20 May 2011
How the impending collapse of Southern Cross will effect the care industry
Today it has emerged that the countries biggest care home group Southern Cross is on the brink of collapse.The media is understandably focussing on the monitory implications and ramifications to the company of the impending collapse with 45000 people facing potential job losses or disruption and the companies share prices plunging 65%. However little is being said about the 31 000 elderly residents themselves even though they may have to shut down 200 residential homes immediately. The group is now pleading for monetary support from the government blaming bad property investments, public spending cuts and lower occupancy rates for its current situation. Underwriters are speculating that the group is unlikely to survive.Reports are telling us that the government has cause to be highly alarmed as a high profile collapse of a care provider like Southern Cross will raise questions about private sector involvement in care services. This would be bad news for private companies such as ourselves (Helping Hands) as we are continually looking to build relationships and work with local councils to provide home care. Ministers already have to amend proposed reforms to the NHS and the way that private companies are utilised after a massive outcry. A collapse like this may well take them back to the drawing board having already spent millions on the proposed changes to systems. Labour MP Michael Meacher has been quoted as saying “no provision was ever made (or even contemplated) for when a major provider collapsed or downsized Analysts are speculating that if the company does fall into administration, the administrator will take over the running of the homes, retaining staff until such times as buyers can be found.This will offer the 31 000 Southern Cross residents little peace of mind. While all this is going on and agreements are trying to be reached, these poor residents and their families have this looming over them. Justin Bowden, national officer at the GMB union said “How much longer must the 31 000 Southern Cross residents, their families and the 44000 staff suffer under the sword of Damocles hanging over their heads before government steps in and takes Southern Cross by the scruff of the neck and restore confidence and calm”At this stage all anyone can do is wait and see if an agreement can be reached to save jobs and peoples homes. With many elderly residents facing a sort of eviction if you like from what they thought were their “forever homes”, we must hope that an agreement can be reached as soon as possible.The impact that this may have on the care industry is huge. If the government looses faith in private care organisations it will have a knock on effect across the industry. With more and more people relying on grants and loans to fund their care needs in the current climate, it is becoming detrimental to the survival and the expansion of the care provider to take on contracts and referrals from councils and government bodies.