Care homes’ finances could face inspection
Care home companies would have to open up their books to inspectors to ensure they were financially sound, under government plans for new regulation.
The measure is included in plans being put out to consultation after the collapse of Southern Cross last year.
The country’s biggest provider had thousands of elderly residents at more than 750 care homes across the UK.
Care Minister Norman Lamb said its demise showed the need for “greater oversight of providers’ finances”.
Rent bill
There had been concerns about Southern Cross’s business model for years and it struggled to balance the books as local authorities reduced the amounts they were spending on social care.
The firm was brought down by having to pay a £250m rent bill as councils made cuts.
After its collapse, other operators had to step in to take over the care of more than 30,000 people.
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When a patient or service user is moved from one care setting to another due to providers failing, it can have catastrophic effects on their mental and physical health”
Dr Peter Carter Royal College of Nursing
The Department of Health has started a consultation on how to prevent such a situation happening again.
One proposal is to give regulators the power to go through the books of the biggest providers and challenge them to prove their business models are sound.
Regular checks
Mr Lamb said there did not appear to be any current providers who are in the same financial state as Southern Cross was just before its collapse, “but you have to keep this regularly under check, because the level of anxiety people suffered as a result of what happened with Southern Cross is completely unacceptable.”
If things go wrong, a “much more planned and controlled exit” was needed, “so that no-one is adversely affected”, he added.
“We want to make sure every person receiving care and support will continue to get the care they need if a provider exits the market, regardless of whether they are paid for by the state or pay for care themselves.
“Southern Cross demonstrated that we need greater oversight of providers’ finances and better plans to support people if their independent provider goes out of business.”
Regular requests for information about company finances would be made by the regulator, and Mr Lamb stressed that it would also challenge business models that were very complex or looked unsustainable.
‘Welcome step’
Dr Peter Carter, chief executive and general secretary of the Royal College of Nursing, said the proposals were a “welcome step forward”.
“For some time we have been concerned about the ability of providers to deliver high quality care and run on a sound financial footing,” he said.
“When a patient or service user is moved from one care setting to another due to providers failing, it can have catastrophic effects on their mental and physical health.”
He added: “It is right that robust plans are put in place to minimise the risk of services failing and that there is scrutiny of their business models. We look forward to seeing these plans in more detail.”
