The biggest care home group in the UK, Four Seasons Health Care, has reported a £264 million annual loss.
These financial problems are indicative of problems that are rife in the social care industry.
Speaking about the difficulties facing the care home group, the chairman of the company, Robbie Barr, insisted that Four Seasons is focused on improving the causing of care, and has a turnaround plan in place.
This is despite the loss and Four Seasons’ debts of more than £500 million.
Four Seasons is responsible for over 18,500 elderly people, and employs 31,000 staff in sites across the UK.
Yet its financial position is clearly paralysed after the company was forced to write down the value of the care homes it owns by £224 million; roughly a third of their value.
While the care home operator owns 55% of its existing 440 sites, the remainder are currently rented from landlords.
The aforementioned Barr claims that the last 12 months have been extremely challenging for the care home industry as a whole.
It is particularly thought that the increase in the minimum wage has squeezed the cash-strapped care home industry.
Barr outlined the problems facing Four Seasons.
“We are now running at 87.5% occupancy, which is in line with historic levels and pretty close to where the sector is. But the bigger issue is the funding from local authorities; there is a deficit to where the cost of care is.”
Four Seasons is also currently paying interest on its £500 million worth of debt, and the credit rating agency S&P has warned that the care home operator is faced with the threat of running out of cash completely.
However, Ben Taberner, the chief financial officer of Four Seasons, denied this assessment, and asserted that there is no evidence that the care home group is currently dry of cashflow.
“I spent a lot of time explaining to them [S&P] that [what they said] wasn’t correct. We would have run out of cash by now if it was correct. This group has medium-term flexibility in its finances.”
Barr maintained that the strategy that the care home group has put in place is inded having a positive influence on the financial position of the company, and that the long-term future of Four Seasons is positive.
“The strategy we have put in place for the business is working,” Barr said. “There has been a significant increase in the quality of care in the business. There are really encouraging signs that the focus on care is filtering through to other metrics [such as financial].”