After Southern Cross, what next?

Britain’s largest care home provider, Southern Cross, finally appears to have reached the end of the road. This should not, we hope, result in many home closures, as the landlords from whom Southern Cross rents its properties are taking possession of the homes. They should in most cases continue to run them.

In many cases residents might be better off than before since new owners may have better access to funds to invest in the homes.

For anyone who is worried about the future of one of these homes, we have some helpful information and advice. You can also call Age UK’s free information line on 0800 169 65 65.

So how on earth did we get into this mess, and how will we stop it happening again?

An obvious answer might be that care is too important to be left to the private sector. Competition inevitably results in some businesses failing. The profit motive is only likely to lead to better quality care if people are able and willing to pay a premium for quality, and for the most part local authorities, who are the biggest purchaser of residential care services, are unwilling to do this.

Another argument, which I think is a strong one, is that markets only sell services or commodities. However, a good care home is defined by good relationships within the home, involving residents, workers and relatives. Such relationships cannot be bought but have to be actively created by all participants. This includes giving residents a say in how the home is run, and in how the day to day life of the home is created.

However it is not, in the foreseeable future, very likely that any government is going to say that the private sector should not run care homes. So the question is can anything be done about the inherent shortcomings of the market system?

Age UK and its predecessors have a history (going back to the Care Standards Act 2000) of demanding financial regulation of the care home sector in order to provide financial stability.

Most older people who go into a care home on a permanent basis expect to be their for the rest of their lives, and a sudden or forced move can potentially threaten health, wellbeing and indeed the person’s survival.

So the conventional view of an ideal free market as being one where a multitude of providers spring up, compete furiously and in many cases go out of business is therefore completely inappropriate for care homes. There is a parallel with banks – we don’t want them going out of business either.

For this reason, post credit crunch, all the major political parties now recognise the need for better regulation of banks. Care homes, by contrast are subject to an increasingly limited regulatory regime due to successive cuts to funding for regulation and inspection.

The standards that were bought in to underpin the Care Standards Act included one referring to financial viability, but the previous regulator, the Commission for Social Care Inspection, never pretended to have the expertise needed to make judgments about the viability of the large multinational corporations and finance houses that are now moving into the care home industry.

However the current Health and Social Care Bill proposes a new economic regulator – initially for the NHS – which should be much better equipped to deal with these large corporations. The new regulator will be Monitor, which currently exists as the regulator for NHS Foundation Trusts.

The bill includes powers for the role of Monitor to be extended to socials services, but originally the Department of Health view was that this would not be done for several years, and even then Monitor’s role would be limited to promoting greater competition. There has been a considerable shift of emphasis since then.

Monitor’s role has been changed to one of promoting co-operation and partnership and Ministers are in discussion about how Monitor could be given a role in promoting continuity and stability. It has been hinted that the next social care bill – which at some point should follow a 2012 white paper – could be used to give Monitor the kind of role that Age UK wants to see.

We have, however, written to the Secretary of State for Health, Andrew Lansley with the aim of speeding the process up. There are other large care home providers – and probably an unknown number of small providers – who are not in the best of health financially, so it is urgent that the government takes action.

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