The honest truth about care home deaths and profits

In a startling piece of twisted logic, the Herald promotes an attempt to blame the Scottish Government for the failures of the private care sector, ignoring the hard evidence that agency staff and not discharged hospital patients brought the virus into the care homes and that failed basic infection control there allowed the deadly spread.

On 29th April, Robert Kilgour was blaming lack of funds for the deaths though infection control has been a long-established, costed, practice through annual flu outbreaks.

https://www.eveningexpress.co.uk/news/scotland/thousands-more-will-die-in-care-homes-without-extra-funding-owner-warns/

As for the lack of funds, as recently as last August, he had boasted:

Care home operator Renaissance Care has secured an additional £600,000 package to accelerate its long-term growth plans and finance further improvements to its portfolio of 14 homes.  The deal from Barclays follows a £4.5m package in 2017 and will allow the company to speed up its capital expenditure programme to improve its homes and expand capacity. The company, which has 600 elderly people in its care, is owned by the Renaissance senior management team and Dow Investments whose CEO Robert Kilgour was the founder of Four Seasons Health Care, currently the second largest care home operator in the UK and seeking a buyer. Mr Kilgour has declared an interest in buying back the Scottish homes in the group. In less than a decade, Renaissance Care has expanded from 80 employees and a turnover of £2.4m to having more than 1,000 staff and a projected turnover of £27m this year.  

https://dailybusinessgroup.co.uk/2019/08/kilgour-raises-60000-to-speed-up-growth-at-renaissance/

Earlier, in 2012, he had claimed:

https://www.scotsman.com/business/renaissance-care-sets-sights-care-home-growth-1602601

It’s clear who will need to be honest. Perhaps our media might report that when it comes?

8 thoughts on “The honest truth about care home deaths and profits”

  1. Firstly
    Their appears to be from a accounting perspective something very wrong with the % and the ratio of cost of salaries / employee in relation to the annual turnover in both set of figures
    And wages appear to represent 60 % of costs
    Very unlikely that the remaining 40 %
    Represents
    Rates
    Debt interest
    Food
    Cleaning material
    Insurance
    Heat & light
    Administration
    Repair and renewal
    Transport & motor vehicles
    Dividend payments
    Directors bonuses
    Any tax inspector would spot this and order a deep investigation immediately
    And any Snr.Banker would be very suspicious of such accounts and be most reluctant to approve any loans till a detailed explanation given
    All this sticks out like a sore thumb
    EG.just to cover holidays,sick pay , H&S and admin costs for employees you need a uplift of 148% to salaries
    So ave salary £ 16k × 80 employees = £1.28 million × 148 % = £3.174 million
    So how is the turnover only £ 2.4 million for 80 employees
    And any journalist or Editor should be able to spot that also

    Liked by 2 people

  2. We have already seen this interesting information about care homes in the UK. Here it is again. There is certainly a need for reform in this area and there are strong indications in the Higgins’ economic review published yesterday that this should be done quickly.

    The report said that the Scottish Government should speed up its work on reforming adult social care and should “urgently review” the structure, funding and regulation of the sector, including workforce issues. The report states that care homes have been at the “front line” of the crisis and calls for action to be taken to make sure that Scotland strengthens sustainability of the care sector as a whole.

    This analysis by the Centre for Health and Public Interest gives reasons why reform is necessary.

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

    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.

