Why Care Homes Must Track Key Performance Indicators...

...and how occupancy rates could be the key for business success.

Like many, the care sector has been considerably affected by rising costs including energy, food and staffing. As one of the biggest employment sectors in the UK (1.7 million people in the workforce), the changes to Employer National Insurance contributions in April 2025 has caused particular discomfort for the cashflow of many care homes.

With around half of care home residents aged 65 and over being self-funded, and with little certainty of support from local authority fees, it is more important than ever that independent care homes seek professional advice on the structure of their business finances to remain profitable. Whilst it can be uncomfortable to look at care in the context of profit, without it, many care homes may be forced to close their doors. Effective monitoring of Key Performance Indicators (KPIs) has become essential for maintaining both financial viability and quality of care.

KPI Metrics for Care Homes

As care homes continue to fight their way back from the chaos of the COVID-19 pandemic, and are faced with rising costs, it’s essential to be measuring the right things when it comes to the books:

• Revenue by service line – you might find that the highest income service line may not be contributing the most to gross profit

• Utilisation – are you making the most of what you already pay for?

• State vs. private income – do you know the optimum balance between the two?

• Operating cost per bed per day – by breaking costs down per resident or per bed, you can begin to understand which levers need to be pulled to make efficiencies

Operating Cost Per Bed Per Day

Understanding how much it costs per bed per day allows you to understand the lost revenue of empty beds, and to weigh up the potential costs of increasing occupancy rates.

With property costs mostly fixed, empty beds are a problem. As a benchmark, currently care homes average an occupancy rate of 90%, where nursing homes average 87%.

Borrowing methods from other private healthcare sectors such as dentistry could prove successful, such as offering short-term occupancy on empty beds for respite care or day care. You could also consider optimising staff levels or utilisation of the property for additional services. With the right data, you’re able to forecast these options and make decisions on how to move forward, both commercially and with patient care in mind.

Savills estimate that the UK will need an extra 144,000 care home beds over the next 10 years to keep pace with population growth. With demand like this, if you aren’t keeping track of your occupancy rates, or making an effort to increase your rates, you’re losing out on business.

How to set up KPI Tracking

The most important thing is to set your metrics and then return to them frequently. The traditional accountancy cycle of annual reports doesn’t work for a business as fast moving as a care home. You need to be able to see your numbers in real time, and understand how the changes you’re making are influencing them.

With the right data to feed in at the start of engagement, we typically provide reports, forecasting, benchmarking and monitoring KPIs quarterly, working with our clients to tailor information to their needs.

If you’d like to find out more about KPI reporting and how this might look for you, please do contact our expert team.