Embargoed homes at Four Seasons plummet by 85% in first quarter of 2016

Four Seasons Health Care has seen embargoes drop to just three in its Care Home Division in the first three months of 2016. There were 20 care homes under embargo in January last year.

Embargoed homes are effectively in special measures imposed either by the Care Quality Commission or by the operator. Typically, the homes freeze new admissions, leading to a dramatic drop in occupancy.

An operator will also pump in additional management resources to turn the services around, so homes under embargo are damaging to the overall reputation of an operator and a considerable drain on profits.

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The drop from around 20 care homes under embargo in the first quarter of 2015 to just three in Q1 2016 contributed to an upturn in overall occupancy for Four Seasons.

In a presentation of its 2015 annual report, the company also revealed that its Q1 2016 occupancy had risen to over 87% by March, a considerable improvement over the average occupancy throughout 2015 of 85%.

Average weekly fees also improved in the first quarter, up from £620 per week in 2015 to £635 by March this year.

2015 overall profitability for Four Seasons was heavily affected by the company’s rising payroll, but this appears to have been reversed in the first quarter of 2016.

Payroll cost as a percentage of turnover for the Care Home Division was of 66.7% in 2015, 2.9% up on 2014. Payroll cost to the business peaked in the fourth quarter at over 68% of turnover, but has fallen dramatically in Q1 of this year to just 64% by March.

“Payroll efficiency should improve with higher occupancy, the wider deployment of safe staffing tools and the reduced level of embargoes,” the company’s chief financial officer Ben Taberner said.

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