Build the rota from resident dependency, then count people, not equivalents, because that is how employer costs are charged.
Start from care hours per resident per day, not from a ratio of staff to residents: hours × residents × 7, plus cover for holiday, sickness and training, divided by contracted hours. An illustrative 60-bed nursing home at 90 per cent, with 5.5 care hours per resident a day, needs 2,079 care hours a week, 65.4 full-time equivalents and 84.2 people on the payroll, at a loaded cost of 2,142,214 a year: 763 per resident per week, 52.6 per cent of revenue.
Worked in full in Senior Living and Healthcare Real Estate by Julian R. Sterling, with every figure reproduced in a free workbook.See the book on Amazon →
Staff is the largest cost in a care home and the one an investor is least able to check from a trading pack. The quickest test is to rebuild it from the dependency of the residents. Care hours drive the rota, the rota drives full-time equivalents, and the payroll, which is where employer costs are actually charged, is larger again because most care staff work part-time.
| Input | Nurses | Care assistants |
|---|---|---|
| Care hours per resident per day | 1.2 | 4.3 |
| Hourly rate | 22.00 | 12.60 |
| Average contracted hours a week | 34.0 | 28.0 |
| Full-time week, hours | 37.5 | 37.5 |
| Cover for holiday, sickness and training | 18% | 18% |
| Employer national insurance: rate, threshold per employee | 15%, 5,000 | 15%, 5,000 |
| Employer pension | 3% | 3% |
The average fee is 1,450 a week, so revenue at 54 residents is 4,071,600 a year. Kitchen, housekeeping, maintenance and the manager are outside this calculation, which covers direct care only. The care hours per resident are an illustrative dependency assumption, not a regulatory minimum or a legal staffing ratio: regulators generally require staffing sufficient for the residents' assessed needs, so the figure has to come from the home's own dependency assessment.
Care hours a week = residents × hours per resident per day × 7
Paid hours = care hours × (1 + cover)
FTE = paid hours ÷ 37.5; heads = paid hours ÷ average contract hours
Employer NI = heads × MAX(0, pay per head − threshold) × rate
In Excel, per role: =Res*H*7*(1+Cover)/37.5 for FTE and =Heads*MAX(0,Pay/Heads-5000)*15% for national insurance.
| Line | Nurses | Care assistants | Total |
|---|---|---|---|
| Care hours a week | 453.6 | 1,625.4 | 2,079.0 |
| Paid hours a week, with cover | 535.2 | 1,918.0 | 2,453.2 |
| Full-time equivalents | 14.3 | 51.1 | 65.4 |
| Heads on the payroll | 15.7 | 68.5 | 84.2 |
| Pay | 612,324 | 1,256,655 | 1,868,979 |
| Employer NI, per contract | 80,042 | 137,124 | 217,166 |
| Employer pension | 18,370 | 37,700 | 56,069 |
| Loaded cost a year | 710,735 | 1,431,479 | 2,142,214 |
The payroll is 28.8 per cent bigger than the full-time equivalent count. Every one of the 84.2 people has their own national insurance threshold, so the thresholds shelter 421,208 of pay, against 327,096 if the model counts 65.4 full-time staff. Modelling in FTEs overstates national insurance here by 14,117, 6.5 per cent; at lower thresholds and higher rates the error changes size, which is why it has to be computed per contract. Together, NI and pension add 14.6 per cent to pay.
Direct care costs 763 per resident per week, 39,671 per occupied bed a year, and 52.6 per cent of revenue. That figure is the first line to compare with the seller's trading pack. If the pack shows direct care well below it at the same dependency, either the dependency is lower than described, the home relies on agency staff booked elsewhere in the accounts, or the rota is thinner than the residents need, and the third is the one a regulator finds.
| Care hours per resident per day | 85% occupied | 90% occupied | 95% occupied | Per resident week, 90% |
|---|---|---|---|---|
| 5.0 | 1,839,275 | 1,947,467 | 2,055,660 | 694 |
| 5.5 | 2,023,202 | 2,142,214 | 2,261,226 | 763 |
| 6.0 | 2,207,130 | 2,336,961 | 2,466,792 | 832 |
Half an hour of care per resident per day is worth about 69 per resident per week, roughly 195,000 a year on this home. A home admitting more dependent residents without raising its fees loses margin as fast as one losing occupancy.
This table scales cost with residents, which is generous: in practice the night shift and the nurse on duty do not fall as beds empty, so a falling home keeps more cost than the table suggests.
Care hours per resident per day × residents × 7 × (1 + cover), then FTE, then heads: 65.4 FTE and 84.2 people here, 2,142,214 a year, 763 per resident per week. The book's rota and employer cost calculator, with the two national insurance threshold regimes side by side, is in the free workbooks for this home. Where this cost sits in the earnings line is in how to calculate EBITDARM for a care home, and why most of it is fixed in what occupancy a care home needs to cover its rent.
It depends on dependency: residential homes need fewer hours than nursing homes. On an illustrative nursing home, 1.2 nursing and 4.3 care assistant hours make 5.5 hours per resident a day; each half hour more costs about 69 per resident per week, roughly 195,000 a year on 54 residents.
Multiply weekly care hours by one plus the cover for holiday, sickness and training, then divide by the full-time week. On an illustrative home, 2,079 care hours with 18 per cent cover is 2,453.2 paid hours, or 65.4 FTE at 37.5 hours; without cover the count would be 55.4.
Because most care staff work part-time. With nurses averaging 34.0 hours and care assistants 28.0, an illustrative home's 65.4 FTE are 84.2 people, 28.8 per cent more, and each has a national insurance threshold, which is why employer costs must be computed per contract.
This article is one calculation from Senior Living and Healthcare Real Estate. The book takes the same case from first principles to the decision, chapter by chapter, and every figure it prints is a live formula in the free companion workbooks.
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