Nearly 1,500 UK care homes could go bust

Posted on August 28th, by geoff in Caring Times, Caring Times head. No Comments

A report published in the onlineTelegrpah says the care home industry is in a state of crisis, according to research commissioned by Company Watch, a specialist at tracking and predicting financial risk.

It has discovered that a third of British care homes have notched up unsustainable levels of debt. The report has given rise to fears that many care homes could crumble under their financial commitments, the same fate that befell Southern Cross, the care home operator that went bust in 2011.

Company Watch has surveyed 4,872 firms, operating 20,000 care homes across the UK between them. Of these, 1,449 have been rated as “financially vulnerable”.

“[These] have a one in four chance of needing a financial rescue,” said the report.

Almost 700 were also found to be “zombie” business, companies with liabilities worth more than their assets. The combined negative net worth of these “zombies” came in at £217m.

Nick Hood, Company Watch business risk analyst and author of the report, said: “The thing that worries me the most is the unusually high level of borrowing across the industry.

“Gearing currently stands at 82pc. Care homes are essentially property businesses that provide a service, so you would expect the figure to be high but not above 60pc. “I’m running a warning flag up the mast for government and the Care Commission,” he added. “Just imagine what could happen if interest rates rise.”

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