The Financial Times reports on a research study published today by Opus Restructuring, which reveals the extent of the financial crisis enveloping the UK’s fragile residential care sector. The study, which utilises the database and methodology of the financial health monitoring specialists Company Watch, shows that 28% of care home operators are at risk of failure threatening the future of up to 6,000 care homes.
The average annual pre-tax profit of a UK care home is only £11,000, a figure well below that required to justify the operational and financial risk involved or to support the investment in the rising care standards required by the Care Quality Commission.
12% of care home operators are ‘zombie’ companies, with higher liabilities than the value of their assets.
Our Business Risk Adviser, Nick Hood states
“Every part of the UK adult care system is in crisis. Private sector operators are withdrawing from contracts for domiciliary [home] care services. The NHS is facing an unprecedented bed-blocking issue because there is insufficient domiciliary and residential care capacity to deal with patients leaving hospital.
“Care home operators are refusing to accept local authority funded residents because the fees are well below the cost of providing care. Sooner or later, privately funded residents and their relatives will revolt against having to pay sky-high fees to cross-subsidise publicly funded residents.”