The care home sector has adapted “immensely well” to the challenges posed by COVID-19, according to legal global property adviser, Knight Frank.
In its latest Care Homes Trading Performance Review, Knight Frank said occupancy rose by 1.2% in the third quarter, after dropping 8.5% in Q2.
Staffing issues continue to the most critical challenges for operators, however, with costs up by 3.7%. Staffing costs represented more than 58% of income in the 2019/20 financial year.
Knight Frank said the increased cost burden on providers had resulted in average fees rising by 6% in the last 12 months.
The global property adviser said COVID had had a limited impact on profitability so far, however, with EBITDARM down by just 0.6% in 2020.
Julian Evans, Head of Healthcare, Knight Frank, (pictured) said: “This crisis has demonstrated the resilience and capability of our residential care sector and shown the outstanding collaboration between the private sector, social care sector and NHS at this time of need. Undoubtedly, the pandemic has tested and will continue to test operators financially well into next year, but it’s critical that we continue to champion the incredible performance of care home operators and their workforces during the COVID-19 outbreak.
“Unfortunately, the pandemic has also highlighted the lack of investment by successive governments into the sector, and therefore the urgent need to prioritise preventative and crisis funding. COVID-19 has merely accelerated trends to scrutinise those buildings that are not fit for purpose whilst emphasising the insufficient funding available for reinvestment into existing care homes, which has therefore expedited the number of potential care home closures.
“Looking forward, group operators are now in a much stronger position and demand for elderly care beds remains incredibly robust in the UK, however, staffing and ongoing funding continue to be the most critical areas of concern in the industry, with many providers affected by the social care funding crisis. A comprehensive solution is needed to address this and increase the number of registered nurses available to the care sector.”