Fears grow for future of residents at St John's Wood Care Home, following Southern Cross cash crisis

Published: 09 June 2011
by TOM FOOT

ST John’s Wood Care Home fits snugly between the solid Neave Brown blocks of the Alexandra and Ains­worth council estate and the Jack Taylor community school for Camden’s children with learning difficulties. 

Outwardly, it is a proud picture of visionary public service in Camden – both comprehensive and stable. 

But behind the facade of the Southern Cross Healthcare home in Boundary Road there are growing fears for the future among its frail residents. 

Relatives of the home’s 29 Camden residents have told the New Journal that the home was a “saviour” for them but that “shameless greed” has brought the private operator to the brink of administration.

The company – the country’s biggest care home provider – has announced it must axe almost a quarter of its 750 care homes after a market gamble backfired. 

Labour MP Glenda Jackson said the government should “be prepared to intervene” and “take control of these residential homes and transfer management to local authority control”. 

Astonishingly, Camden Council chiefs did not appear to realise the Town Hall was spending millions on buying care from Southern Cross until the New Journal made enquiries earlier this week. Officers briefed councillors that it did not pay the company money for services.

Yet council accounts displayed on Camden’s own website clearly show the firm is paid about £170,000 a month – more than £2million a year – for “nursing block contract”, “nursing homes”, “residential care homes” and “void beds”. 

The teetering fortunes of Southern Cross – expected to lead to a massive, banks crash-style bail-out from the taxpayer – follow a complex and risky buy-and-sell-to-rent investment strategy chartered by ­private equity firm Blackstone.

How it worked can be traced through files for St John’s Wood Care Home stored at the Land Registry. 

The purpose built, privately run, 100-room care home was run by Life Style Care plc in the 1990s, but sold to Southern Cross Healthcare in February 2007. Less than a year later, it was sold on, to an investment company called Regency Investments Ltd, registered in the tax haven of Jersey. 

Southern Cross retained a lease, paying rent to its landlord, ­partly using fees it was receiving from the council. Camden appears to have paid a standard rate of about £3,000 per user a month over the past year. 

But the rents Southern Cross pays have risen faster than the fees the company now receives for care. 

Major shareholders made huge profits during the heady days of the property sales.

The company’s share price has since nose-dived, from about 530p in mid-2008 to its current level, 5p. 

St John’s Wood Care Home provides specialist care for the young and elderly, mainly those living with dementia or physical disability who cannot look after themselves. 

The home was rated “good” in July 2008 by government watchdog the Care Quality Commission (CQC). 

The 2008 CQC inspection reported 13 complaints from relatives that, inspectors said, had been properly investigated. 

There have been no inspections since 2008 when the economic ­crisis hit. 

A council spokeswoman said the Town Hall was “working closely with the directors of Southern Cross during this time of financial restructuring” and that it was “confident the home will remain open as it is efficient and well run”.

Yesterday (Wednesday), Labour adult social care chief Councillor Pat Callaghan told the New Journal: “We have got 29 residents in St John’s Wood who will defin­itely be protected under our duty of care. We need more transparency on companies like Southern Cross. We need to know that care home operators are more transparent about their finances. It’s our people whose day-to-day living we are talking about. 

“I think any member of council would prefer if we could do it in-house. I imagine hiving it off to a private company was done because it was seen to have lower costings, which doesn’t always pay in the end. There have been lots of discussions with chief officers, been in daily discussions.” 

The council has at least 80 contracts with private care operators providing residential and nursing care for Camden residents throughout the country – in Lancashire, Devon and north Wales to Edinburgh. 

Ms Jackson, whose constituency covers St John’s Wood Care Home, signed an Early Day Motion on March 11 warning that Southern Cross was “once again facing severe financial problems with the risk of the company going into administration, putting at risk the residential care of large numbers of elderly people”.

The motion called on “the government to be prepared to intervene to take control of these residential homes and transfer their management to local authority control”. 

But the council appears to be moving in a different direction. Last year, care chiefs approved plans to shut down the last four of its “in-house” care homes and open two newly-built ones in Gospel Oak, to be run by private company Shaw Healthcare. The homes will open in Maitland Park in 2012 and Wellesley Road in 2014. 

Shaw Healthcare is 70 per cent owned by staff and the remaining 30 per cent by its parent company, Shaw Homes. 

Cllr Callaghan added: “We hope we’ve done the right thing and given the best quality option. I think staff and officers are happy with the way things have gone.”