Industry sector:

Care home: Occupancy


The percentage of the total number of places that are occupied at any one time is referred to as the occupancy rate. So if you have ten beds and nine residents in your care home, then your bed occupancy rate is 90% (it's most usual to talk in terms of bed occupancy in a care home, but sometimes room occupancy might be looked at too). Occupancy will probably fluctuate a bit and it's usual to look at occupancy as an average over a given period, often a year.

You will need to estimate what your average occupancy rate will be during the first year of business so that you can forecast your income for the cash flow. It is realistic to expect that your occupancy rate will initially be quite low. You will hope to increase your occupancy fairly quickly as your new business becomes established. It may be that some people have already put their names down to enter your home when it opens - if so, use this as a starting point for estimating occupancy.

Your occupancy rate may be affected by the type of care home that you open. For example, if you decide to target a specialist niche market for which you have identified strong demand, you might expect your occupancy to be higher than in, say, a middle of the road care home for the elderly.

As a very rough guide, if your income estimates for the first year in business (possibly excluding the first month) rely on projected average occupancy of much more than 85% or so then it is possible that you will have to re-think some aspects of your business plan.

Remember that occupancy can be affected by a number of different factors, including:

  • the reputation established by your home
  • the fees that you charge
  • the amount of local demand
  • the amount of local competition
  • the approach adopted by your local authority towards care provision
  • regional location; average occupancy is higher in some areas of the UK than in others
  • any legislative changes which affect either the amount of public funding available to care home residents, or the way in which local authorities are required to meet their obligation to provide care

Find out whether your local authority publishes any statistics on care home occupancy in your area - if this information is available it could be very helpful for your financial planning. Some of the regional care regulators publish care home occupancy statistics too.