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Elderly care sector: what the data tells us about the pandemic’s impact on occupancy rates

Tom Robinson • 10/11/2022

Two and a half years after the devastating first wave of the COVID-19 pandemic, occupancy rates in the UK’s elderly care sector are returning towards pre-pandemic levels. Leveraging data from our national dataset, we have analysed the challenges faced by elderly care homes since spring 2020.

The rapid and devastating spread of COVID-19 in the UK in March 2020 marked the beginning of a traumatic period for the entire population, but the risk of contracting COVID-19 and the wider impacts of the pandemic were most severe for the elderly and those with underlying health conditions. One of the most heart-breaking and harrowing phases of the pandemic saw thousands of elderly care home residents pass away from COVID-19, separated from their families due to transmission concerns.


Office for National Statistics (ONS) data suggests there were over 43,000 deaths involving COVID-19 among care home residents in England between Q1 2020 and Q1 2022, with the greatest numbers aligning with national spikes in COVID-19 cases and deaths.

With no reliable test for COVID-19 available during the initial wave, the number of ‘COVID-19 related’ deaths is likely an understatement. Comparing the number of deaths among care home residents against five-year averages suggests that COVID-19 could have resulted in an additional 10,000 deaths in Q2 2020 alone, based on ONS figures.

Occupancy rates across the sector

Leveraging our national dataset of care home trading data, we have analysed the longer-term impact of the COVID-19 pandemic on occupancy rates across the sector. The current national picture is one of recovery, aided by the COVID-19 vaccination programme. However, our analysis suggests that occupancy rates in the elderly care sector understandably still have some way to go to recover from the pandemic’s impact.

The UK’s elderly care market consists of assets of varying quality. To aid our analysis, we graded every elderly care home in our dataset as A, B or C based on its physical characteristics. By doing so, we revealed that each segment of the market experienced the pandemic differently in occupancy terms.

The grading of elderly care homes


Prior to the pandemic, A grade homes maintained average occupancy rates approximately three percentage points higher than B and C grade homes, which showed similar occupancy profiles before and during the pandemic. Since March 2020, A grade homes have experienced a more substantial and prolonged downturn in occupancy than B and C grade assets.




Occupancy rates expected to return to pre-pandemic levels

While the average occupancy rate across B and C grade homes bottomed out at approximately 79% in the winter of 2020, occupancy rates in A grade homes continued to fall, reaching a low point of 76% in Q2 2021, following the second spike in COVID-19 deaths among care home residents in Q1 2021.

The dataset hides the unpredictable and often binary nature of the impact of COVID-19 on an individual care home’s occupancy; some experienced outbreaks, deaths, and reputational damage whereas others, for whatever reason, did not.

Occupancy rates at B and C grade assets have recovered steadily since Q4 2020, climbing to 85% and 84% respectively by Q2 2022, just 2-3 percentage points below pre-pandemic levels. If recovery continues at the current rate, occupancy in B and C grade care homes will have returned to pre-pandemic levels by spring 2023.

Our data also shows A grade homes recovering steadily, albeit from a delayed nadir in Q2 2021, with occupancy reaching 80% by Q2 2022. Given occupancy fell further in A grade care homes during the pandemic, from a higher pre-pandemic base level, their recovery is expected to take longer than for B and C grade assets. 

A key factor in the differing recovery trajectories of A grade homes compared with weaker quality assets is their primary client group. Whilst B and C grade assets are likely to be at least partly, or potentially wholly, local authority funded, residents of A grade assets are much more likely to be private consumers.

In contrast to local authority funded residents, whose intake is directly needs driven and often because remaining at home is either physically or financially untenable, private customers tend to enter care homes at a time of their own choosing. With repeated and well-documented COVID-19 outbreaks affecting care homes during 2020 and 2021, it is easy to understand why individuals with the financial means and space to accommodate remaining at home a little longer (or their families acting on their behalf) would have opted to delay. Empty beds were thus not refilled as fast in A grade homes as in B and C grade assets. As the public perception of risk and the threat of contracting COVID-19 receded, however, pent-up private client demand has driven steady A-grade asset occupancy recovery in 2022.

A road to recovery

Occupancy is undoubtedly the lifeblood of the care sector, but it remains only one part of the bottom-line profitability story. Faltering occupancy through the pandemic was partially offset by fee inflation, but staffing costs rose, as the need to observe isolation periods exacerbated familiar pre-pandemic challenges. Our data suggests that these factors collectively contributed to an average 12% decline in annual profitability (EBITDARM) between 2019 and 2021. For A grade homes, the equivalent figure was 22%, highlighting the unique journey such assets have been on in comparison with other segments of the market. The elderly care sector is emerging from the primary challenge presented by the pandemic, with occupancy rates on track to return to pre-pandemic levels during 2023. But it is not there yet, and work remains to be done.

Current headwinds aside, and with the process of recovery still incomplete, investor sentiment was positive in the first half of 2022, with Cushman & Wakefield tracking just under £1billion of deals in the sector. As the sector confronts the challenges of inflation, cost of debt, and the perennial difficulties around recruitment, it is important that analysis of the care home sector is not seen as a one-size-fits-all process. Operators, investors, and other key stakeholders need to resist rushing to generalised conclusions.  

Cushman & Wakefield’s Healthcare team is committed to data-led advice and insight, and we continue to watch the investment market and inflationary turmoil with interest. We will continue to share the data-led story of the sector over the coming months.

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