The idea of care homes for older people being traded like financial instruments might be unpalatable, but it is a reality in today’s adult social care sector. In what has been called the “financialisation” of care, private equity investors have pounced on a £16bn industry, attracted by a steady stream of income in the shape of fees from a growing population of older people.
Some 410,000 older people live in care homes in the UK, according to official figures, receiving everything from specialist dementia care to less complex nursing and bed and board. Those numbers are set to rise with lengthening life expectancy.
While these changing demographics are attractive to profit-hungry private equity firms, fears are mounting that some have racked up such huge debts to buy into the sector, they could trigger a financial crisis.
Investment in care homes has gone badly awry in the not-too-distant past. When care home provider Southern Cross imploded in 2011, residents of its 750 homes were plunged into a period of uncertainty. Much of the outrage focused on the firm’s former owner, private equity group Blackstone, which walked away with estimated profits of 500m, leaving cash-strapped local authorities to pick up the pieces.
Today, 95% of the 11,300 care homes for older people are provided by the independent sector (both for-profit and charities). A total of 360 are owned by struggling private equity-backed Four Seasons Health Care. In January, the Clova House care home in Ripon, Yorkshire, closed after Four Seasons said it was no longer financially sustainable. The shock news caused confusion and fear among residents, some already suffering the disorientating effects of dementia. Yet such closures are far from rare. A recent study by healthcare analysts LangBuisson found that 929 care homes, housing more than 30,000 older people, have closed in a decade, some for financial reasons, others due to serious failings in care.
Recent closures include 12 homes owned by Scottish provider Bield, Bupa’s Hillview home in Eston, North Yorkshire and Valley View in Blaydon in the north-east, where residents were given a week to pack their things and leave. According to accountancy firm Moore Stephens, one in six UK care homes is at risk of failure.
– The Guardian
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