Four years ago, in 2011, my blog followed the demise of Southern Cross which was then the largest care home operator in the UK. (You can read the full story by clicking on “Southern Cross” in the TAG CLOUD).
It was optimistically conceived in an ever-growing population of frail older people who were funded by the State. Eventually this rapidly assembled and dangerously financially leveraged corporate empire collapsed in on itself.
I likened the whole process to a poker game, where money was the only driver and the residents were just cards to play in the high stakes game. When Southern Cross went bust, the spoils were divided up between the remaining players and the second largest care home operator — Four Seasons Health Care — inherited the largest chunk of homes to pay off Southern Cross debts.
Sadly, the market fundamentals had not changed and Four Seasons were just as highly indebted. I forecast that it was likely to happen all over again and sure enough it has. Four Seasons has £500m of debt and annual interest bills of £50m. Occupancy levels are falling and Social Services’ fees are being squeezed, so the outlook doesn’t look good. The new minimum wage may just be the tipping point for yet another collapse.
The poker game is still being played out to see if Four Seasons becomes the next Southern Cross. That’s 22,500 old people who have an uncertain future in 470 care homes.
It is high time Government accepted that social care of the elderly is too important to be left to a card game of chance. We need a 21st century positive outlook to later life which offers all older people a secure and caring future. This can only come about if politicians are honest with older people about the limited state funding that is available to pay for care.
In turn that means that most older people will have to cash in the equity in their own homes if they need to pay for care. The Government’s key future role should be to encourage greater provision of retirement housing and facilitate less expensive and more trustworthy models of equity release.