Making Supported Living work financially is not for the fainthearted. You may have access to property but how do you ensure that it’s doing what it’s supposed to do and not losing money?
Two of the most common issues for new and growing providers of Supported Living are ensuring that voids are filled and pricing properly. In order to do this successfully a provider needs to ensure that your service is well-prepared to meet regulatory standards, attract clients, and operate efficiently. Here’s a guide to help you through the process:
Pricing is a key element of Supported Living where many of the purchasing is done through a competitive tendering process. See Guide 1 for an outline of the type of procurement vehicles that are most commonly used by local authorities. We will give you more information on how to tender in a future guide.
Making a Supported Living service profitable requires a balanced approach that will equally prioritise financial sustainability, volume and the quality of care. Here’s how you can achieve profitability while maintaining high standards:
- Optimize Operational Efficiency
- Streamline Processes: Evaluate and streamline administrative and care delivery processes to reduce waste and increase efficiency. Ensure that your managers live and breathe these processes and that staff are able to sleepwalk through these processes. See Guide #3 on developing a staff guide.
- Leverage Technology: Use technology to automate routine tasks (e.g., scheduling, billing, record-keeping), which can reduce labor costs and errors. There are a lot of rota systems and finance systems available online. If you are new to the industry then speak to other providers and find out what they are using to save expenses on locked in 12 month contracts. You want systems that match your site but also match your growth. They need to be able to flex with you.
- Staffing Levels: Be clear on your core staff to service user ratios to ensure adequate care while minimizing unnecessary staffing costs. Ensuring that you can deliver a safe service is paramount. If your management staff are frontline then make sure these costs are costed into the core staffing levels.
- Diversify Revenue Streams
- Self-Funded Options: Often you will hear that you can offer services to clients who can pay privately, which often brings in higher revenue than authority or health funded clients. This is a very uncommon option for services which specialise in Learning Disabilities, Autism, Mental Health, Physical Disabilities etc as there is a statutory duty to care and support people with an assessed need under the Care Act 2014. Older People’s services such as Nursing and Residential Homes (Care Homes) do attract people who can afford to self-fund however.
- Specialised Services: Introduce additional specialism (e.g., dual diagnosis, challenging behavior, Forensic Mental Health Support, short-term respite care) that command higher fees. It is worth identifying the local need from the Market Position Statements that a lot of local authorities publish.
- Partnerships and Referrals: Establish partnerships with local health care providers, commissioners, social services, and charities for referral arrangements, bringing in more clients. Attend forums and webinars where they are offering information on what they are planning to do market wise. Work with other organisations such as landlords to deliver quality care with economies of scale.
- Maximize Occupancy Rates
- Some providers will have agreements with the local authority where there are 100% nomination rights. So the local authority has a certain amount of time to consider a void before you can market it to other local authorities. Other providers may be on a procurement system which means they need to inform the local authority brokerage team when they have a void. However in addition you can:
- Marketing Strategy: Think about how you are planning to tell referrers when you have a void or empty spot (vacancy). This could be through a newsletter, email, your website, a local Dynamic Purchasing System etc.
- Offer volume discounts: Offer incentives to current clients or referrers (like social workers, commissioners or brokerage officers) who bring in new clients by creating a volume bundle offer.
- Client Satisfaction: Focus on client satisfaction to reduce turnover and ensure that service users stay with your service longer. Please note that if the service is meant to be a transition or step down that you should have turnover as evidence of your successful support of service users. Throw some get togethers where you have communal areas to bring together all of your stakeholders.
- Some providers will have agreements with the local authority where there are 100% nomination rights. So the local authority has a certain amount of time to consider a void before you can market it to other local authorities. Other providers may be on a procurement system which means they need to inform the local authority brokerage team when they have a void. However in addition you can:
- Effective Cost Management
- Managing cash flow is an essential part of a successful Supported Living Service especially if you are supporting people with Housing Management.
- Bulk Purchasing: Purchase supplies and equipment in bulk to take advantage of discounts. This is harder with Supported Living where economies of scale can’t be split across service users who pay for their own supplies.
- Energy Efficiency: Invest in energy-efficient appliances and practices to reduce utility costs. This could include household wifi for example.
- Outsource Where Possible: Outsource non-core functions like central costs, IT, Finance, HR, Training etc to specialists who can do it more cost-effectively and quicker. The quickest way to slow your growth is to try to do everything yourself.
- Managing cash flow is an essential part of a successful Supported Living Service especially if you are supporting people with Housing Management.
