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Biggest nursing home operator closes - yet another P3 privatization disaster

Southern Cross, the giant British nursing home operator, is shutting down after months of financial troubles.  Until now, this giant for-profit corporation ran 752 nursing homes with 31,000 elderly and vulnerable residents. 

A spokesman for British Prime Minister David Cameron said no one would be left homeless, adding that local authorities have a duty to make sure people received the appropriate care.  According to the Southern Cross plan, 250 homes will be transferred to landlords. The landlords of the remaining 500 homes are still "finalising their plans" however.

Southern Cross had profited by buying a huge number of nursing homes and then realizing a cash bonanza by selling them to property companies and renting them back. But when government squeezed funding, Southern Cross continued to face steep rents and failed.
Southern Cross workers interviewed by the business newspaper the Financial Times spoke of a deterioration in standards over the past year, as the company’s finances lurched into crisis. One dietary workers reports that the food budget in her home had been reduced to 2.47 pounds per day per resident ($3.81 CDN). Earlier, this summer Southern Cross announced that it would lay off  3,000 nursing home workers.  

Southern Cross growth was part and parcel of a massive privatization of nursing home health care services in Britain.   About 100,000 beds in municipal homes have been replaced by beds run by for-profit corporations (and, to a lesser degree, by voluntary organisations). Barely 10% of all care remains in public hands.

Other Troubles?
The conservative newspaper, The Telegraphreports that "many private care home operators are under financial pressure."  It adds, however, that  "many care operators have complex structures and are in some cases owned by overseas companies." 

In other words, it will not be easy for families to determine whether the corporation they place their family member with is financially viable.

The Financial Times reports that "Care home operators face much tougher regulatory controls in the wake of Southern Cross’s collapse as the government attempts to protect residents and taxpayers."

Ontario plans to entrust the development of much of its public health care infrastructure to for-profit corporations via "public - private partnerships" (P3s).  


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