In some good news for the Care sector, the government has extended the provision of free PPE to March 2022. The sector has been through a time of intense adversity, but continues to show resilience, and where businesses have weathered the storm, they look to strengthen in the future.
Following the headlines over the Crown Office’s recent release of the schedule of COVID-19 mortality rate in Scottish Homes, it is worth considering that without context, these figures do not supply a full picture. Whilst certain individual homes were hit badly, as a rough calculation based upon publically available information sources, the percentage of deaths per number of registered beds for the top 12 providers impacted in the country ranged from 4-17%[i]. It is also possible that Care Home mortality rates may remain below the 2019 equivalent for this time of year thanks to less exposure to other infections
Decline in Infection
Larger chains of homes had a lower percentage of mortality[ii] than for some smaller operators, and as the rates of infection have come down across the UK, care home COVID-19 deaths have declined. Although this figure may rise once restrictions are reduced.
Vaccination of care home staff has been extremely successful, with the programme being promoted by education and in some cases bonuses, with around 80% vaccination rate in most regions. Some operators would like vaccination to be compulsory, while others are concerned that such a measure will cause staff dissatisfaction and attrition.
Occupancy & Domestic Demand
Occupancy levels have been impacted, remaining flat for several months, at around 80% according to several sources. This is the result of multiple factors. Visiting restrictions and quarantine measures have led to a reluctance to place loved ones in care homes and as people work from home, they are more likely to be able to take care of relatives. Moves to larger properties outside cities have also allowed an increase in intergenerational living. However, it’s uncertain if these changes are permanent or to what degree.
The specialist and domiciliary care sectors remain generally buoyant, and it looks like demand for such services will remain strong.
Occupancy levels may also be impacted by actions of local authorities, some of which are still paying for unused, commissioned beds, although the majority of block bed contracts have fallen away now. We anticipate that there will be further discussion of streamlining social and hospital care in order to ease the flow of patients from hospitals to care homes, when specialist nursing isn’t required. This would free up hospital beds and make use of spare care home capacity.
Insurance, Sleep-In & April Fees
The sector is preparing for claims due to COVID-19 deaths. Lawyers are likely to start no win no fee actions shortly, and some claims may be linked to the early discharge process. General insurance premiums have seen significant rises[iii].
There is similar uncertainty regarding the ‘sleep-in’ situation. Following the Supreme Court’s verdict that staff are not entitled for the national minimum wage for shifts sleeping overnight, this has freed up provisions in accounts. However, some operators feel they wish to do the right thing and pay the minimum wage for night-time shifts, but pass the cost onto local authorities, so the future treatment remains inconclusive.
Finally, it remains too early to fully understand what fee uplifts may be available from local authorities for the new financial year, but indications are that these may vary significantly depending on area, ranging between 1-7%. This may see some operators review portfolios and hand contracts back if the uplift is too low.
The road ahead
M & A activity remains buoyant, especially for specialist care facilities, and for this, as ever, good CQC ratings remain key. Despite the challenges and the turbulence of the past year, the care sector remains resilient. With an ageing population, the demand for care is unlikely to reduce, despite post-pandemic lifestyle and demographic changes, and businesses that have weathered this storm have proved their resilience in times of the greatest adversity.
Key tax developments for the sector
[ii] Registered beds in Scotland by provider: carehome.co.uk