The FT has reported:
Shares in Southern Cross dropped almost 65 per cent after the care home company issued a starkly worded warning that government spending cuts and high rents had put it on a financially unsustainable footing.
It notes:
“In the light of reduced local authority placements the company considers its current rent burden to be unsustainable and intends to step up discussions with landlords based on a more radical agenda, ” Southern Cross said.
The reality of this is pretty straightforward. Councils are not spending on respite care for the elderly. Most care homes use these to earn fees that actually generate much of their magical profitability. And that profit has gone, just about over night. So care homes are in trouble. They have empty beds. At the same time hospitals can't discharge patients who are bed blocking, with costs rising heavily fro them as a result. This means emergency care for others will be denied soon.
This is the new health market for the UK at work. And failing instantly. Not just failing the odd patient though - although it is undoubtedly doing that. It's failing systemically as well.
This is Lansley's dream collapsing before it's begun.
What a mess.
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“When you’re 50 you start thinking about things you haven’t thought about before. I used to think getting old was about vanity – but actually it’s about losing people you love. Getting wrinkles is trivial.”
Eugene O’Neill
i’m reluctant to be too sympathetic with the carehome businesses themselves. they are incredibly expensive and, in a generally deeply fragmented industry, have taken taxpayer money and spent it on pumping up the property bubble moreso, perhaps, than caring for their patients. the charges are inexplicable given what many provide and the shockingly low wages they pay a lot of their staff. there are, of course, good and bad examples.. but it’s become an increasingly attractive business to be in thanks to demographics, capital growth, low staff costs and steady government funding… so i think we can be fairly certain that people don’t go into it because they care!
as with housing benefits, i’m happy if restrictions on state spending can pin back ever-expanding rents and capital bubbles.. rather than distorting the market in the wrong way as they do now.
the rather significant spanner in the works, however, is that this can’t be done at the cost of providing support to the people who need it.