Care Home Residents : Exploited For Money / Private Eye Expose

Discuss news stories and political issues that affect carers.
Daily Chuckle for this one , raises some rather interesting questions : ... donor.html
Half of Bupa’s care homes to be sold to Labour donor Chai Patel for £450 Million

Patel, who became embroiled in the cash-for-peerages scandal in 2005, created HC-One in 2011 and it took over a third of Southern Cross’s homes after the firm collapsed. Since then HC-One has been on a major acquisition spree.

HC-One ?

We're on a mission to be the first choice care home for Residents and colleagues in each of the communities we serve

The free market economy in all it's glory ... mere chattels sold ... and to a " Charity " ?

Only time will tell .... how can a " Charity " be a charity and yet offer services which need a business type model to run ?

A charity is a charity , a business is a business ... never the twain shall meet ?
HC-One was sold in 2014 to a group of private equity firms including Formation Capital for £477million. The transaction netted the HC-One management team, including Patel and its directors, around £30 million
All businesses are about profit, but its obscene some of the monies being made on the backs of those that are elderly and/or disabled. If even half of the £30m was ploughed back in to providing/increasing services, it would be a help.

Charity / business ?


It is NOT for the Government to wash it's hands of responsibilty for the welfare of it's most vunerable citizens by shunting them off to the private sector ... to either charities or businesses.

Clearly , there is a need for the Law to be changed so as to spell out the accountability and responsibilities of all concerned in the new state of things.

In theory , LAs can be changed through the ballot box.

What of charities / businesses ?

By the application of charity and / or company law ?

Same offences but different provisions allied with penalties ?

Regulators ?

It needs sorting ... now !
One can always rely on The Eye for some of the most " Interesting " stories ?

Public service, private killing.

Care homes, Issue 1455

SUPER-WEALTHY care home boss and equity dealer Chai “Diddums” Patel is buying back some of the same care homes he sold to Bupa in 1999 when he ran Care First. The deal suggests that there are still rich pickings to be had for some in the care industry, despite warnings that it is in crisis. But if Patel’s plan gets the regulatory go-ahead, as seems likely, it would show that nothing has been learnt from the 2011 collapse of care giant Southern Cross.

The £300m deal for HC-One to acquire more than 100 Bupa homes – making chairman Patel a major player in the industry once more – relies on the same sort of dodgy “financial engineering” that put Southern Cross’s 31,000 residents at risk. That disaster proved that short-term private equity, off-shore debt deals and poor financial and care regulation are a toxic mix for long-term social welfare.

A leaked memo showed how Southern Cross tried to balance its books before its collapse and attract new owners by cutting staff across the board, thereby compromising care and safety. Newspaper horror stories detailed neglect and poor care; but despite the “never again” promises from regulators and politicians, it remains the case that high-risk business models more suited to start-ups and tech companies are now central to much of the care home industry. As one analyst told the Eye: “So long as you have buildings, a cash stream, and predictable costs, financial engineering is now the way to make money.”

Extracting cash from care

There are three main ways to extract cash from care: from the fees charged for the service itself; from stripping out assets such as property, selling them and then leasing them back as operator (as happened with Southern Cross); or loading up debt, often for other acquisitions, through loans, bonds or secured notes. With the financing buried in a maze of complex operating structures, inter-related company transactions (some offshore and in different tax jurisdictions), it is also possible for companies to avoid tax - and all but impossible for anyone else to follow the money.

It’s not just big players like HC-One, Four Seasons, Care UK and Barchester that have changed the game; some smaller groups are also “restructuring” and going offshore. “Not-for-profit” Bupa has a complex corporate structure, with two-thirds of its care homes registered in Guernsey.

Analysts say around a fifth of the country’s care home operators are now funded by an estimated £5bn of such debt, for which typically investors expect a return of between 8 and 12 percent. But profits for investors mean greater costs for care homes and higher fees for residents. A recent study by the Centre for Research on Socio-Cultural Change found that, with a 12 percent return, up to a third of care home costs went to debt and equity – money that could otherwise be spent on staff, good care and expanding bed-space.

