Corporate Care Homes Will Never Work
This week's Panorama on the care crisis missed the most important point: that quality care is impossible in a system geared towards cutting corners and squeezing profits.
For-profit companies now provide 84 percent of care home beds. (shapecharge / Getty Images)
Last year, Dale found his 91-year-old father Norman dressed in a woman’s blouse and wandering his residential care home with blackened feet, as warning signs started to pile up about Ashton View care home, near Wigan. HC-One, the UK’s largest care provider, apologised to Dale for Norman’s treatment at the home, one of more than 320 it runs. But when Norman later suffered two falls and a stroke, he was moved to a local hospital. Shortly before Norman’s death, Dale received a notice that HC-One was increasing the £1000-a-week bills his father paid.
In this week’s BBC Panorama on the social care crisis, Dale and other families who have seen relatives neglected in care homes ask why millions of pounds paid for care—in Norman’s case, £125,000 of life savings—are ending up in Caribbean tax havens. The answer delves into the secretive $7 trillion industry of private equity firms, which have been responsible for buying up British care homes, loading them up with debt, and overseeing a vacuum at the frontline of care for the country’s most vulnerable elderly people.
The documentary unearthed eye-popping stories, including the £4.8 million in dividends paid out by HC-One’s private equity owners in May 2020 at the same time as begging councils for £18 million in Covid relief funds. These findings have led to demands for answers for care home patients, and even from former Health Secretary Jeremy Hunt, who called it ‘the unacceptable face of capitalism’.
But for many in the care industry, there is disappointment that journalists and politicians are attempting to weed out bad actors, while once again failing to recognise the radical change that care homes need. Eileen Chubb, one of the BUPA 7 whistleblowers who raised the alarm about conditions in care homes at the turn of the millennium, said the programme contained ‘no shocking new facts’, only what everyone has known for years: ‘Profit and care does not and never will work.’
What’s worrying is not just that history appears to be repeating, but that the real change that’s needed is still excluded from the question of care. It has been just ten years since the UK’s largest care home provider collapsed, after critics’ warnings that the privatisation and deregulation of British care had allowed vampiric investors to take control of the lives of some of the country’s most vulnerable people. The Southern Cross chain went bust in 2011 with 31,000 elderly residents in its care, after owner Blackstone had sold off land and property in sale-and-leaseback deals that quickly made the business unviable—but not before Blackstone, now the world’s largest private equity firm, had sold its stake on. (It denies responsibility for the collapse.)
Southern Cross was wiped out, but its remnants were bought up by investors. This is the origin of HC-One—yet this history of private equity ownership was oddly left out of the coverage, as Panorma’s researchers unpicked the successor company’s byzantine financial structure, which funnels profits via the holding companies in the Cayman Islands to Saudi and American backers.
When Southern Cross fell, it was trade unions that led the charge for transparency, change, and the removal of private equity actors—who can conceal their working far more effectively than publicly listed companies—from the sector. ‘More is known about the Mafia than about the antics of private equity,’ said Paul Kenny, then-GMB general secretary and longtime critic of private equity, in 2011. ‘This is a financial exploitation process that does not care if it exploits elderly people in care.’
Deja Vu
A decade ago, care workers asked what would follow if decisive action was not taken to stop the process of speculating on vulnerable lives. ‘These kings of private equity meet in secret, excluding the press and the public,’ said Kenny. ‘What further ravages are they planning for the British economy and British jobs?’
A decade on, we have answers. In the years that followed, as the world emerged from the aftermath of the Global Financial crisis, the actors and strategies that had preceded the collapse of Southern Cross were not restrained by new regulation, as many hoped following the crash. Instead, they grew, emerging into new essential services, including social housing and NHS healthcare provision. To each sector, they bring the familiar practices of leveraged buyouts, deliberate disinvestment, and the sale-and-leaseback structures.
For-profit companies now provide 84 percent of care home beds, although councils and the NHS cover the cost of about half of these services, the rest being paid by families. Since 2010, private equity firms invested more than £1.7 billion across 64 retirement and nursing home deals, according to analysis, as government spending on adult care fell by £700 million. Of the five biggest providers, three were private equity-run, providing 39,000 beds, until 2019, when Four Seasons collapsed into administration amid unpaid debts.
It’s a Groundhog Day pattern of financial speculation and collapse, trailing back to the earliest days of privatisation under Thatcher. But Panorama strips this bare, presenting little context to today’s ills. Worse, on a series of bizarre interviews, the programme allows the terms of debate to be told to it: its two most prominent talking heads are a private equity chief who used to run a care home chain and Jeremy Hunt, who led the ministry of health from 2012 to 2018. The dissenting expert voice comes from a business analyst who is framed as a critic but sings the praises of private equity’s work in other sectors, adding, ‘It’s just in care where it doesn’t seem to be working.’
