Cash-strapped Southern Cross may hand homes to landlords

 

Britain's largest care home provider, Southern Cross Healthcare, is planning to return one in five of its care homes to its landlords, potentially causing disruption to thousands of elderly residents.

Overall, Southern Cross plans to return 132 of its 752 properties as part of a financial restructuring package aimed at saving the struggling group from bankruptcy.

However, while many of the properties will be run as care homes by other operators or by the landlords themselves, documents produced by the company concede that a "double-digit" number of the homes may close.

This could mean hundreds of frail residents being forced to move into other care homes over the next year.

News of the closures comes just days after the company revealed plans to cut 3,000 jobs, including more than 300 nurses and 1,275 care staff.

Southern Cross has already been criticised over staffing levels in some of its homes. Yesterday the Care Quality Commission, which regulates the sector, said it would monitor developments on a case-by-case basis.

"CQC's role is to ensure all care homes meet essential standards of quality and safety – our primary concern is always the welfare of people who use services," said a spokesman.

"We will require Southern Cross to demonstrate that all its homes are meeting these essential standards; any failure to so may result in enforcement action."

Southern Cross is Britain's largest care home operator and looks after 31,000 elderly residents. But the company does not own the freehold to the vast majority of its homes. About 250 are owned by city bondholders which bought them from a private equity company five years ago.

Since then, the amount Southern Cross has had to pay in rent has risen by nearly 20 per cent to more than £200 million a year despite a falling rental market. At the same time residency rates have been falling.

The company has been attempting to negotiate rent reductions with landlords – but has met strong resistance. The admission that it may hand back homes could be an attempt to force landlords back to the negotiating table.

Southern Cross recently warned that it was in a "critical financial condition" and reported a £311 million loss in the six months to 31 March. It wants to reduce its annual rent bill from £202.3 million to £137.5 million and recently said it would cut the rent it paid to landlords by 30 per cent as it tries to give itself some breathing space. It told its 80 landlords it was keen to work with them to "enable the orderly transition to an alternative operator of their choice".

It confirmed plans to transfer 47 of the homes to landlords in the next four to six months, with the remaining 85 returned over the next two to five years. A spokesman said: "Southern Cross's paramount concern is minimising disruption for its residents."

A Department of Health spokeswoman said: "Ministers have made clear that the welfare of residents living in Southern Cross homes is paramount... The quality of care and continuity for residents must not be affected by staffing changes within homes. We expect the CQC to closely monitor standards of care and take action as appropriate."

Start your day with The Independent, sign up for daily news emails
Voices
voices
News
general electionThis quiz matches undecided voters with the best party for them
Arts and Entertainment
Keira Knightley and Matthew Macfadyen starred in the big screen adaptation of Austen's novel in 2005
tvStar says studios are forcing actors to get buff for period roles
News
Prince William and his wife Catherine, Duchess of Cambridge show their newly-born daughter, their second child, to the media outside the Lindo Wing at St Mary's Hospital in central London, on 2 May 2015.
news
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Ashdown Group: Trainee Consultant - Surrey/ South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Ashdown Group: Trainee Consultant - Surrey / South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Ashdown Group: Recruitment Consultant / Account Manager - Surrey / SW London

£40000 per annum + realistic targets: Ashdown Group: A thriving recruitment co...

Ashdown Group: Part-time Payroll Officer - Yorkshire - Professional Services

£25000 per annum: Ashdown Group: A successful professional services firm is lo...

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before