Creamed off profits

The money-go-round is financed by care home fees - typically between £500 and £1,000 per week – from self-paying residents or cash-starved local authorities (often with top-ups from family members), which fund around 60 percent of care home places. But the carousel comes to a crashing halt when cash flow no longer covers the debt costs. Southern Cross’s private-equity owner, Blackstone, had already creamed off profits from the sale and leaseback of around 700 care homes when the credit crunch meant income from residents wasn’t enough to cover its rent and interest charges.

Yet it was out of the Southern Cross mess that Patel launched HC-One, taking over 241 of the failing homes. Only three years later, he and his then fellow directors trousered a £30m profit when HC-One was taken over by US private equity firm Formation Capital in a deal worth £477m. HC-One, still run by Patel, has recently acquired around another 50 homes from two smaller chains, and owes around £282m – even before any Bupa purchase. Last year, to reduce a similar “debt burden”, HC-One resorted to selling off more of its property portfolio in a sale-and-leaseback deal. In effect, it was simply replacing debt repayments with rent liabilities.

HC-One’s corporate structure is as transparent as concrete. It is ultimately owned (via Jersey-based Libra Intermediate Holdco Ltd) by FC Skyfall LP, a Cayman Islands entity and the main conduit of funds from the group’s US private equity owners Formation Capital and Saudi investors Safanad Ltd.

The curse of the care chains

The Eye’s database of property owned offshore shows that nearly half of HC-One’s care homes are themselves owned via a string of Jersey companies, which may mean stamp duty can be avoided on any sale. But it operates through UK-based FC Skyfall Upper Midco Ltd, where accounts up to September 2016 show “external debts” of £260m and a further £22m owed to Cayman Islands companies within the group. If the Bupa deal is approved, its debt will increase and so could its risk of collapse.

Patel and other operators are gambling on the likelihood that, after seven years of austerity, the government will increase care funding to protect vulnerable residents and give them the returns they want. In any event, even if one group goes under, as Southern Cross did, the property and buildings themselves would go to the banks, the investors or the bond holders – all ready to sell on to the next buyer so the money-go-round can start all over again!

As Karel Williams, professor of accounting and political economy at Alliance Manchester Business School, told the Eye: “The curse of the care chains is now debt. As we have seen, financial distress puts pressures on managers and has consequences for care standards – even if the residents are not put out on the streets and the care home simply passes to another operator. I do not understand why the regulators appear incapable of addressing these financial engineering issues.”

But with HC-One having assured the Care Quality Commission watchdog that its “debt levels are both prudent and manageable”, and that its “ever-strengthening and stable financial position means residents will continue to receive the kindest high-quality care”, there is little indication the deal will be stopped. Meanwhile, 450,000 elderly and vulnerable care home residents – and their relatives – may wonder why the government and regulator allow these private equity profiteers to play financial roulette with their future.

Follow that !!!!!!!!!!!!

One article where the INK really is needed ... so much to highlight , even the BOLD function does not do it justice !

If there is money to be made , many will attracted.

Care homes ?

What is REALLY going on ?????????????????????????????

And , what about actual CARE as a consideration ??????????

One for any reader to ponder on ... for a while !!!!

If only we could get them interested in us ... the whole circus ... enough for a dozen issues ... who and what would be left afterwards ???
You may be interested to watch the recent film "The Founder" about the start up of McDonald's. An entertaining watch showing quite clearly how it became a major company only when it realised that it was better to be a property company than a burger company. Yes, they still sell burgers (several billion!) but that accounts for a tiny fraction of their overall business.
In my banking days ... almost lost in the midst of time ... many companies and businesses were only able to keep afloat by the increasing value of their bricks and mortar following several years of mismanagement and losses.

Even when refered upstairs to higher echelons in the bank , the usual answer was ... " Not really worried. If it goes down , we'll get our monies back from the bricks and mortar " ... a few billion out on loan even at that time ... tens of at today's values.

Talk about having all one's eggs in one basket ... billions out on loan secured by bricks and mortar ... no problem in 1973 , and then came 1974. Even after leaving in 1991 , I was still clearing up from that mess minutes before finally going out of the door.

I can recall several of the very top commercial property valuers being sent out to value properties in 1974. They came back , all with similar answers at the end of their glossy reports ... " We valued this at £ 5 miilion only last year. Today , and given continuing uncertainly in the market , a valuation of , perhaps , £ 0.5 million , and invite offers around £ 0.4 million to see if there is any interest out there."

