Britain’s private care faces crisis

Britain’s care homes face a deepening crisis as some private-sector companies that piled into the sector struggle with their financial miscalculations amid fresh evidence that they provide worse quality care than their non-profit rivals.

Southern Cross, Britain’s biggest care home company which looks after 30,000 people, must persuade its landlords to cut its rents by Wednesday or risk financial collapse. The company’s plight is the result of misguided property deals to fund rapid expansion and underinvestment in its homes.

An investigation by the Financial Times has shown that the quality of care in one in seven privately run homes in England was rated “poor” or “adequate” by the government regulator. The low ratings indicate potentially serious problems such as a failure adequately to feed or clean residents.

By contrast, the low ratings applied to one in 11 homes run by non-profit organisations or local authorities, based on April 2010 ratings from the regulator, the Care Quality Commission, which were scrapped in June 2010.

The private sector pays lower wages on average than the non-profit and public sectors and has higher staff turnover rates, according to industry data.

The increased financial pressure on the industry coincides with weakened regulatory oversight. The FT investigation found that the CQC, hit by its own financial constraints, reduced inspections by 70 per cent in the six months to March this year compared with the previous six months.

“Fundamentally, it’s now got to a point of being dangerous [for residents] – and it’s going to get worse,” said one CQC inspector, who spoke on condition of anonymity. “If I had a relative who needed to go to a care service, I’d be ­concerned”.

CQC refused a freedom of information request to disclose details of enforcement activity, saying that its systems and processes were “not [yet] set up in such a way as to allow the reliable and robust collation of statistical information on [enforcement] activity”. But data provided suggests that from October 2010 to December 2010 its enforcement activity in effect came to a halt.

Like others, Southern Cross bought homes across the country before the financial crisis, when the sector was a magnet for private equity and property investors.

Some care home operators are already in the hands of their lenders after borrowing more than they could afford.

“At a time when the private sector is being promoted for its astute business strategies, they’ve made a pig’s ear out of it [residential care]” said Margaret Flynn, a senior associate at social care consultancy CPEA.

However, some private care home companies rank highly in the quality ratings, including several owned by private equity.

Dr Peter Calveley, chief executive of Four Seasons Healthcare, the country’s second-biggest care home provider, said that it was unfair to lump all private providers together. He also said “the private sector is put under more scrutiny” by the regulator.

Private owners account for 70 per cent of the residential care sector, which was privatised two decades ago.

Private care home operators also say local authorities pay them unreasonably low fees and spend much more on local authority owned homes.

The Department of Health said that the CQC was developing a “more comprehensive” assessment system to replace the old star ratings.