UK points to declining profits for older aged care homes

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An interesting insight into how the ‘post-COVID’ recovery could pan out in Australia.

The latest figures from Knight Frank show that in the UK, residential aged care occupancy is recovering, but homes aged over 20 years are reporting significantly lower profit margins.

Its 2021 Care Homes Trading Performance Review, which looked at data from 98,000 beds across 781 towns and cities, pointed to signs of stabilising occupancy rates across the UK in the second half of 2020-21.

Occupancy had fallen from 87.8% the previous year to 79.4% as UK aged care homes struggled with COVID-19 outbreaks.

The research shows that operators are seeing increased demand for beds and a corresponding backlog of potential residents, with average weekly fees increasing by 6.7% year-on-year.

However, there was a clear difference between the profitability of newer and older stock, with margins dropping from an average of 31.4% for newer homes to 25.2% for older stock.

“The disparity in margins between new and old units is a cause for concern, given the proportion of care homes that are more than 20 years old,” said Julian Evans, Knight Frank Head of Healthcare (pictured).

“However, if developers and operators focus on building new, high-quality homes and retrofitting older units, we remain confident in the future prospects of the sector.”

Easier said than done.

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