Care Home Management

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Rising energy costs: what can homes do?

As winter looms, care home providers are being faced with some stark choices when it comes to managing their energy bills.

Research conducted in August by Care England and not-for-profit energy consultancy Box Power CIC found that the annual energy cost for a care home bed would rise by 683 per cent from October 2022.

The representative body said that this would effectively eradicate any profit margin and called on the Government to introduce a cap, extend the £400 energy rebate and scrap VAT and the Green Levy on provider’s energy bills.

So what can care home operators do to reduce their energy bills and remain solvent?

Marr Procurement advises care home groups on methods to reduce energy costs. Managing  director Christoph Marr said: “You have got two fears in the market right now. Number one is the actual cost today for those who are having to pay the current market prices and it is very easy for these prices to have doubled in a very short period of time. Number two. Those who are on a fixed contract are worried about what happens when they renew.”

He says that many care providers have found themselves caught out in the last nine months as they come out of contract with no proactive plan in place. He says: “The minute you find yourself out of contract you are exposed to typically higher rates.”

Time to negotiate
Care home operator Harrogate Neighbours managed to secure a fixed contract until 2024 but now has to move premises, meaning it will have to negotiate a new energy deal.

Chief executive Sue Cawthray said: “The difference is 127 per cent, which is unbelievable, and we are going to have to do some serious negotiating as you can image how that is going to affect our cashflow.”

Negotiating the best deal for gas and electricity will be critical to remaining a sustainable business. Marr Procurement is advising its clients to seek counsel from a procurement organisation specialising in energy or employ an energy broker. Marr said: “On the supply side it is about finding the best contract, it is about finding the best price.”

Marr cautioned that when care providers chose a partner to do this, they should make sure they are transparent about the fees and prices involved.

He said that a good broker will update a client every month on the status, which can help with budgeting.

“It is really important to insist on multiple options from multiple providers over varying periods of time, with different types of contract”, Marr added.

Internal savings
Savings can also be made by not consuming as much energy within the care home.

Marr said it is about determining what are the top ten opportunities to cut consumption and for each of those top ten actions, understand how much they each cost and how much they each benefit the operation.

Key to doing this on the ground is appointing an energy champion, he argued.

Harrogate Neighbours have given this task to a handyman. Cawthray explained: “He is just the go-to person. He is the eyes and ears as he is around the home all the time so he can support everyone. He keeps people safe and warm while thinking: ‘Can we turn things down just a notch or two’.”

Another saving has come from cooking everything in one kitchen rather than two, cooking in batches and freezing food.

Cawthray said: “We have adjusted our menu really slightly to do less cooking but still make sure we give a really good menu.”

Although some care homes have the option of passing costs onto residents, she says the first step has to be getting the message across to everybody – residents and staff – that there is now an imperative to be a bit more energy conscious.

“If our running costs are going up, in order to be sustainable, you are going to have to pass some of the costs on, but it has to be realistic”, Cawthray explained. “You can’t suddenly say you are going to put the bills up as our gas has gone up 27 per cent. However, you can look at what the current cost of living is and make a reasonable increase.”

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