    Liked by 2 people

    1. Just a fucking racket
      Makes you wonder who the real Mafia are

      But that is the result of unregulated neo liberal capitalism
      Not only is it grossly failing care homes
      It now has the very future of human civilisation and extinction on its hands due to climate change
      The super rich are responsible for most of co2 relaease
      In fact over 90% of co2 release is by less than 10 % of the population
      Time is fast running out and fast approaching the point of we revolt in every sense of that word or it is end game for humanity
      Our leaders should have NOTICE served upon them that if they do not act Now and implement policies asap that address all this
      Then we the people will act
      Not Negotiable any more
      3 choices now for them
      1.Act if not
      2.Replace them now
      3.If 1 & 2 does not happen
      Light the blue touch paper and it is a fight
      To the death Either they are killed or we are all killed
      I assure you that what i say next is the truth
      All key data on global warming is going expodential now and there are NO KNOWN cases EVER when such occurs
      That the amplifying consequences of such
      Can ever be avoided
      It is that serious now
      98.2 % of world population live at a level above sea level that in the event of a 10 metre rise in sea levels displaces them
      Civilisation ends as soon as that occurs
      And the rate of ice melt in polar regions is accelerating expodentially now
      If this happens then most important skills for those that survive are
      A horse and plough
      And a bow and arrow to defend the above
      The one sure way to species extinction is
      Not disease ,pandemic,war or Famine
      IT IS RAPID ENVIRONMENTAL CHANGE
      Homo Sapiens is not genetically equipped to evolve fast enough to deal with such
      So extinction over 2- 3 generations will be the only possible result Or it evolves into a new species
      There is no known case of where a species population collapses by + 98 % that does not go extinct
      Sorry to rant on but in terms of Scots Independence time is now of the utmost importance
      We will soon have to take our gloves off and take the fight to them head on

      Liked by 1 person

  3. From this source

    https://leftiehistorian.wordpress.com/2020/04/14/coronavirus-and-the-tricks-of-the-care-home-sector-where-a-bed-can-have-35000-of-debt/

    Trick number 1 – the directors fees trick.

    This is relatively modest but telling. You simply charge hefty fees for your services as a director. This then appears as a cost.

    Trick number 2 – the rent trick.

    Instead of owning the home you rent it from someone else. But the someone else is often another company you own. Since this is not a competitive relationship you can charge yourself what you want. While some smaller homes pay as little as 2% of their income in rent, in the 7 of the 18 largest chains 15-30% disappears this way.

    Trick number 3 – the debt trick.

    The biggest extraction method is to borrow a huge amount of money from another company related to you. Your care homes then appear saddled with debt. Now here comes that quite astonishing statistic. One sixth of the money that private equity owned homes get from individuals and councils goes to pay off debts. Analysis shows that the debt on UK care home beds owned by privately equity companies care can be estimated to be running at £35,000 a bed.

    Trick number 4 – the old overseas company trick.

    You need to make sure that the real companies behind you are based elsewhere. The best way to do this is to be registered in a tax haven so that your money goes there.

    The Myth of the Private Sector

    In modern capitalism it is not really a question of state versus market. What is described here is a fake, grey market in which money is siphoned off in no small part from the state sector.

    Privatisation has too often been a mask for this type of plunder of state resources leaving the state to carry the risk.s

    Liked by 2 people

  4. Margaret Thatcher started the privatisation of care homes she closed the many many efficient residential homes first a lot of which used to take in day patients and give them lunch followed by bingo and entertainment .
    Initially the privatisation was slow because many businessmen really did not believe that a person with no experience could open a care home charge thousands per patient per month and basically just give them a bed with one qualified nurse per forty residents.

    As time went bye more and more people realised it was easy to make a fortune all you needed was a personality that put the blame elsewhere just like you have seen with the covid19 crisis.

    Care homes have been providing a diabolically bad service from the outset of privatisation they relied on the relatives of those residents turning a blind eye its common for visitors to visit less and less once admission concluded.

    How many scandals over the years , so many, residents abused , bullied , violated , killed.
    Tip of the iceberg because most is hidden, covered up, occurs when visitors not around and the use of tranquillizers is huge.

    So so sad

    Liked by 1 person

  5. Do council-run care homes run at a loss? How about the ones run as charities – like the one up the road from here which seems to be operated by the Church of Scotland?

    Can anyone work out, please, what it would cost to nationalise private care homes?

    Like

    1. It does not require much working out
      As the slush profit funds hidden away via
      Deposits to off shore tax havens
      Then declared as bonuses and dividend
      In other loosely assoc.shell companies
      Just ensure such are NOT contained in the balance sheet then present for valuation & recommended purchase price by the State
      Cheap as Chips
      Then reduce fees proportionally and deploy remainder of the inherent real profit for Increase in staff training & remuneration along with proper investment to improve the overall standard of care
      Now as Boris would say
      And it shall be World Beating

      Like

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