The Three Goals Of Effective Care Home Management: Compliance, Marketing & Reputation

Maintaining profitability, staying viable and understanding the full cost of non-compliance are vital elements to balance when running an effective care home. This is what every Registered Manager needs to know.

Understand The Usual Needs Of A Care Home Business

When managing a large costly business like a care home (50 beds plus) it is tempting to apply normal commercial logic.

That is, minimize your costs and your maximize revenue to attain high profits. Repeat.

Sure, it CAN look like simply putting pressure on cost control will lead to higher profits.

But the connection between the three key elements of care home business must be understood intelligently.

The 3 elements that REALLY impact future profitability are:

1. Compliance

Is the home compliant with the applicable laws and the regulator – the CQC? (See this article on becoming a CQC registered manager.)

Is the service being run in that way consistently? Does the home cover all the important bases and is it amply reflecting the legislation that applies to it?

2. Marketing

Is the service self-sustaining with enough new enquiries from referrals or new enquiries to keep the flow of business running?

Does it market itself well?

3. Reputation

Is the service what it said it would be?

Does it provide good value for money?

Is the quality to the standard expected?

A trustworthy provider wins a good reputation for these questions and beats competition providers in a busy and competitive sector.

Why All Three Factors Must Be Held In Balance

These 3 items will impact future profitability and they are interlinked and must always be held in balance.

A care home is not quite subject to typical commercial laws.

Let’s look at how each factor plays it’s role in ensuring profitability.

1. Compliance

For example, let’s imagine we applied only the usual commercial logic to your care home. That is, you’re looking to cut some costs to increase profitability.

An example of this is a provider I worked with where the owner’s family would oversee orders for wipes and gloves.

They habitually reduced the orders to save a little money – perhaps £50 per week. But the stocks would run out for a day or two.

I pointed out that if they were reported, they would likely get an embargo or possibly an emergency inspection.

The result of that could easily cost them £100k. It wasn’t worth trying to save £50 here.

A provider without compliance knowledge may run the home purely on a financial basis.

Of course, sometimes there are trade offs which avoid risks and it takes expertise in the application of the law around social care as to how to do this.

But if a home is not well run it will eventually be inspected and given a rating of “requires improvement” or if particularly bad “inadequate.”

These ratings put the service at risk of further sanction, fines, being downgraded, a possible embargo (no admissions allowed with terms) and, in extreme cases, enforcement action with instant closure.

An embargo occurs when the provider says that due to issues within the service, they are pausing new admissions (a self-imposed embargo is a useful tool against the authorities imposing the same).

Similarly, if your local authority believes that the service is not being run well, they can impose an embargo – it may have conditions, it may be regularly reviewed but, in some cases, can last a year or more. If you run an older people’s service there will likely be many departures that year (deaths), and if there are no admissions the home can lose a great deal of money very quickly – sometimes several hundred thousand pounds.

Compliance is fundamental to the survival of the business long-term.

2. Marketing

The 2nd area, marketing, is fairly self-evident. To support the salaries of a large team, you need a minimum degree of occupancy.

Put very simply, this is usually a minimum % of beds filled to cover key salaries – Home Manager, Deputy Manager, Nurses, Carers, Administrator, chef, handyman, housekeepers.

For an established home, the admissions need to keep track with the departures over the long term otherwise the service will struggle financially.

Of course, marketing is closely tied with compliance and reputation, but it ought to be valued in its own right too.

3. Reputation

Finally, and naturally, if a care home goes from a rating of “good” to “requires improvement” it is like a bad review for a restaurant. It may (and is likely to, especially in the current, nervous climate) affect referrals to the home.

Conclusion

So, it is like this: COMPLIANCE > REPUTATION > MARKETING > BOTTOM LINE

Of course, compliance impacts marketing which impacts the bottom line.

We can see then that sustaining high levels of compliance is an absolute minimum requirement to running a successful care service and business.

Compliance protects the service from risks of being downgraded or an expensive embargo.

But even when compliance is settled, the needs of marketing and reputation remain key in order to raise your profile in a competitive sector.