Covid-19 crisis: the faked story: care home industry hits out in panic as ‘chickens come home to roost’

The Herald ‘owned by Newsquest, one of the UK’s biggest newspaper and website publishers’ is today the media arm of a pre-emptive strike by the private care home industry to try to transfer responsibility for their failures onto the Scottish Government.

In this report spokespersons for the industry are able to distort the truth unchallenged by the reporter.

First, the ‘damning critique’ in the sub-title, comes from Scottish Care, described quite misleadingly as ‘Scotland’s main care body’ when they are merely, as they put it themselves, ‘the voice of the independent care sector.’

Entirely unchallenged by the reporter, the group attempts to blame the Scottish Government for their own failures. These are institutions owned by large corporations, often registered offshore to avoid tax, paying massive dividends to shareholders and paying minimum wages to staff. Often they operate at dangerously low levels, relying on agency staff, to make profit.

They are then allowed to excuse themselves from paying for testing especially of the staff moving from one home to another, from not training staff in long-established and simple infection control techniques and from forgetting to stock enough PPE.

In one revealing comment they demand more testing within easy range of their staff who ‘do not always have cars‘. Why don’t they have cars wonder the millionaire owners? Insecure employment on poverty wages?

In a key omission, the report fails to mention that, on average, the much commented on 900 patients discharged into care homes works out at around one to two each, requiring isolation procedures, non rocket-science, of the kind New Zealand’s care homes managed to do without fuss.

What are the chickens coming home to roost?

  1. Failure to impose simple and long-standing isolation procedures
  2. Failure to train staff in the above
  3. Under-staffing due to poverty wages and insecure employment practices
  4. Heavy use of agency staff and staff movement between homes spreading infection
  5. Lack of PPE investment going back years
  6. Failure to implement PPE use by all staff
  7. In some homes failed infection control procedures.

When dogs bark they are afraid.

6 thoughts on “Covid-19 crisis: the faked story: care home industry hits out in panic as ‘chickens come home to roost’

  1. In a follow-up to this story there was a feature on Good Morning Scotland today (1,June) with MrTony Banks, who was identified as a care home owner and spokesperson for the private care home industry in Scotland. The report was preceded by a reference to the articles in the previous day’s Herod. Personally, I felt that the intro was pretty factual and did not hint at a partisan position on the part of GMS. The only bit that caused the antennae to prick up was when he was welcomed as “Tony”. (However, as the use of first name familiarity, is now a commonplace in the media and in general public life ,it might just be my old codger view of how the formal should be dealt with.)

    Mr Banks began in ‘reasonable’ tone, implying that we are now talking with the benefit of hindsight and that at the time – e.g the discharge of patients into care homes without testing was generally widely accepted and that, correctly, saving the NHS was the priority. However, he laid down a couple of markers about “Government” (he did not say which one) about lessons from Italy and Spain before the virus hit the UK. He agreed that the Care Homes had welcomed the decision and had accepted the guidelines. set out by the SG.

    The interviewer, I felt conducted the interview pretty fairly and put to him a number of valid questions regarding duties of owners
    which had not been being put to Care Home owners until fairly recently. When she put to him the fact that the Crown Office was investigating care homes, his calm reasonableness shattered and he started talking angrily about ‘unfairness’ demanding that there be similar investigations of other organisations. The interview ended then – it had been about 4/5 minutes.

    I think THIS is the issue as far as the Care Home industry is concerned – they are feart because this investigation will have legal powers and can get access to documents.

    Liked by 1 person

  2. If the private care home sector are now saying that they are not responsible for health care in their establishments,then people should be demanding their money back.
    Providing food and shelter can be accommodated in other ways which are less costly.
    We will need a public review of how we provide effective care for the elderly once the covid dust settles.

    Liked by 1 person

  3. A little bit more to add to the picture of health care across the UK though John has already given a clear picture of corporate failings.

