Backlash over sale of Bupa care homes
tHOUSANDS of elderly residents could be at risk if the planned sale of 150 Bupa care homes goes through, it is feared.
Private equity backed HC-One – which is run by controversial Labour donor Dr Chai Patel – is looking to buy the sites from the healthcare group to make it the country’s largest care home operator.
But the deal looks set to leave the company saddled with £600m of debt – sparking fears for the future of its elderly residents.
Former pensions minister Baroness Ros Altmann warned that the entire care home sector is ‘riddled with debt’.
She urged the authorities to get a stronger grip on care home owners’ finances and debt levels to avoid a repeat of the Southern Cross disaster which left thousands at risk when the firm collapsed.
‘If a care home goes out of business you are talking about people’s lives being put at risk,’ said Altmann, a campaigner for the elderly and pensions minister between 2015 and 2016.
‘this is not widgets on a shelf – these are frail, elderly people and if they are suddenly uprooted from their surroundings it can be life threatening.
‘We have seen it with companies that have loaded up – with Southern Cross they had large debt, they could not secure it. A company with huge debts is clearly going to be more of a risk than one without.’
Southern Cross left more than 31,000 vulnerable people at risk when it went bust amid a slump in the property market.
Patel, who was nominated for a peerage by tony Blair in 2005 but withdrew amid the cash-for-honours scandal, formed HC-One to take over many of the homes from the crisis. He has reportedly agreed to pay up to £450m for 150 care homes from Bupa. But if the deal is financed through borrowing, as a recent big purchase by his firm is thought to have been, debt could reach £600m when the cost of the deal is added to existing debts. that would leave the homes facing millions of interest costs every month before they can break even.
Karel Williams, professor of accounting and political economy at Alliance Manchester Business School, who last year co-authored a critical report on care home owners’ financing, said: ‘ this is not a suitable area for people who are covering a substantial part of the cost of purchase with debt.
‘they cannot simply say to shareholders, “Oh, we have had a bad year, we are not paying a dividend”. If they don’t pay the company goes to the bondholders.’
He added: ‘It does not put people on the street but it does put pressure on management.’ Janet Morrison, chief executive of Independent Age, the older people’s charity, said: ‘In a week when we have heard that one in six care homes are showing signs of financial distress, older people and their families need reassurance that high quality, affordable care will be available whenever they need it.’ Since April 2015 after the Southern Cross disaster, the social care regulator the Care Quality Commission has been able to monitor financial sustainability of care providers, including Bupa and HC- One. It is required to notify local authorities if it thinks services will stop due to business failure. A CQC spokesman said yesterday it had made no such notifications to date and was aware of the proposed Bupa sale.
An HC- One spokesman said: ‘HC- One’s debt levels are both prudent and conservative, allowing us to make significant capital investment, and enabling us to build an organisation that Residents and families can rely on, one which can withstand future uncertainties, and continue to provide kind care.’