Article

Are healthcare valuations skewed by support?

Daniel Smith 15 Mar 2021

Could government support schemes be hiding the reality of the healthcare sector's financial situation? Daniel Smith explains how we can help you see through temporary boosts to get a true picture of your organisation's value.

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.

Our team can help you improve your resilience so you're ready for whatever happens in 2021. Take a look at how we've helped your peers in the last 12 months.

Discover our key credentials in the sector

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.

Case study

Four Seasons Health Care

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.

Our work was made more complex when coronavirus started affecting residents in the care homes, forcing the homes to adapt their operating models, place vulnerable staff on furlough and implement enhanced infection control measures.

Regardless, we worked with all the operational elements, from finance and procurement to IT and HR, and successfully made the transition, while securing all 2,500 jobs. We also helped the care homes secure an extra £2 million in funding through government support schemes.

How we help our clients

Our team work across the healthcare sector, supporting:

social care providers
primary and secondary care providers
medical device companies
retail healthcare providers
healthcare distributors.

This gives us an overview of the entire industry, both before and during the coronavirus situation. Applying this knowledge, we can help our clients separate the reality of their current situation from the surface appearance of their finances.

With this knowledge, you can start to move from support back to self-sufficiency.

Find out more about how our healthcare team can help you.