    1. THERE ARE SIGNIFICANT LEVELS OF LEAKAGE ACROSS THE CARE HOME SECTOR AND THE TYPE OF CARE HOME BUSINESS IMPACTS THE AMOUNT LEAKING OUT.
    For 784 small and medium-sized care home companies £7 of every £100 received goes to profit before tax, rent payments, directors’ remuneration, and net interest paid out. For the 18 largest for-profit providers the level of leakage is more than double at £15 of every £100 received.
    2. THERE ARE SIGNIFICANT DIFFERENCES IN THE LEVEL OF LEAKAGE AMONGST THE LARGEST 26 CARE HOME PROVIDERS.
    For the 8 largest not-for-profit providers the level of leakage is £8.60 out of every £100 received, and amounts to £93m a year
    For the 5 largest for-profit providers (Private Equity owned or backed) the level of leakage is £9.06 out of every £100 received, and amounts to £159m a year.
    For the 13 largest for-profit providers (Non-Private Equity) the level of leakage is £19.49 out of every £100 received, and amounts to £401m a year.
    3. SOME OF THE LARGEST 26 PROVIDERS USE COMPLEX COMPANY STRUCTURES TO MAXIMISE LEAKAGE AND HIDE PROFIT EXTRACTION.
    6 have an offshore owner in a tax haven; 18 split up their operating and property companies; 9 use sale and leaseback; and 12 purchase services or supplies from a related company. The significance of each of these is discussed in the report.
    4. THE LARGEST 26 PROVIDERS PAY OUT SIGNIFICANT AMOUNTS IN RENT PAYMENTS EACH YEAR, OFTEN TO RELATED COMPANIES WHICH ARE BASED OUTSIDE OF THE UK’S TAX JURISDICTION.
    7 of the 18 largest for-profit providers spend between 15-32% of their income on rent payments, totalling £264m a year.
    The 8 largest not-for-profit providers spend £2.34 out of every £100 of their income on rent, compared to the £11.07 out of every £100 received for the 18 largest for-profit providers.
    5. DEBT REPAYMENTS ARE A SIGNIFICANT AREA OF LEAKAGE FOR SOME OF THE LARGEST 26 PROVIDERS.
    The problem is especially serious in relation to homes operated by the 5 largest for-profit care home providers which are owned or backed by Private Equity. Collectively their debts amount to £35,000 for each care bed they own, and they pay interest costs of £102 per bed per week; this means that 16% of the weekly fees paid to these providers by local authorities or individuals for residential care goes towards paying off debt.
    6. MUCH OF THE DEBT LOADED ONTO THE CARE HOMES BY THE LARGEST FOR-PROFIT PROVIDERS IS OWED TO RELATED COMPANIES THAT ARE OFTEN BASED OFFSHORE AND AT HIGH RATES OF INTEREST I.E. A FORM OF HIDDEN PROFIT EXTRACTION WHICH ALSO AVOIDS TAX.
    Across the 26 largest care home providers a total of £261 million of the money they receive to provide care goes towards repaying debt. Out of this £117 million (45%) are payments to related companies which is a known way of avoiding tax and hiding profits.
    7. SPLITTING THE CARE HOME BUSINESS INTO SEPARATE OPERATING AND PROPERTY COMPANIES RAISES OTHER PUBLIC INTEREST CONCERNS, INCLUDING THE ABILITY OF A CARE HOME OPERATOR TO PAY COMPENSATION FOR CAUSING HARM, AND POTENTIAL TAX AVOIDANCE.
    8. LEAKAGE IS ALSO OCCURRING THROUGH MANAGEMENT FEES AND RELATED COMPANY TRANSACTIONS.
    Based on these findings we make the following recommendations:

    RECOMMENDATION 1: A CARE HOME TRANSPARENCY ACT – CARE HOME PROVIDERS SHOULD BE MANDATED TO DISCLOSE WHERE THEIR INCOME GOES.
    RECOMMENDATION 2: A NEW FORM OF CARE REGULATION IS REQUIRED TO PREVENT CARE HOME COMPANIES WITH UNSATISFACTORY FINANCIAL MODELS FROM PROVIDING CARE IN THE UK.
    RECOMMENDATION 3: CAPITAL SHOULD BE MADE AVAILABLE BY THE GOVERNMENT FOR THE PROVISION OF NEW CARE HOMES.
    PLUGGING THE LEAKS IN THE UK CARE HOME INDUSTRY – STRATEGIES FOR RESOLVING THE FINANCIAL CRISIS IN THE RESIDENTIAL AND NURSING HOME SECTOR

    https://chpi.org.uk/papers/reports/plugging-the-leaks-in-the-uk-care-home-industry/

