Private UK care homes’ profit margins soared in pandemic, research finds

theguardian.com:

The UK’s biggest care home chains saw their profit margins jump by 18% on average during the pandemic, new research shows, while the highest paid director’s salary surged to £2.3m.

Amid a social care staffing crisis, and warnings from medical leaders that the system is “deeply flawed” and in need of urgent reform, analysis seen by the Observer lays bare the financial successes of major providers caring for elderly and disabled people.

The research – by the Centre for the Understanding of Sustainable Prosperity at Surrey University and Trinava Consulting with the trade union Unison – found that six of the 10 biggest adult social care providers for whom data was available saw their underlying profit margins widen between 2019 and 2020, the first year of the pandemic.

The biggest rise was at Runwood Homes, where the underlying profit margin widened by 37% in 2020, and which reported a profit before tax of £25.4m, up from £15m the year before, according to the research. A quarter of its homes are rated as requiring improvement by the Care Quality Commission.

The highest margin – 41.7% – was at Avery Healthcare, up from 39.8% in 2019 and 32.5% in 2015. The company, which runs 56 care homes in the UK, was recently acquired by the Reuben Brothers, named as Britain’s second richest family with an estimated fortune of £21.5bn, in the company’s first investment in the senior care sector. A press release in March said the deal – a joint venture with US real estate investment trust Welltower Inc – was expected to “generate significant future growth opportunities”.

The​ findings will fuel concerns about profiteering by private providers despite the pressures of Covid, and come amid reports of cost-cutting at some chains, and continued low