Knight Frank Healthcare release 8th annual Care Home Trading Performance Review

With the aim of supporting care operators and investors, the care home trading performance index (CHTPI) provides industry leading benchmarks on occupancy rates, average weekly fees (AWF), major costs and profitability. As well as comparing performance across regions and care types, this years’ review also compares trading performance by funding type (local authority vs private pay), a key issue in the current market. Our 2019 analysis drew the following key headlines:

Care home occupancy fell marginally from 89.4% to 88.9% in 2019. The fall was down to changes in the composition of the index rather than a meaningful decline in demand for care beds.

Average weekly fees were up 8% on 2018/19, reaching £837 per week. Fees in the nursing home sector are now up to £897 per week as a reflection of the higher medical costs in this subsector, while fees in the personal care home sector are at £721 per week.

Staff costs increased again and now average £25,938 per resident per annum, according to our index. As the key driver of fee inflation, staff costs now represent 58.6% of income.

Profitability, measured as EBITDARM as a percentage of income, fell marginally to 27.4% in 2018/19. Broadly speaking, year-on-year fee increases have not been enough to combat the extra cost of delivering care.

Despite this, we can report that over a 3^rd of homes in the index are achieving EBITDARM margins in excess of 30% and only 1% of English homes were rated as “inadequate” by the Care Quality Commission.

Joe Brame, Senior Healthcare Analyst