Let’s be clear: globally, private equity is a ruthless and risk-embracing industry that has fired tens of thousands of workers, led dark money campaigns to preserve profit-boosting healthcare charges, spent big to unseat progressive politicians, and been condemned for human rights abuses by a United Nations housing expert. It is currently propping up the global fossil fuel industry. Statements that claim it’s a usually ‘positive’ force shouldn’t get a free pass.
This guilelessness culminates in bewildering scenes where the BBC social affairs editor asks the private equity chief if it is ‘moral’ for private equity to run care homes. He dodges the question but is allowed to spend some time, unchallenged, pushing claims that the state cannot be trusted to run care homes and that privatisation has a mostly positive track record.
It’s frustrating to see the BBC not just pulling its punches, but neutering the underlying research intended to illustrate wider failing by allowing the care sector to be interpreted for us by a series of talking heads drawn from business and the Conservative Party, even when experts featured in the programme have demonstrated compelling evidence that for-profit care homes deliver worse-quality care than voluntary and public sector operators.
One of the programme’s experts, Christine Corlet Walker from University of Surrey, wrote this summer in the Conversation that many studies have found that for-profit operators have ‘on average fewer staff hours per resident and worse indicators for quality of service’, with private equity ownership linked to reduced quality of care measures. State-supported care is popular, as well as successful, and should not be scratched from the narrative on the say-so of someone who has made millions from healthcare privatisation.
Never Again?
Chubb, a former care home worker who has seen the crisis play out again and again, was unsatisfied with the story that the BBC told. ‘Those who asset-stripped Southern Cross got out with millions in their pockets; some went on to set up new care home [providers] and the same foreseeable pattern resulting in avoidable human suffering started all over again,’ she wrote the morning after the programme. ‘If I were making a documentary, I would have dug into the BBC archives and found the repeated assurances that Government gave at the time, namely that a scandal like Southern Cross would never happen again.’
Such actions to guarantee the safety of the sector were not suggested in Panorama and they have not been suggested by the government, whose own new social care plan arrived just last week and was widely dismissed on arrival, with Hunt telling the BBC’s Today programme that it failed to provide answers to the lack of public funding or the staffing crisis. Tweaks that hope to preserve a quasi-market at the centre of care homes have already been tried.
David Rowland, the director of the Centre for Health and the Public Interest think tank, wrote after the Four Seasons collapse in 2019 that in eight years since Southern Cross, only the Care Act 2014 contained and provisions to address the preceding collapse: an ‘oversight regime’ by a toothless regulator and a requirement that councils step in when care homes collapse. ‘But the intention of the 2014 policy wasn’t to prevent provider failure. It was to allow it to happen in a way which would cause minimum disruption to the functioning of the market.’ On Panorama, we get few suggestions that reach further than Hunt’s demand that the UK’s competition authority review the ownership of care homes.
Stability is the minimum that should be expected for the residents of care homes, who endure distress and whose health is imperilled by the collapse of their caregivers. But the current regime of private sector provision and light-touch regulation offers neither this nor the benefits in innovation and quality that its architects in the 1980s and ’90s claimed, explains Emma Dowling, a sociologist at the University of Vienna, whose book The Care Crisis was published in January.
‘The experiment in privatising and financialising this area has obviously failed,’ says Dowling, in a conversation the morning after the Panorama aired. Decades of private equity and other private providers have failed to do anything particularly ground-breaking to change the fundamental realities of social care, resorting to typical tactics of slashing investment, cutting contact time, and avoiding taxes in order to achieve profits.
‘Social care ends up with these kinds of financial engineering practices precisely because it’s not a profitable industry,’ Dowling explains. ‘The only way you’re going to make any money is through these sorts of practices, because care is very labour-intensive. It’s very time-intensive. You can’t just enhance product productivity in the same way that you might do in rationalising industrial production. It doesn’t work.’
Dale, whose father died in November 2020, begins his story by saying that he chose the HC-One home in Wigan as ‘the best of a bad bunch’, spotlighting the need not just for less exploitative care homes but viable alternatives. If policymakers and public want new approaches to care, they’ll do best to look at the structure of the caring economy, not just the individual bad apples.
‘It really needs a radical rethink,’ says Dowling. ‘Obviously it needs more public funding, public infrastructures—bringing these services back in-house, so more funding actually goes towards the services as opposed to propping up profits. But also thinking of different models like cooperative models, non-profit models, post-growth models; that’s something that really needs to be thought about seriously.’