Southern Cross closure highlights risks of private health mismanagement

The beleaguered care home provider Southern Cross today announced it is to shut down as its shares were suspended at 6.25p by the Financial Services Authority. The company, which owns around 750 homes across the country, will hand over control to landlords after it became unable to pay its rents, despite the company’s financial restructuring in March.

Southern-Cross-Healthcare
David Cameron’s public sector “revolution”, announced today, intends to give private companies the right to run schools, hospitals and nearly all other public services. The news of Southern Cross’s demise, the behaviour of some of its directors and its inability to continue providing care for elderly people should be of concern to the prime minister.

Shadow health secretary, John Healey MP, said in a statement today:

“This announcement is what those living in Southern Cross owned homes have feared for weeks. While the company offers reassurances, residents and their families must now hear from Ministers what action they are taking to guarantee nobody ends up on the street or is left with inadequate care provision.”

In June, the Financial Times reported that the company’s directors had made £35m after selling their entire shares in the Southern Cross. In December, the company’s former chairman, William Colvin, and three executive directors sold all of their stakes in the company for 550p a share.

Last month, the GMB union reported that one of Southern Cross’s landlords, Loyds Property Investments, which owns 49 of its properties, is linked to offshore tax avoidance. Its parent company, Loyd’s & Associates Inc, is registered in the British Virgin Islands. The union found that Loyds, which is in administration, has links to Israel, the Channel Islands and Switzerland. Its website boasts that the company’s current portfolio in the UK is worth an estimated £285m.

Today, 31,000 elderly residents of Southern Cross care homes are awaiting the news of whether they will have to find somewhere else to live. It is thought that while 250 of the homes will be run by other companies immediately, the future of the remaining 500 is yet to be decided. The 44,000 staff that work in the care homes too will be experiencing an uncertain period as the company searches for new landlords to takeover its operations.

Christopher Fisher, Southern Cross’s chairman, said the company appreciated the loyalty of its staff:

“We anticipate that the period of uncertainty which we have been experiencing will now draw to a close. We regret the loss of value which shareholders have experienced.”

As Laura Bradley wrote on Left Foot Forward last week, the Dilnot report on social care for older people outlines some important changes to the status quo. The news of potential job losses and vulnerable people being forced out of their accommodation shows all too well the risk of private companies, even those that have public money put into them.

http://twitter.com/fauxpaschick/status/90454961959337984 fauxpaschick

Southern Cross closure highlights risks of private health mismanagement: http://bit.ly/nKzEkQ writes @clairee_french
http://twitter.com/evilc154/status/90455047292469249 Clive Burgess

Southern Cross closure highlights risks of private health mismanagement: http://bit.ly/nKzEkQ writes @clairee_french
http://twitter.com/dawn_bowden/status/90455255891972096 Dawn Bowden

RT @leftfootfwd: Southern Cross closure highlights risks of private health mismanagement: http://bit.ly/nKzEkQ writes @clairee_french
http://twitter.com/press_not_sorry/status/90455708004397056 Press Not Sorry

Southern Cross closure highlights risks of private health mismanagement: http://bit.ly/nKzEkQ writes @clairee_french
http://twitter.com/nick_theobald/status/90458917578088449 Nick Theobald

Southern Cross closure highlights risks of private health mismanagement: http://bit.ly/nKzEkQ writes @clairee_french
http://twitter.com/mickeyfree53/status/90460801571373056 neil lambert

Southern Cross closure highlights risks of private health mismanagement: http://bit.ly/nKzEkQ writes @clairee_french
http://twitter.com/cuchulaindundee/status/90462553116909568 Alan Cowan

Southern Cross closure highlights risks of private health mismanagement | Left Foot Forward http://bit.ly/qABui5
http://twitter.com/adele_reynolds/status/90467420027891712 Adele Reynolds

Southern Cross closure highlights risks of private health mismanagement: http://bit.ly/nKzEkQ writes @clairee_french
Dave Citizen

If we let our politicians go down this privatisation routewe can expect more of this in the future.

Pulling out profits in the good years by selling off assets and scaling down investment in the future, then closing down when times get tougher, leaving tax payers to pick up the pieces while the profits are spent elsewhere.

If we are aiming at civilisation we need to put down a few markers – like taxing ourselves enough to ensure we can look after our elderly without the need to invite in the private profit roller-coaster.
http://twitter.com/ackemp03/status/90497246017228800 Anthony Kemp

Southern Cross closure highlights risks of private health mismanagement: http://bit.ly/nKzEkQ writes @clairee_french
http://twitter.com/robhove/status/90543070310957056 Rob Jarrett

Southern Cross closure highlights risks of private health mismanagement: http://bit.ly/nKzEkQ writes @clairee_french
http://wheresthebenefit.blogspot.com DavidG

Any replacement of public services by the private sector will require massive investment secured from venture capitalists, all of whom are looking for a short-term return on investment, if necessary through liquidating capital investment – precisely as we have seen with Southern Cross. Add to that a requirement to drive down costs not for efficiency’s sake or to maximise service to the community, but to maximise dividends for shareholders and Cameron’s proposals can only be seen as a recipe for absolute disaster.

To misquote Admiral A B Cunningham, it takes 60 years to build the tradition of a welfare state free for all, 3 readings of a bill to wreck it.
http://twitter.com/carbonised/status/90637444831129600 Rebecca Devitt

Southern Cross closure highlights risks of private health mismanagement: http://bit.ly/nKzEkQ writes @clairee_french
http://twitter.com/june4th/status/90733026752991233 Noxi

RT @leftfootfwd: Southern Cross closure highlights risks of private health mismanagement: http://bit.ly/nKzEkQ writes @clairee_french
Robert

Well if you take out £35 million to pay bonus payments to the top table then sadly the company will go bust as it has
http://twitter.com/carbonised/status/90842476943908864 Rebecca Devitt

Southern Cross closure highlights risks of private health mismanagement: http://bit.ly/nKzEkQ writes @clairee_french
http://twitter.com/interuncut/status/90888430870986752 InternationalUNCUT

How privatising care in the UK really works. http://fb.me/zWV3AhdN
jonathan

From your account it looks as if the decision to sell the shares was an indication that the company was simply a means of making a short term gain for the “Directors” . The buildings had been sold off to finance the purchase. HOW can this asset stripping be avoided. Is this milking process to become the norm with hospitals and schools?
Without a proviso that directors dont do that dumping there seems no commitment (at least at the very top) to the function or role of the organisation, be it ,personal care, education, or health.
http://companyformationnews.co.uk/07/news-offshore-company-registration-news-1-185/ News – offshore company registration news – #1 | Companyformation

[...] the owners of many of the care homes involved are based off-shore for tax reasons. Both Southe Southern Cross closure highlights risks of private health mismanagement – Left Foot Forward – leftfootforward.org 07/11/2011 Telegraph.co.ukSouthern Cross closure highlights risks of [...]