In addition, there has been a reduction in referrals due to the current care home situation being played out in the mainstream media and a reluctance from family members to place relatives in care. This has resulted in an occupancy decline of more than 7.5% in the sector during 2020, with average occupancy estimated at 80.6%, even before the third lockdown.
Financial support has been provided in a number of ways:
- An unexpected increase in funded nursing care (FNC), paid retrospectively for 2019/2020
- Infection control funding (ICF) provided to local authorities to manage coronavirus
- Grants provided by local authorities to operators
- Payments to bridge the gap between current and pre-coronavirus average occupancy in some jurisdictions
The provision of short-term support in the sector by the government has been a welcome relief for operators and owners. It has also resulted in some difficulties in understanding the true underlying performance of the assets.
Understanding the different sources of income and being able to separate those from the underlying revenue generation of the homes is critical in analysing performance in the sector, especially given the likely withdrawal of government support in the coming months.
The landlords who owned the Four Seasons Health Care portfolio tasked us with transitioning 60 care homes to new operators in March 2020. The priority was preventing any disruption to continuity of care.
