Care home companies face tougher financial checks

  • 4 May 2013
  • From the section England
Media captionNadra Ahmed, National Care Association: "It's not just the top 50 we need to look at"

Large providers of care homes in England are to have their financial records regularly scrutinised in future to spot potential business problems.

Under the government's plans, the Care Quality Commission and local authorities will also ensure care continues if a company does go bust.

It comes after provider Southern Cross collapsed, causing distress and anxiety to its residents and their families.

Care minister Norman Lamb said the move would give reassurance to people.

The Care Quality Commission (CQC) will start to make checks on between 50 and 60 of the largest care companies in England, including those that provide care in a person's home.

CQC chief executive David Behan said the measures - to be set out in new legislation - would provide early warning of potential company failures in the care industry.

The CQC will have the power to:

  • Require regular financial and relevant performance information
  • Make the provider submit a "sustainability plan" to manage any risk to the organisation's operation
  • Commission an independent business review to help the provider to return to financial stability
  • Get information from the provider to help manage a company collapse

The Department of Health said the powers would bring care in to line with other services such as hospitals and holiday operators, which have procedures to check on the "financial health" of organisations.

In the case of the collapse of a national provider the effects would be felt in many parts of the country, so it would be unfair for local councils to have to deal with the problem, the department said.

Mr Lamb said: "Everyone who receives care and support wants to know they will be protected if the company in charge of their care goes bust.

"The fear and upset that the Southern Cross collapse caused to care home residents and families was unacceptable.

"This early warning system will bring reassurance to people in care and will allow action to be taken to ensure care continues if a provider fails."

Southern Cross, the country's biggest care provider, had thousands of elderly residents at more than 750 care homes across the UK when it collapsed in 2011.

The firm was brought down by having to pay a £250m rent bill as local authorities made cuts.

After its collapse, other operators had to step in to take over the care of more than 30,000 people.

BBC social affairs correspondent Michael Buchanan said in that case nobody had to leave their care home because other companies took them over, but the government has been keen to ensure such a collapse is not repeated.

A report earlier this week said the number of care homes going bust had almost doubled in the past two years, with the level of fees that local authorities were willing to pay being blamed.

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