The care sector has been drastically affected by the Covid-19 pandemic, by it’s very nature of having to protect the most vulnerable. Hundreds of care homes have closed their doors in the last two years. According to a report by healthcare analysts LaingBuisson, a total of 275 UK care homes closed between January and August 2020, more than the number for the whole of 2019. The CQC reported 39,265 covid related (suspected or confirmed) care home deaths notified to them between 10th April 2020 and 31st March 2021.
As well as loss of patients, and therefore income, further challenges included social distancing measures, supply issues with personal protective equipment and lateral flow tests, mandated mask wearing and the ‘pingdemic’. The government mandated “no jab, no job” policy that came into effect for the care sector on 11thNovember 2021 meant that approximately 56,000 care home staff members who had not had their second vaccination were no longer able to go to work. Care homes nationwide are reporting staff vacancies of 25% to 49% and existing staff are having to work excessive hours to fill the gaps, which is not sustainable.
A key challenge to care homes has been permitting family visits whilst keeping their residents safe. 98% of care homes closed their doors to visitors in 2020, in an effort to protect the residents and staff. They then had to provide safe visitation spaces or pods and bring in PPE protocols and procedures, all of which bring increased costs when income is on the decline.
It’s no surprise that care homes have become a noticeable trend in the insolvency statistics and we have definitely noticed an uptake in care related instructions. The key issues we have noted in the sector are as follows:
Loss of income due to reduced resident numbers
Loss of staff
Supplier issues and rising prices
Repayment of bounce back loans and CBILs
Rent and/or mortgage arrears
Business rates
Covid-19 compliance costs
VAT arrears
Winding up petitions
The assets that a care home can own are included but not limited to; medical equipment, furniture and decor, mobility and care aids, commercial catering equipment, vehicles, consumables stock, trademarks and branding, websites and social media accounts, customer databases and goodwill. There is also potentially a leasehold interest (which can often be a liability rather than an asset) and occasionally a freehold interest, although this is rare due to the rising costs of property.
So how can we help? A valuation is a key part of early advice. It can clarify your position and aid with the decision-making process. It is also a way of identifying surplus assets or elements of the business that can be sold off to raise capital. In an insolvency situation, any sale of a business or assets is going to be subject to scrutiny, and a valuation report will demonstrate to creditors and any proposed insolvency practitioners that Market Value has been achieved.
If we can be of assistance to you or any of your clients, please do not hesitate to get in touch on 01425 200366 or op@proudleyassociates.com