Care Home Concern

Over the last few days the beleaguered care home provider Southern Cross announced it is to shut down and its shares were suspended at 6.25p by the Financial Services Authority. The company, which owns around 750 homes across the country and two in Medway, will hand over control to landlords after it became unable to pay its rents, despite the company’s financial restructuring in March.

Ironically, on the same day as this collapse, David Cameron announced the intention of his government to give private companies the right to run schools, hospitals and nearly all other public services.

The irony was not lost.

Could a Southern Cross happen to a school or hospital near you if Cameron gets his way? Could we see asset stripping and private equity investors come into our health or education system? Flogging school buildings or hospitals only to lease back to the state? This is a very real possibility if this concept of state sell-off is not monitored.

The problem with the Conservative view on this issue is that many of them do not understand markets despite actually being the biggest cheerleaders for them. Many private equity firms have no interest in managing state assets; they have an interest in maximising profit and stepping back.

The case with care homes is a case in point. The financial restructuring of the firm saw the mortgaging of old people care for short term profit. Guess who now has to step in to fix the problem; government. Many of the 'landlords' who have taken over SouthernCross care homes across the country will also need to be closely monitored to maintain standards.

Shadow health secretary, John Healey MP, said in a comment:

“This announcement is what those living in Southern Cross owned homes have feared for weeks. While the company offers reassurances, residents and their families must now hear from Ministers what action they are taking to guarantee nobody ends up on the street or is left with inadequate care provision.”

In June, the FT revealed that Southern Cross senior management had made £35m after selling their equity stock in the Southern Cross. In December, the company’s former chairman, William Colvin, and three executive directors sold all of their stakes in the company for 550p a share.

Last month, the GMB union reported that one of Southern Cross landlords, Loyds Property Investments, which owns 49 of its properties, is linked to offshore tax avoidance. Its parent company, Loyd’s & Associates Inc, is registered in the British Virgin Islands. The union found that Loyds, which is in administration, has links to Israel, the Channel Islands and Switzerland. Its website boasts that the company’s current portfolio in the UK is worth an estimated £285m.

The Tories locally have had an agenda over the last decade of allowing the privatising care homes. I campaigned with Cllr Stephen Hubbard and former Cllr John Jones in 2007 against the privatisation of the Shaws Wood care home and we held major concerns about the scope of private sector involvement in health care.

In the last full Council meeting before the local election, I asked the the portfolio holder at full Council whether the Council could guarantee that no more Care homes would be privatised or sold off? He refused to give a firm answer.

Well if this situation highlights anything; it is that our older people need security and peace of mind.

A private company with the interests of share holders looking for short term return on an investment, may not necessarily be the same as those of a patient who is looking for medium-long term care.

Just food for thought.