Care UK says that it does not expect local authority fee increases to fully offset the cost of paying the National Living Wage.
In a statement accompanying its Q2 2016 results for the first three months of this year, the company said that “challenging negotiations [are] continuing”.
Speaking ahead of the release of Q2 data, Andrew Knight, managing director for Care UK, told Care Home Professional that he was not seeing enough movement from local authorities in discussions over spot contracts. “I feel as if we have seen positive movement form some local authorities, but there are so many unanswered questions.
“The precept has been taken by, I think, 152 local authorities, something like 98%. And yet, what we are seeing at the moment is a lot of local authorities offering us rises of nothing, 1%, 2%, which doesn’t quite add up,” said Mr Knight (pictured above).
Care UK’s business continues to be dragged down by weakness in its Health Care division, which is seeing elective surgery volumes constrained despite long NHS waiting lists, while nursing shortages are forcing up wages. Health Care division revenue fell by £15.8 million year-on-year to £75.5 million in the second quarter.
In the same quarter, the group’s residential care business powered ahead, with an increase in revenue from £59.6 million to £66 million. Earnings soared from £3.9 million in the second quarter of 2015 to £5.6 million this year.
In advice accompanying the Q2 results, the company said that it expected margins to improve for its residential care division because it will not be opening any more new homes this year. Next financial year, which begins in October 2016, the group will open seven homes, which will impact average occupancy.
Care UK is aiming for 50% of its care home residents to be self-funded by 2020, and continues to make progress towards that goal with self-funders accounting for 37% in the last quarter, compared to 32% for the same quarter in 2015.
This helped average weekly fees to rise to £763.