Care Home Manager – Costing Care Effectively

Who doesn’t want an improved fee?

Many providers want better fees and whilst most accept local authority fees they feel aggrieved they are not paid sufficiently for the care provided.

We appreciate that sometimes taking lower fee-paying clients may be the fastest way to fill beds and it could be seen as “better to have some income than no income”. Taking a longer view can help you increase your fees, but it takes real knowledge or perspective of residents and understanding of your costs, and an appreciation of the systems of procurement used by your local authority.

Within this article we give managers tips and advice which can be used to increase the fees paid by local authorities. Be prepared not to succeed 100% of the time.

The first step in understanding what you can charge is understanding the environment you work in. Consider the bed capacity in the local area, is there an under or over provision. If there is an under provision of beds in an area you will be in a stronger position to ask for higher fees. Where there is an over provision of beds, there is always the possibility if you ask too much another provider will accept a lower fee.

Understand your service in relation to other services in your area. Become a secret shopper and find out what other services offer. Consider what you offer that others do not.

When you fully understand your marketplace, consider what the cost of care is for a standard resident. This involves looking at all the costs incurred running your care home, from energy, to food and upkeep as well as the staff costs which will always be the biggest cost.  You should make use of your budget to understand when expenditure is anticipated and what revenue you require to fund this.

Divide your expenditure by the number of beds you have. This will provide you with the cost of care but does not take into account any profit/surplus. You must therefore factor this into your calculations.

Also calculate the number of care hours provided within that cost per resident.

This gives you a basis for what level of service you can provide for what cost.

These calculations can be complex, and our team can help you to make sure your calculations are correct and will withstand scrutiny.

When you are asked to consider a new client, complete a detailed assessment of the client, consider how much care the person will require, is there additional equipment you will need to provide, are there special requirements you will need to meet?

Then set your price taking into consideration care hours required, and equipment needed. Break down the care needs in detail so that your fee can be justified. Can you meet the identified needs using the existing staff hours, or are additional resources required?

Remember that homes in large companies or larger care homes, will be able to achieve cost and volume savings and may be able to accommodate the resident at a lower fee than you.

Knowing your market will help you to argue your case, especially if you offer a different service to others in the area. So be imaginative.

Costing care and holding out for higher fees can be worthwhile, but also carries an element of risk so getting the balance right is critical. Our team at Swift Management are happy to assist, in both individual fee negotiations when considering residents with complex needs and also working with providers and local authorities to discuss numerous fee uplifts.

To discuss further please contact our consultancy team on 020 8087 2072