Wednesday 1 June 2011
Troubled care home group Southern Cross has announced that it is slashing rent payments to the landlords of its care homes in an effort to keep open the 750 care homes that it manages.
"Southern Cross certainly could go under," William Laing, health economist at Laing and Buisson, told BBC Radio 4’s Today programme, speaking after Southern Cross unilaterally decided to hold back 30% of its rent payments over the next four months.
Southern Cross has been in serious trouble for several months, and has already breached key conditions imposed by its bankers. It has blamed public spending cutbacks for reducing its earnings from local councils – a key source of revenue, along with rising rents and increased care costs. City analysts, though, say the company is paying the price for poor decisions taken when it was owned by a private equity company.
"Thousands of very vulnerable people and their families will be worried sick by what’s being reported about Southern Cross," said shadow health secretary John Healey.
"Ministers must get a plan B in place if the company can’t sort out its problems," he said.
"Underneath the current difficulties, because councils are continuing to buy care from Southern Cross, there’s a viable business that can in some way be structured," said president of the Association of Directors of Adult Social Services, Peter Hay.
His members are directors of social services at local authorities in England and include those who buy care from Southern Cross.
"And there’s no need to talk about mass movement or mass closure of older people living in these homes. We will work with all parties - landlords, Southern Cross and others - to try and build a sustainable, viable business from this for the future," he told the BBC Radio 4 Today programme.
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