How to reduce care home operating costs

February 17, 2022

Over the decades, councils have withdrawn from an area they traditionally used to support: social care. As of 2019, private companies own and run 84% of beds in care homes in England.

With the UK’s social care system so reliant on the private sector, it’s imperative providers get the Government support they need to cope, which it plans on delivering with the health and social care levy.

Will it be enough? Perhaps, perhaps not.

Either way, there are things care homes can be doing now to ensure they continue to fulfil their responsibilities to residents and investors alike.

So, let’s look at one of the basics of any business – which, love it or hate it, a private care provider is – and consider where you could reduce some costs while continuing to provide the best and safest care possible.

Staffing costs

In December 2021, the Nuffield Trust reported that the number of social care staff in the sector fell by 50,000 to 70,000 in the six months leading to October that year, representing 3-4% of the workforce.

The Government blames the crisis on “fatigue, exhaustion and burnout” among staff.

The need for staff is a problem in its own right, but the way some care homes are handling it – agency staff –  may be costing them an eye watering amount of cash.

That’s because agency workers, who are used to plug the gaps in care homes, tend to be more expensive than your average trained carer – you might even have to pay for their travel costs. 

So, unless you’ve already accounted for it, high agency usage may mean you go over-budget.

It’s easier said than done to recruit in-house staff, but getting a job advertisement out there the day you need extra hands is a good start.

You also need to consider flexible work contracts if you want to reduce your care home operating costs, because you might not always need every member of staff in equal spells over the year.

For instance, if your beds are only half full one season, it wouldn’t make sense to get all your staff in work as if you are running at full capacity – which you would be doing if contracted hours make up 100% of your staffing budget.

As a rule of thumb, we recommend around 70% of your staff hours are contracted and 30% are to be picked up as extra shifts.

Minimise spend on utilities

Utilities are not something you can escape. For care homes, you absolutely need to keep residents safe and warm, but there are still ways to do that while bringing costs down.

First, reduce usage. 

For electricity, that means switching to energy efficient light bulbs to reduce usage and spend on replacements. As simple as it sounds, drill in turning off equipment into your team to reduce electricity usage further.

To save on gas payments, invest in insulation to your reliance on heating. When you need to switch it on but your gas rates are higher than your electricity rates, use electric heaters.

Second, compare and switch suppliers if you can find (and negotiate) a better deal. We suggest you compare between around six suppliers.

Other costs

You can revise your spend to reduce just about anything else if you spend enough time researching all your options, from maintenance and catering costs to IT systems and even agency costs.

Just bear some things in mind. First, remember what we said about energy saving light bulbs? Sometimes, an initial high expense might mean you save more in the long run.

Second, where you can buy in bulk, particularly for catering – suppliers are more likely to give you a discount that way.

Third, do not cut costs if they put your residents at risk. For instance, deliberate understaffing could lead to unsafe care – which isn’t fair, ethical, or legal.

Accounting costs

If you have an accountant, they are probably promising to increase the value of your care enough to easily offset their fees. 

But have you considered whether they’re the right choice for you? Just like any other individual or firm you work with, you need to interrogate that question.

At JCS Accountants, our team has worked with more social care providers than we can count, so we know all the challenges you face. 

Chances are, we’ve helped someone else in your position and can give you the advice and help you need to be a success.

Don’t hesitate to get in touch with us if you have any questions.

Ready to talk?

Dick Haffenden JCS

Then we’re ready to listen.

Tell us about yourself, your goals and what you need to achieve them and one of our team of friendly accountants will be in touch to begin the conversation.

020 8643 1166

jcs Accountants

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