PER­SONAL AC­COUNT

The Daily Telegraph - Your Money - - YOUR MONEY - Richard Dyson

For­get whether the care home is com­fort­able: is it go­ing to sur­vive?

The first things fam­i­lies con­sider when they start look­ing into po­ten­tial res­i­den­tial homes for el­derly rel­a­tives is whether the homes are com­fort­able. As im­por­tant, are they over­seen by warm, cheer­ful, trust­wor­thy staff?

The fi­nan­cial state of the busi­ness is un­likely to be top of the agenda.

Even if it were a con­cern, it would be hard – given the com­plex cor­po­rate struc­tures used by many care home op­er­a­tors – for any­one other than an ex­pe­ri­enced fi­nan­cial an­a­lyst to get a sharp pic­ture of the op­er­a­tor’s se­cu­rity.

But it needs to be a con­sid­er­a­tion. The care cri­sis, as it’s most of­ten re­ported, usu­ally in­volves poor stan­dards of care. What is less likely to make the main news pages is the chronic fi­nan­cial dif­fi­cul­ties care homes face and their rapid rate of clo­sure. It is in­evitable that more homes will have to raise fees, more will close and more will go bust.

For res­i­dents and their fam­i­lies the con­se­quences of these things reach far and wide: there is the po­ten­tial prob­lem of hav­ing to find ex­tra money at some point in the fu­ture.

Worse, per­haps, there is the risk of hav­ing to move.

Since the fi­nan­cial cri­sis the num­ber of care homes in Bri­tain has fallen by around 2,000. If they are to sur­vive, the big­gest firms which run the care homes are say­ing they need to close more.

They face a wall of fi­nan­cial pres­sures in­clud­ing ris­ing wage costs, in­creas­ing reg­u­la­tion and – for many providers the most crip­pling fac­tor of all – costly debts.

The other grow­ing fi­nan­cial night­mare is the fact that lo­cal au­thor­i­ties, where they are re­spon­si­ble for pay­ing for res­i­dents, aren’t pay­ing enough. The care homes then have to squeeze the short­fall out of the “self-fun­ders” – those well-off and mod­er­ately welloff peo­ple who fail the care meanstest and have to foot their own bill.

But fam­i­lies won’t see these things when they come to visit a home along with a par­ent or other el­derly rel­a­tive who’s think­ing of mov­ing in (and likely sur­ren­der­ing a for­tune to do so).

They will be look­ing at the size and clean­li­ness of the rooms, and the fa­cil­i­ties, and ac­tiv­i­ties; and they will spend time meet­ing some of the staff. Will this be a suit­able place for a much-loved par­ent? This, af­ter all, is where they might spend their last days. Or that is prob­a­bly the hope. It may not be the re­al­ity.

The big­gest op­er­a­tor of care homes in Bri­tain, Four Sea­sons Health Care, has sold or closed more than 50 homes in the past two years. It makes a loss on its re­main­ing 370 homes, and is likely to un­dergo a fi­nan­cial re­struc­tur­ing this year to help re­lieve the bur­den of more than £500m debt.

Its fi­nan­cial sit­u­a­tion is sta­bil­is­ing, it says. Cer­tainly, the firm has ad­e­quate cash at hand – over £50m ac­cord­ing to re­sults pub­lished late last year – but even so, its ac­counts do not make re­as­sur­ing read­ing.

On­go­ing prob­lem: pro­test­ers lobby Par­lia­ment in 2001 about the need for sus­tain­able care fund­ing

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