Depth of Southern Cross crisis revealed

The depth of the financial crisis at collapsed care home operator Southern Cross was laid bare yesterday as new figures showed admissions sliding just before its decision to close down.

The firm’s crisis was brought on by a rising rent bill and lower fees as occupancy rates declined and local authorities reduced the number of patients they placed with the group.

That trend accelerated in the three months to June with overall admissions down by 7.5 per cent year-on-year with a 10.5 per cent fall in local authority referrals and an 8.1 per cent drop in patients from the NHS.

Occupancy over the nine months in total fell from 89.5 per cent to 86.5 per cent while operating losses rose to £39.1 million, up from £26.9m, as revenues fell 2.1 per cent to £696m.

Southern, the UK’s largest care home operator with 31,000 residents, announced in July it would close down after a rescue plan that involved reduced rents across its 752 homes was rejected by its landlords.

Owners of two-thirds of the homes have indicated they would take them back and run them themselves, which includes 249 homes to be taken back by NHP in conjunction with Chai Patel, the former boss of the Priory chains of clinics. Uncertainty still surrounds the fate of a third of the homes.

The GMB union this week said the landlords had missed a deadline of 1 August to appoint new operators, which it claimed may put the timetable for handover by the end of October in doubt.