11 Jul 2011

Southern Cross confirms closure

Care home chain Southern Cross is being broken up after rescue attempts failed. Its 750 care homes are set to be taken over by the landlords, bringing further uncertainty for some residents.

Britain’s biggest care home provider has been working with its landlords and lenders since March in a bid to save the business but now its homes will be split among its landlords and it is expected to “cease to be an operator of homes”.

Southern Cross, which has 752 homes, 44,000 staff and 31,000 residents, will be wound up and its care homes transferred to the new operators in an agreement with its landlords.

For around 250 care homes, the landlords are either care home operators already or have strong links with operators, and as such are expected to take on the operation of the facilities.

Southern Cross set to be wound up and its care homes taken over by landlords (Reuters)

But for the remaining 502 homes, where the landlords do not have care home links or experience, the future is less clear. Southern Cross said the landlords were “finalising their plans” – meaning potential further uncertainty for care home residents and their families.

However, Southern Cross said it would continue to ensure the welfare of all residents and staff was maintained. To ensure continuity of care, it said all payments to trade creditors are to be maintained and all home-based staff transferred on their current terms.

Read more: Who are the Southern Cross care home landlords? 

The company also said it would provide operational management and back office support services to those landlords which have no care homes experience.

Ian Fletcher, Policy Director at the property industry trade body the British Property Federation, told Channel 4 News it would still be “challenging” for these landlords.

“There are undoubtedly challenges ahead for landlords. It is a case of relying on the staff operating these homes. This is just a change of management,” he said.

There are undoubtedly challenges ahead…but I am hopeful the majority will continue as care homes. Ian Fletcher, British Property Federation

He said he expected to see a “range of solutions” from landlords, including some sales, but he expected most of the care homes to remain care homes regardless of the long-term ownership.

“One presumes that a number of these landlords have already lined up other care homes operators. It is difficult to see how you could transfer a care home to another use, so I am hopeful the majority will continue to operate as care homes,” he said.

Put the needs of the residents first
Michelle Mitchell, Charity Director at Age UK, said: “This has been a really worrying few months for Southern Cross residents and their families, with these latest developments only adding to their concern.

“We would urge everyone involved in the potential transfer of the Southern Cross homes to put the needs of the residents first, remembering that those living in the homes are very vulnerable and frail. The current situation only serves to highlight the need for Monitor, the new regulator for health and social care, to be given greater powers including responsibility for ensuring the financial viability of care homes. Companies that are not able to show that they have a sustainable business model should not be allowed to run care homes.

“Any older person or those caring for them who would like to know their legal rights with respect to care homes can call the Age UK freephone advice line on 0800 169 6565.”

Shareholders left empty-handed

While the group fights to ensure its residents continue to be cared for, the picture is bleak for Southern Cross shareholders. The company’s shares have been suspended with immediate effect and it has said shareholders are likely to get nothing back when, as expected at the end of the transition process, Southern Cross ceases to operate.

Chief executive Jamie Buchan and his senior team will lead the process. He said: “My objective, and that of my team, is to continue to provide excellent care to every resident and to manage the programme of transition professionally.

“All 44,000 staff can take pride from the significant operational turnaround and improvements in care delivery which have been achieved over the past two years.”

The news comes a month after a Channel 4 News investigation uncovered evidence that the company’s fiscal problems were affecting the quality of care it offers to residents.