UK care industry 'on the brink'

Privatisation of care 'an experiment that went wrong'

Care advisers say it's 'business as usual'

The collapse of Southern Cross is just one example of a care industry on the brink of crisis, according to a new report from UNISON.

The trade union claims that the privatisation of the industry "is an experiment that has gone seriously wrong", with a high risk business model now exposed as fundamentally flawed. Changes of ownership among inexperienced companies, high levels of debt and constraints on local authority funding are all contributing to the crisis, according to the report.

In addition to Southern Cross, provider Four Season is in "severe financial difficulties", according to the union’s analysis. If both Southern Cross and Four Seasons were to collapse, around 1,150 nursing and residential care homes would be at risk of closure, affecting nearly 50,000 people.

Dave Prentis, UNISON’s general secretary, said: “Our report exposes the risk of other care homes collapsing because of the behaviour of wheeler-dealer private equity firms.

“The home and day care market is worth about £4bn a year, making it attractive to private companies eager to make profits. But the looming catastrophe in the sector shows that gambling with people’s care is irresponsible and too risky.”

Barchester, the fourth largest care home provider in the country, challenged the report. Spokesperson Aisling Kearney pointed out that the company, which is run for profit, had the highest ratings from the regulator - the Care Quality Commission - of any major operator in the country, with 92.9% of homes rated "good" or "excellent" in April 2010. She challenged UNISON's research, including its claims about Bachester's ownership and business model and future.

"The story of Barchester is of a company that has been in the same ownership for many years, has invested most of its profits into the enhancement of the care for its residents and as a result of that has the highest quality ratings of any organisation in the sector," she said.

Advisers report 'business as usual'

Nicky Cave, managing director of managing director of Eldercare, a provider of independent advice on long-term care, said that it was "business as usual" for her firm.

"You can only plan for the situation you are in," she said. "If any of our clients were in homes about to close, then their immediate needs annuities would just follow them. What the press is doing is not very helpful - quite a lot of it is scaremongering."

Immediate needs annuities (INAs) are insurance policies bought at the point at which care is needed. For a lump sum, policy-holders are assured that their care fees will be paid until death. Jim Boyd of long-term care provider Partnership believes these policy-holders are "lucky" in the current climate.

"They can have huge amount of peace of mind as they [INAs] follow the individual," he said. "The policy is underwritten on their health conditions not on where they are going and if paid to a registered care home provider then it is tax free."

Cave believes that if more people had accessed long-term care funding advice earlier, the care home sector would have profited.

"A number of people have became state-funded that need not have done," she said. "[Access to financial advice] would have meant companies got a higher influx of private payers. If they had been able to protect a private fee stream they would not be so reliant on low local authority funding."

A recent report by care home owner Bupa suggested that local authority cut backs could see the loss of 81,000 care home beds over the next ten years. It warned that providers with large levels of debts could fail.


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