Protect Your Care Business Now

As you know, National Living and Minimum wages and National Insurance will increase come April.

This is going to increase your overall costs by at least 10% or if your revenue doesn’t increase, will instantly reduce your profit by at least 10%.

Can your care business take that kind of a financial hit?

Even if you’re one of those rare care providers who is returning an overall profit margin greater than 20%, losing 10% is still going to hurt and for many will make their business financially vulnerable.



What can you do? Well, you have three options, you can…

• Hope the government will increase available funding.
  
  
• Wait until April and then see how the rises actually impact your care business and then respond.
  
  
• Start now to make sure your business can handle the new rise.
  
  

Considering the state of the economy, cuts in spending and councils declaring bankruptcy, option 1 really is a non-starter.

You can wait until April and then react to the impact on your business. When you see your profit margin drop and then investigate the return you are making on individual fees to identify which are too low or even now returning a loss, you will need to arrange client fee reviews and find you’re at the back of a long queue of other care providers needing the same.

Meanwhile, you will be stuck, possibly for months, with clients on fees that are too low, leaving your care business financially vulnerable. This makes option 2 a terrible choice too.

Or you can take control and work out how much your client fees will need to increase in order to maintain the financial health of your business. Option 3 is of course the only viable choice.




Review Your Current Care Fees

It’s safe to assume that April’s cost rises mean you are going to need to increase all your care fees.

Any fees currently returning less than 20% profit margin will fall into single figure profits and there is the danger that some could actually start making you a loss.

So, to protect your business, you need to…



• Know what profit each fee is going to return come April. Simply adding say 10% to each fee won’t cut it when negotiating with commissioners. You need to know precisely what each fee’s profit will be come April and what each fee needs to increase to in order to maintain the profit you need.
  
  
• Arrange client fee reviews with commissioners. You know your commissioners will drag their heals to do this which is why you need to start this process now to give you time to have these reviews before April.
  
  

Both these steps are going to take time and the clock is ticking, hence the need to make this your current top priority and start now.

Getting this done and getting it right is simply too important.






Getting This Done and Getting it Right

You really need to start this as soon as possible, so I recommend you look at your calendar now and allocate some time to starting step 1 – reviewing your fees.

Find a couple of half days to start with over the next few days and book the time in so it’s there in writing and nothing but an emergency is going move that time.

How long it takes to review your fees will depend on how detailed and accurate your current fees are and how many clients you have.

For example, if you have set fees based on particular client types or tiers then commissioners will challenge you about not having person-centred fees and won’t simply agree to a blanket percentage rise.

Also, if a current fee is simply one that a commissioner proposed to pay, and you accepted then they are more in control of that fee and you will struggle to justify an increase that is going to work for you.

In these cases, you need to re-create the fees and show an accurately calculated minimum breakeven point and extra individual care based on accurately calculated average hourly rates, which will of course takes longer than if you already do this.

All your clients will need to have their fees reviewed and so the more clients you have the longer this process will take.


So, the sooner you start this fee review process, the sooner you’ll know how much work you must allocate yourself or your managers.




The second step will probably take longer.

Having calculated your current fees based on April’s cost rises and finding that many of your fees (if not all) need to be increased, your commissioners aren’t going to rush to arrange fee reviews. And the closer you get to April the longer it will take to get review meetings as hundreds of other providers will be trying to schedule their own reviews.

And so, again, please don’t put this off but start as soon as you can and stay ahead of the wave of providers who will be clamouring to have their fees increased.



How to Proceed

Having set aside the time to do this, you want to get through this first step of re-creating detailed, justifiable fees based on April’s cost rises as quickly and thoroughly as you can.

And this is where we can help.

Rather than detail here the steps to take, I’ve created a talk called, How to Prepare Your Care Business for April’s Cost Rises, that takes you through what you need to do and the financial impact of not doing anything.

I’ve got two options for you. You can watch a pre-recorded video now.

Watch Recording: How to Prepare Your Care Business for April’s Cost Rises.

Underneath the video of the talk, you can download a pdf version of the talk. If, having watched the talk, you have any questions, you can drop us an email at support@qualityofcare.co.uk.

Or you can sign-up for one of my live webinars where I take you through the same talk, but you can of course ask me questions.

Sign-up for the Free Talk.

Please don’t hope your local council will announce an uplift anywhere near enough to cover the coming cost rises – you know they won’t.

Instead, I urge you to proactively prepare and protect your care business from the financial harm these rises will bring.

So, register for a place on one of my webinars or access a recording of the talk now and make protecting the financial health of your care business your top priority.