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Southern Cross collapse 'councils' fault'

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The head of one of Britain’s largest care home providers has claimed that funding pressure from councils played the decisive role in the collapse of Southern Cross Healthcare.

Speaking ahead of the National Children and Adults Services conference, Oliver Thomas, director of UK care homes for Bupa, called on councils to take a longer-term approach to the funding of care home places.

He warned that while some councils were already doing that, others appeared to favour a market filled with small providers in an attempt to push costs down to unreasonable levels at the risk of quality.

Southern Cross was broken up after it could no longer pay the rent on properties it had sold and leased back from landlords.

“The Southern Cross issue has been building for at least the past four years, which is the amount of time that local authorities have been squeezing care fees,” Mr Thomas said.

“So while [Southern Cross’] business model played its part, below-inflation fee increases were the decisive blow.”

The most recent Community Care Market News survey of baseline care fees, published by leading analysts Laing & Buisson, found the majority of English councils had either frozen or reduced the fees paid to care home operators.

“There are some authorities under financial pressure that are keeping lots of providers’ fees ridiculously low, and these will inevitably have implications for the quality of care that’s provided as a result,” Mr Thomas said.

He said he believed councils needed to strike a balance with providers that saw long-term commitments on both sides in return for assurances on funding and the quality of care.

“While a provider having a monopoly in one area is not a good thing for elderly people, nor is an overly diverse local pattern that sees prices driven down to the extent that cost rather than quality becomes the overriding issue on which providers compete,” Mr Thomas said.

“Local authorities have to make some choices about the providers they want to work with and allow them to make a reasonable return on their investment so long as they are providing a good quality of care.

“That’s what you have to do if you want to get more good providers coming into the business.”

John Jackson, joint chair of the Association of Directors of Adult Social Services resources committee, said the sector’s view was that Southern Cross’ business model, rather than fee pressures, was to blame for its difficulties.

He also questioned the correlation between the cost of care and standards.

“Research we carried out in Oxfordshire showed that there was no difference in the cost of care between those providers who were awarded three stars by the inspector and those who had zero stars,” he said.

  • 4 Comments

Readers' comments (4)

  • davy jones

    Personally I think that councils probably also caused the world economic crisis, the recent earthquake in Japan, and World War 2 - there is no end to their wickedness !

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  • Taking a long term view of the provision of social care would mean not seeing the private sector as the default option for future provision. Short termism is in the nature of privatised services - witness the decision of Southern Cross to sell and lease back and enjoy the past financial gain that resulted.

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  • Roger

    It's not our fault guv, it's those nasty customers for demanding value for money for their taxpayers! Shame on us!!

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  • And since when did local authorities exist to underwrite private business?

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