    Click to access CHPI-PluggingTheLeaks-Nov19-FINAL.pdf

    Liked by 1 person

  4. More research from the excellent CHPI blog. This shows some of the lengths to which major care home owners go to extract profit from the industry.

    https://chpi.org.uk/blog/the-hidden-profits-behind-collapsing-care-homes/s

    “These large for-profit providers have higher levels of leakage via hidden profit extraction, but also are predominantly expanding using a method called ‘sale and leaseback’. This involves selling their existing care home properties to an investor and then renting back these same properties for an annual rent. The money received is then used to buy or build more care home properties.

    Sale and leaseback may be one of the few ways that these companies can expand but it raises three concerns. Firstly, the investor who purchased the property will expect a return from their rent charges, and when the information on these agreements was available we found that rent payments typically rose by RPI (an inflation measure) + 2-4% a year. This puts pressure on future care home fees to rise in tandem to cover this growing cost, a burden borne by local authorities and those forced to pay privately for their own care. Already the 9 providers with identifiable sale and leaseback arrangements pay the highest average rent at £14.32 out of every £100.

    Secondly, 5 of the 9 providers with sale and leaseback arrangements have them with related companies, which raises the risk that rent charges will be set artificially high to reduce the stated profit of the care home company, and facilitate tax avoidance with rent payments going to the (often offshore) related property companies.

    Thirdly, the type of care home being built is large 60-120 bed homes, because a certain size is needed to generate sufficient returns for investors. However, such large homes are not necessarily desirable for their elderly residents and bigger homes are associated with a worse quality of care. These also being built to target the self-paying segment of the care home market, and not the needs of local authority-funded care.

    In summary, the financial structure of some of the largest for-profit care home providers means that the funding boost will not be sufficient to ensure a transparent and resilient care home industry, either during or after the current crisis. We recommend a Care Home Transparency Act which mandates greater financial transparency, the regulating out of unsatisfactory financial models, and government capital made available to a variety of care home providers, in order to start fixing these deep-rooted problems affecting the industry.”

    Liked by 1 person

  5. At the briefing today, Jeane Freeman seemed to hint that there would be discussion (regulation?) of the care home sector in Scotland. The license of Home Farm in Skye has already been withdrawn.

    This piece from CHPI shows how “light touch” regulation in England does not make it possible for the Care Quality Commission to withdraw a license even when a home is failing.It also shows the rotten structures on which many of the big operators work.

    https://blogs.lse.ac.uk/politicsandpolicy/corporate-care-homes/

    In 2011 Southern Cross, the care home chain which housed and looked after 31,000 residents went bust. A combination of the financial crash and high rental payments to its landlords meant that it was unable to repay the debts that it had accrued in order to expand the company…

    …When Southern Cross collapsed many of its care homes owned were sold to another larger provider, Four Seasons Healthcare. In late April 2019, Four Seasons Healthcare – which currently owns 220 care homes housing 14,000 older people – also became bankrupt, again causing distress and anxiety to thousands of older people. It too was a highly leveraged company which collapsed due to income from local authorities being insufficient to meet the costs of servicing its high levels of debt, as well as providing care….

    …..Thus, whilst the Commission has regulatory levers – although even these are very weak – to address the causes of poor care in some areas, such as low staffing levels or poor clinical governance, it has no powers to address one of the commonest cause of poor quality, namely the financial difficulties of the care home owner…

    ….This change in the law introduced a moral hazard into the system: once large care providers knew that the costs of going bust would be picked up by the state there was even less incentive for them to avoid risky behaviour….

    ….It could be argued that neither of these two investors has the current wellbeing of the care home residents affected by their financial transactions as their primary concern. Certainly Blackstone, the private equity firm which owned Southern Cross, and Terra Firma, the private equity firm which owned Four Seasons, have not suffered unduly from the collapse of these companies. In January 2019, the Evening Standard reported that the staff of Terra Firma saw the wage of their employees increase from an average of £134K a year to £322k, whilst Blackstone made a reported £1.1 billion from selling Southern Cross…

    Like

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