A few , particularly mere holes in the ground awaiting development , came back with minus valuations.

Banks worldwide continue to give " Fianancial advice " to their business clients ... and hardly anything has changed over the years.

I am sure that the investors behind " CareHomeGate " see exactly the same ?

So much for " Care " ... and the continuing smiles from the front line staff who would not have said job without someone keeping an eye on the bricks and mortar value of the care home ???

And , would be rather " Interesting " to see the fallout if interest rates rise , and a repeat of 1974 is seen in the commercial property world ... then , values meant nothing if one could not sell the property ( Almost at any price ) in the market at that time.

Private monies would be withdrawn from that sector just as fast as it came in to cream off the top while the going was good , leaving a void.

Who would fill it ? A residents' buy out ? LA ? A " Charity " which really was a charity ?

In the absense of which , what would be the fate of the residents ?????????

A ticking atomic bomb if ever their was one ... ???????
Chai Patel ?

Merely one of a number dabbling in the private care homes sector for ... profit ?

Not without some " Questions " even before his latest " Business " venture :

The section heades CONTROVERSY makes interesting reading ?
Lynde House

In 2004, Patel was charged with serious professional misconduct and faced being "struck off" over complaints about poor care at Lynde House, one of his former care homes for the elderly.[6] In June 2005 the case was dropped by the General Medical Council due to insufficient evidence.[7]

Patel had been the subject of a sustained campaign against him and had maintained from day one that the charges against him were never supported by admissible evidence. This was supported when the High Court judge Mr Justice Collins stayed the case again Patel pending the judicial review hearing. He called the original charges laid against Patel a "rotten indictment.".[8]

On 15 June, with the consent of the group of residents’ families, the High Court ordered that some of the charges should be struck out and that amendments intended to rectify deficiencies in other charges should be disallowed.[8]

After the conclusion of the hearing, Patel said: "I am relieved that at last this terrible ordeal is over. My family and I have been through a great deal as a result of charges of serious professional misconduct which were never supported by any admissible evidence. I call today for the GMC to look at how it carries out its work.".[8]

In 2009 the NMC Professional Conduct Committee began their own investigation into whether the manager and deputy managers of Lynde House – Sarah Johnson and Lynette Maggs – were guilty of professional misconduct and negligence in relation to the earlier accusations of poor care at the residential home. In December 2011 the Committee ruled that they were guilty of misconduct. Whilst they decided not to take any formal sanctions such as registration penalties, in part due to the time elapsed since the original allegations were made, Johnson and Maggs were nevertheless left with a misconduct ruling against their names, and decided to appeal the decision at the High Court by way of Judicial Review.

On 18 July 2013, at a judicial review, High Court judge Mr Justice Leggatt concluded "a decade after this misconceived and mismanaged case was brought against the registrants, their names are clear", referring to the NMC case against the manager and deputy manager of Lynde House.[9]

The judgment then went on to criticise the NMC’s handling of the procedure stating it was a "case study for how a disciplinary case should not be conducted."[10]

Later in 2013, the Health Select Committee expressed its concerns over the length of time the NMC’s disciplinary process takes. Chai Patel cited the NMC’s handling of Lynde House, in an article by The Guardian newspaper, commenting "the NMC must act to ensure the decade of trauma that Maggs and Johnson endured never happens again. They were good people, doing a good job, who had their careers and lives needlessly and unjustly blighted." [11]

Lynde House ... lengthy article in the Guardian , September 2004 for the background : ... ngtermcare

Just a snippet :
Two years ago, a report into Lynde House upheld complaints by residents and their relatives that a number of older people suffered physical injuries, lack of basic hygiene, a high rate of infections and poor nursing care.
Dr Patel said that he was not asked to quit the government's older people's taskforce, but simply left when his tenure came to an end in November 2002. He added that he voluntarily resigned from Help the Aged.

Where's there's smoke , there is usually a .... ?

Does a leopard change it's spots ????

Nothing to frighten the horses ... is there ?

After all , how many care homes does this gentleman ... a future Sir or Lord depending on whether £ 1 or £ 2 million changing hands ( ? ) ... own ?