“SOUTHERN CROSS POKER GAME – Residential Care Dilemma” 3

The history of residential care has had its highs and lows over the years (see “Residential Care Dilemma dated 12 October 2010).  At times there has been rapid growth and high profits, but always on shaky foundations (see “Houses Built on Sand” dated 16 January 2011).  Its future now is at a crossroads – a Southern crossroads.  The road taken may well determine the future role of residential care, and impact on the lives of hundreds of thousands of older people.

Somewhere in a Government Department or a Banker’s office in the City of London, a high stakes poker game is being played behind closed doors.  Each player is holding on to their cards and trying to protect their stake in the game, by not declaring their hand too soon.  Poker is a game of bluff where the key questions are:-

Who has the strongest hand?

Who has the most money to play with?

Who will back down first?

Who has the strongest nerve?

Spectators are superfluous in a poker game, they don’t have any cards to play.


In what could be Southern Cross’s final game, let’s have a look at:-

A)  Who are the key players ?

A1  Southern Cross Management – an ever-changing group of directors, where their predecessors have bailed out with golden goodbyes, leaving the latest group with few cards to play.  (The get rich quick shareholders have long since lost their shirts and are now only in the audience watching the game).

A2  Bankers and venture capitalists – heavily disguised with the dark glasses of unknown companies.  Supported by an army of accountants and lawyers who are likely to be the only guaranteed winners in this game.

A3  The Care Quality Commission – who would like to be in control of the game but are very inexperienced at this level of poker.  Poker is a dangerous game for novices.

A4  The Government – whose hand will be played by the Department of Health and Social Care.  So far they have kept their cards under the table.

B)  What are the first moves?

B1  The new Southern Cross Management Team – have already played their first cards by delaying and rescheduling the rent owed to their landlords.  Thereby saving themselves £10m per year.  The landlords won’t like this, but it is small change in a high stakes game, so they probably won’t do anything about it.

B2  The Landlords (bankers and venture capitalists in disguise remember) – have up until now been sitting on their hands.  As long as they continue to receive some rent, they are most likely to hang on and stay in the game.  They could trade lower rent for shares in the company but since Southern Cross is almost worthless, this would hardly be a strong play to make.

B3  The Care Quality Commission – have already upped the stakes by closing admissions to 17 homes which increases the tension and sends a signal to the other players that they are in the game.

B4  The Government – is already in discussion with the key players including some competitors (BUPA, Four Seasons, Audley, Barchester), who would like to be picking on the bones of Southern Cross.  The Government is nonetheless a very reluctant player, one who has created the game; allowed the rules to be set by the financial market; constrained social service fee levels and now does not want to play.  They will however have to pick up the pieces if the game collapses – the pieces of course being the residents.

C  So what is the final hand?

C1  Southern Cross Management – could put themselves into voluntary liquidation and let administrators default on the existing management agreements, thereby forcing the landlords to make more economic arrangements with other operators.  I doubt the new executive team will want to do that, otherwise they are out of a job.

C2   The Landlords (bankers can be, and venture capitalists definitely are – ruthless) – they could do the same thing by terminating the management agreements on the grounds that the rental payments have not been honoured.  Although there is little honour in any of this story.

C3  The Care Quality Commission – whilst continuing tightening the screw on new admissions, might also want to contemplate the logic of a policy that protects new residents from moving in to new substandard homes, but leaves the existing residents vulnerable to gambling operators, bankers and venture capitalists.  Shouldn’t the regulations outlaw gambling with residents’ lives?

C4   The Government – with the guidance of the Department of Health, they are the only organisation with enough resources to outbid all the other players.  If they play their cards right they hold all the aces in the pack:-

Ace of Spades – concern about premature deaths of residents worrying about having to move, in the event of sudden home closures (remember Napsbury in 1997).

Ace of Clubs – the threat of the Care Quality Commission having to stop all future admissions to Southern Cross homes because they fail the financial viability test.

Ace of Diamonds – the potential to offer higher fees for rehabilitation services by moving older people from NHS wards.

Ace of Hearts – the White Knight of politicians riding to the rescue of vulnerable older people and saving them from a fate worse than death.

With these cards carefully played by David Behan, the Director of Adult and Social Care at the Department of Health, the Government could fill, not only Southern Cross’s empty beds, but also many other residential care places.  This has the potential to turnaround the financial viability of the whole residential care corporate sector whilst at the same time ensuring that NHS patients are looked after in better accommodation and are still supported by NHS transferred specialist staff.   Money would be saved in NHS budgets and spent more economically by new GP Commissioners on a transformed, slow stream rehabilitation service.  This solution is a potential win-win option for residents, operators, bankers/venture capitalists, the Care Quality Commission and politicians.


This entry was posted in Residential Care and tagged , , . Bookmark the permalink.

3 Responses to “SOUTHERN CROSS POKER GAME – Residential Care Dilemma” 3

  1. david freeman says:

    Well I never this wekend the Sunday/Monday Telegraph has had a piece on Southern Cross and its ‘rats’. One interesting feature I noted was that the official or given addrees of the company was Darlington!! My mind went back to the NE coast area and John Poulson (Late 70,s). This was a going concern wrapped up in the NE of England policical scene and was an absolute scandle!! So how far is Darlington form the safe seats of the labour heartlands, and who where the influencial MP,s at the time of Southern Cross, s inception. Was the company ultruistic or out to make a buck, and what now? who is crying because they have no money? The original MP,s from the NE England? where is their moral fibre? I am sure the city was not lead by a donkey, when there was money to be made.

  2. david freeman says:

    The scallywags!!! T Dan Smith from Newcastle and Poulson from Wakefield?

  3. David Evans , Cardiff says:

    This is being played out in the financial press and elsewhere in the media almost every day. Not too much mention of the uncertainty that the residents must be facing. This should not be allowed to happen. What on earth are the authorities doing?

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s