Southern Cross & the Care Homes Crisis

It is not without some dismay that I have been reading about the downfall of Southern Cross in the press.  Clearly this has been a disaster waiting to happen over the last year or so and finally it has.

The thought that up to 35,000 elderly residents could be ‘on the streets’ does not bear thinking about as my understanding is the average survival rate of an elderly care home resident after being moved is approximately six weeks.

There does seem to be some hope in that the landlords to a large extent are taking on these homes and in my opinion, there is no way the government would have stood by and let the homes be closed and the residents moved with the consequent mortality event.

I have to say the financial model which Southern Cross adopted in providing this care does seem to represent the type of reckless financial management which only takes place at the height of a boom. 

I can understand their desire to release capital from land and buildings and they would argue their business is providing care rather than being land and building landlords.  However, the one problem with this is that you then leave rent to the vagaries of your landlords and market forces which I believe has ultimately led to the downfall of Southern Cross.

It is difficult enough trying to run a care home in the current climate with the pressures of staff costs against zero increases from local authorities where residents are funded or self funding residents having reducing income due to current investment returns, without having to cope with ever increasing establishment costs.

I know it is easy to be wise after the event and hindsight is a wonderful thing and I can only say I do take relief in the fact that for the time being the ongoing security of the residents seems to be safe, after all that must surely be the most important thing.