Concern grows over fate of care homes

CAMELON. Brown Street. General views of Kinnaird Manor nursing home owned by Southern Cross Healthcare Services Ltd.
CAMELON. Brown Street. General views of Kinnaird Manor nursing home owned by Southern Cross Healthcare Services Ltd.
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The future welfare of over 250 pensioners living in residential homes run by the Southern Cross Healthcare Group is causing concern.

The cash-strapped care home company plans to withhold a third of the rent it is due to pay its landlords for the next four months in a desperate bid to avoid going under.

The crisis-hit firm, which operates five residential homes for OAPs across Falkirk district, is facing financial ruin as a result of tying itself into 30-year leases for its homes at a time income from local authorities, its biggest customer, has slumped.

The group looks after 254 elderly residents at its homes in Westquarter, Larbert, Reddingmuirhead, Camelon and Falkirk.

This week, the managers of all five said they were unable to comment about the situation and referred inquiries to their head office in England.

Margaret Anderson, acting director of Falkirk Council’s social work department, said: “We are aware of the speculation regarding the economic situation affecting Southern Cross. However we have had no approaches to indicate that they have any plans to alter their services locally. The Council makes use of all of the local Southern Cross care homes and will continue to monitor the situation closely.”

Because of the uncertainty, there is growing concern over the future of the frail and elderly living there and whether staff will still have jobs just months from now.

Southern Cross has already announced it intends to sell one home in Lanarkshire in a bid to raise cash.

Revenue from the first six months of the year has fallen by three per cent to £464 million - but it is due to pay £250 million a year in rent. The company, Britain’s biggest care home provider looking after over 31,000 elderly in 750 properties, recently reported half-year losses of £311 million.

On Wednesday, it confirmed plans to keep £20 million it owes to landlords until September while it desperately tries to restructure its finances.

The move is hoped to give Southern Cross much breathing space it needs to plan its next move. Possible ways ahead could include striking a deal with lenders to swap rent for shares and even selling a number of its homes - a move it is claimed could raise £100 million.

The Darlington-based group has confirmed it is in a “critical financial position”.

Chairman Christopher Fisher said: “We believe all the key stakeholders in Southern Cross want this restructuring to succeed. We are in dialogue with the Department of Health, our lenders and landlords and they continue to support the process.

“Those landlords that do not want to take part in the longer-term restructuring will be able to review other options, but it is in everyone’s interests if this is as part of a larger, managed and orderly process.

“The objective will be to emerge with a stable and sustainable business model for the continuing care of our residents. Our primary concern is the continuity of care to all our 31,000 residents”

Mr Fisher added: “Sefton Park Care Home in Lanarkshire falls into a small category of homes that are not fit for purpose moving forward. We don’t see a huge number closing. It is in the few tens. The reason that would occur is if the home was wrongly placed for demographics or the building is not the right form or configuration.”