Just two weeks ago I was blogging about the precarious financial position of the residential care sector. (See “Poker Played With Peoples’ Lives” by clicking on “Residential Care” in the topics list).
It is a story which grew out of the rapid expansion of the residential care sector in the 1980’s and 1990’s. It was a private sector response to the rapidly ageing society and the then Government’s reluctance to fund new Local Authority provided “Old Peoples’ Homes”. A host of new companies sprang up to build new homes. A commercial “cash cow”, with new names – Take Care, Ashbourne Homes, Beaumont Health Care, Craigmore and several others.
Sadly, this new edifice was built on sand. Unskilled staff, low wages and high levels of capital borrowing. It has survived this long thanks to a series of mergers and takeovers, which exacerbated their level of indebtedness.
The industry is reaching a tipping point, the “cash cow” has become a “dog” in commercial terms – profit margins have fallen to a point where the poker playing financiers no longer want to be in this game.
Four Seasons Health Care – the subject of my blog two weeks ago – just reported a third quarter loss of £25.4 million on a turnover of £172 million. The introduction of the new living wage will add another £10 million to their cost in April. 90% of Four Seasons residents are state funded, so any closure of their homes will increase pressure on NHS beds and demands on Social Services.
Ironically, public and private sector residential care are both built on mountains of debt. Meanwhile, elderly people are just cards being played in a high stakes poker game that no-one can win.