’LAs should pay for care of elderly’
“Whether or not local authorities fulfil this, care providers should take appropriate steps to safeguard their fee income from self-funding residents,” the managing director of national care fees planning network Symponia said.
Her comments follow speculation that the UK’s largest care home operator Four Seasons Health Care could run out of funding, risking closure of the 350 homes it operates across the UK.
On 2 November, ratings agency Standard & Poor’s said that the care home operator’s capital structure was unsustainable and warned that unless Elli Investments, the parent company of the London-based operator, underwent radical restructuring of its finances, its cash could run out.
However, in a statement, Four Seasons rejected the accusation, claiming it had financial flexibility “well beyond S&P’s projections.”
A spokesman said: “We said in August that the group has sufficient medium-term financial flexibility and that remains our position. We also announced in October the appointment of advisers to help us improve that flexibility.”
This came just a few weeks after Care England, a group of care home providers, warned that a major provider could collapse in the next 12 to 24 months because of the cost of implementing the national living wage.
In 2011 care home operator Southern Cross had to shut down after landlords were forced to take back leases linked to the firm’s 750 care homes because it could no longer afford the rent.
Analyst View
In January ratings agency Moody’s downgraded Elli Investments Limited. Richard Morawetz, lead analyst for Four Seasons at Moodys, said: “The downgrade reflected Moody’s expectation that earnings and cash flows in 2015 will remain depressed, and that, barring a significant upturn in profitability, Moody’s believes that there could be a significant cash burn in the coming 12 to 18 months.”
