Pay more for less care?

In the Herald today:

CARE home residents are facing monthly fee rises of up to £240 this year with private providers citing Covid-related costs and “Brexit uncertainty” for inflation-busting increases.

Some facts to consider when reacting to this:


45.2% of the 275 privately-owned homes had an outbreak compared to 27.9% of the 41 local authority and 12.5% of the 32 voluntary homes. 90% of the largest 46 homes, with more than 90 residents, had outbreaks. That all of these are owned by large corporations is not reported in the data but given what we know about the demand for profit margins and economies of scale in that sector we can be sure that they are.

Complaints about standards of care:

In the last year, to March 31 2020, there were 158 complaints about voluntary sector homes, 2040 about private homes and 146 about local authority homes.

There are thus 2.5 times as many private as voluntary homes but the level of complaints is 13 times higher.

There are 3.1 times as many private as local authority homes but the level of complaints is 14 times higher.

So, the level of complaints to private homes, taking account of the number there are, is around 4 times higher than in voluntary sector or local authority care homes for the elderly.

Avoiding tax yet relying on NHS for PPE and support staff:

Although HC-One has declared a loss in every year except one since its creation in 2011, investors received cash dividends of £42.3m in 2017 and £6.2m in 2018. HC-One has paid no corporation tax in that time, but instead received net tax credits of £6.5m since its reorganisation in 2014. The group’s auditors are infamous offshore tax-avoidance experts Deloitte. HC-One’s structure “means investors and executives are likely to have received much greater sums as only one subsidiary, FC Skyfall Upper Midco Ltd, files consolidated accounts”. Court Cavendish, owned by Dr Chai Patel (90%) and his family trust (10%), has received £25m in management fees.

The company was put up for sale in May 2018 for £1 billion. Its immediate owner is Libra Intermediate, based in Jersey and the ultimate owner is FC Skyfall LP, based in the Cayman Islands. It has a complex corporate structure, with 50 companies, six of which are registered offshore either in the Cayman Islands or Jersey and a further five in the UK as foreign entities. Earnings before interest, tax, depreciation and amortisation were about £130 million in 2017.

There’s more:

5 thoughts on “Pay more for less care?

  1. I am surprised that the article actually identified that there are PRIVATE providers. Perhaps this addition is to justify the rises – these businesses have to make profits for their substantially off-shore owners not to pay tax on.


  2. If a private care home can make a profit per head on residents on a cost base less than the local authority homes then you do not have to be a genius to figure out how that profit is being achieved.

    Good people will be working and running these private homes but the reality of the business model is that investors are always looking for a greater return. If they don’t get it they move their money which drives cost cutting actions.

    Many politicians try to move costs off their budget for short term glory. The example of Labours PFI is typical. Yes you build hospitals and schools and your 5 year electoral span is glorious. However the 30year scale paying several times the capital cost is madness.

    Our current political structure encourages profits being diverted to the wealthy. This is the Tories greatest achievement….the two party system forces a privatisation environment on us permanently as the parties compete in the world of electoral terms.

    Liked by 1 person

  3. Another good,comprehensive examination of the care homes system here.

    “But what explains the reasons why occupancy rates were so high at the height of a pandemic? Again, there are good reasons to consider that it comes back to the decisions by previous governments to rely on private sector investment in our care infrastructure. As the Competition and Markets Authority pointed out in their 2017 study the current private sector investment model is dependent on an occupancy rate of 90% in order to generate sufficient returns.

    For those large for profit companies which have borrowed large amounts to invest in a portfolio of care homes—in some cases owing £35,000 for each bed they operate—there is also a strong financial incentive to keep occupancy levels high in order to generate the income to repay these debts.

    At this stage there is only anecdotal evidence to suggest that the imperative to maintain high occupancy levels during the pandemic led to some care companies choosing to override concerns about the safety of staff and residents to take in potentially infected people. But it is an issue which is being talked about within the sector—as one care home owner told the Financial Times in July “We had to admit people with covid to stay afloat—whether it’s right is a moral question”

    Emerging research is also pointing to the fact that the state of the adult social care workforce has contributed to the spread of the virus. As is now well known, the care workforce is amongst the worst paid in the country with excessively high turnover rates, low levels of qualifications and with a large number of care workers on zero hours contracts.”

    Liked by 1 person

  4. “Granny farming” is big business these days, with a never ending supply of recruits. No risk, no scrutiny from the media–just bank the profits—off-shore, in the British tax haven of your choice!

    Stuck? Just ask Moggy–he knows, for a small fee.


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