Care home failure could be repeated, MPs warn

The government must do more to avoid the collapse of further care homes following the fall of Southern Cross, a group of MPs warned on Tuesday.

Authorities are failing to monitor the financial health of providers, some of which are stacking up huge debts, the Public Accounts Committee said.

The warning follows the collapse of Britain's largest care home provider, Southern Cross, which operated more than 750 care homes, accounting for nine percent of the market.

The committee said a continued lack of checks and contingency plans could mean other companies face a similar fate as costs rise and local authority funding is cut.

The care home market is worth £23 billion a year, with around two-thirds of funding provided by the government.

"Reducing this funding could destabilise the market or create problems for the NHS with elderly people blocking beds as local authorities no longer fund the social care places," the cross-party committee warned.

Margaret Hodge, who chairs the committee, said it was "deeply worrying" that the Department of Health had failed to outline what would happen to providers which failed.

"This is crucial to protect frail and vulnerable users of care and to provide reassurance that the responsibilities of the failed providers will be transferred quickly and with minimum disruption to users," she said.

Effective monitoring of the care market is essential to protect social care users and taxpayers, she stressed, warning: "The Department of Health must get to grip with the very real risks to the social care market, if we are to avoid another Southern Cross.

"No one, government or local authorities, really knows what is going on locally or whether one provider is becoming too dominant.

The committee singled out Four Seasons Health Care, which racked up £1billion of debt, as an example of other companies experiencing "financial stress".

The company, which has taken over 140 Southern Cross care homes said its debts had been reduced to £750 million and insisted it is good financial health, making a "modest profit".

Justin Bowden, national officer of the GMB union, which represents care home workers, said: "The lessons of Southern Cross must be learned.

"The existing framework has proved woefully inadequate. It does not meaningfully check the financial health of care providers, nor protect the care sector from financial predators."