- Pricing Strategy
- We will go into pricing in future guides. However getting your pricing right can be the hardest part of Supported Living. Here a number of pricing strategies
- Competitive Pricing: Analyse your competitors’ pricing and ensure your rates are competitive while covering costs and generating profit. This can be difficult to do as prices tend not to be publicised. You can ask your local authority about median rates for the type of support you provide.
- Value-Based Pricing: Less popular but you could charge more for premium services that offer additional outcomes, specialised care, or enhanced amenities. You will need to see what additional training is needed for staff to justify this but it’s a good way of ensuring profitability. Note that anything Health related is often not eligible under a social care charge so you will need to ensure that your additional offer isn’t too clinical.
- Transparent Pricing: Ensure your pricing structure is clear and transparent to avoid disputes and ensure clients understand what they are paying for.
- If you’re still struggling then try using our free calculator to help you work out what a Supported Living Placement cost should look like.
- We will go into pricing in future guides. However getting your pricing right can be the hardest part of Supported Living. Here a number of pricing strategies
- Improve Client Care Outcomes
- High-Quality Care: Provide excellent care, as this leads to better client retention and higher satisfaction rates, which can result in positive word-of-mouth referrals. Local Authority officers speak to each other regularly and one happy social worker can make a difference to your void levels as a spot provider.
- Client-Centered Services: Tailor your services to meet individual service user needs, increasing outcomes, satisfaction and the likelihood of long-term engagements.
- Accreditations and Certifications: Obtain relevant accreditations or certifications, which can justify higher pricing and attract more clients. Empower staff to be able to support service users and their families with their goals.
- Technology: Use of technology for care and support planning or monitoring outcomes will help you monitor and improve on outcomes and become more efficient.
- Funding and Grants
- Government Funding: Stay updated on available government tenders or opportunities for supported living services and apply for inflationary uplifts annually if this is not already part of the contract. We will delve deeper into government funding and how tenders can make your organisation sustainable in future guides
- Grants: Explore grant opportunities from charities, foundations, or local councils that support initiatives around independence e.g supported employment, community activities, equipment etc .
- Fundraising: A less popular option unless you are a registered charity is to organise fundraising events or campaigns to supplement income, especially for special projects or equipment. Involve service users and families where possible.
- Regular Financial Monitoring
- Budgeting and Forecasting: Create detailed budgets and regularly forecast income and expenses to avoid financial shortfalls.
- Profit and Loss Analysis: Regularly review your profit and loss statements to identify areas where costs can be reduced or revenues increased. Local Authorities are reliable clients in terms of payments but you may experience delays in being paid especially at the beginning. You need to have some cushion for this period
- Contingency Planning: Set aside a reserve or contingency for unexpected expenses or downturns to maintain financial stability. Local Authorities will not pay void costs however you should ensure you can cover staff and agency costs as required. This should be linked to your Business Continuity Plan.
- Staff Training and Retention
- Continuous Training: Invest in staff training to improve care quality and efficiency. Make sure that staff training is relevant and meets the needs of your service users. Safeguarding is the cornerstone of all training. Well-trained staff can work more effectively, reducing costs associated with errors or rework.
- Retention Programs: The UK is struggling with staff retention especially in Care and Support. Implement programs to retain staff, such as offering competitive salaries, benefits, and career development opportunities. High staff turnover can be costly and disruptive. Continuity of service is more cost effective in the long term.
- Client and Family Engagement
- Communication: Maintain regular communication with local authority officers, service users and their families to address concerns promptly, improving satisfaction and retention.
- Feedback Loops: Implement systems to regularly gather and act on feedback from local authorities, service users and their families. Happy clients are more likely to recommend your services.
- Scalability
- Growing your Business: As your business grows, consider expanding services to new locations or adding more beds to increase revenue. Business Development and Growth require a separate strategy which includes cash flow on any new services but it will give you economies of scale on your central overheads.
- Franchise or Licensing: Not a popular option outside of the domiciliary industry is to franchise your service. It’s difficult to ensure that services are consistent but it does give economies of scale in marketing and branding. If successful, consider franchising your model or licensing your brand and methods to others.
- Risk Management
- Insurance: Ensure you have adequate insurance coverage to protect against potential legal or financial risks. Professional Indemnity, Public Liability and Employer’s Liability are key. These will be required when you submit a bid so check for levels of cover required.
- Regulatory Compliance: Stay compliant with all relevant regulations to avoid fines, legal issues, or loss of licenses. CQC will do this for you but it’s best to stay ahead of inspections and changes to legislations in your policies and procedures.
By focusing on these key elements, you can make your supported living service not only profitable but also sustainable in the long term, all while maintaining a high standard of care for your service user.
Look out for our future guides on pricing, how to manage the bid/ tender process, changes in procurement regulations.
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