Brighton care home closes as owner struggles under huge debt burden

Posted On 18 Jun 2017 at 6:47 pm

A Brighton care home has closed as its owner struggles under a huge debt burden, reported to exceed half a billion pounds.

Dane House stands boarded up in Dyke Road Avenue, Brighton, less than a year after an official watchdog – the Care Quality Commission (CQC) – said that it required improvement.

When the CQC carried out its inspection 19 people lived at the home which had space for 25 residents.

Its fate was sealed before Christmas as Four Seasons Health Care faced up to debts that had risen to £565 million from £510 million nine months earlier.

Debt rating agency Moody’s had already downgraded Four Seasons’ credit rating to junk status, making borrowing more expensive for the company.

Annual interest payments topped £50 million a year – more than the business was making from its day-to-day business.

The dire financial situation forced the ultimate owner, Terra Firma, the private equity business, to keep selling assets – that is, its care homes.

The company, which had 370 homes, said that having closed just over 50 of them in the previous year, it would close a similar number this year.

One of those has turned out to be Dane House.

Staff tweeted about the impending closure a few weeks ago – at about the same time that another Four Seasons home, Bon Accord, in New Church Road, Hove, was rated as inadequate by the CQC.

They said: “We are very sad to tell you that Dane House will be closing by the end of the month.

“We have had a fantastic time entertaining, making our residents laugh and smile. We have enjoyed every minute of it.”

Dane House stands boarded up

Last month Four Seasons said that it had put up fees at its remaining homes by an average of 7.5 per cent. This took the fee for an average resident – most of them funded by councils – from £617 a week in 2015 to £663.

The loss-making company blamed the rise on increased staff wages, energy bills and food costs.

But fees have been under pressure for years because of government austerity measures, which have affected local authorities like Brighton and Hove City Council and how much they can afford to pay.

Terra Firma, which sold the Odeon and UCI cinema chains last year and previously lost more than £1 billion on EMI, bought Four Seasons for £825 million in 2012.

It is expected to “restructure” its debts later this year or risk going bust although Four Seasons has been at pains to say that it is making enough money to stay afloat.


The company also said that its financial challenges would not affect staff or the quality of the care that they provided for residents.

Four Seasons is the biggest residential care company in the country but it has been far from alone in closing homes.

The rate of closures is running at more than 200 a year on average at a time when the elderly population is growing. About 16,400 homes are registered with the CQC, down from more than 18,000 seven years ago.

In the autumn statement last year the Chancellor Philip Hammond promised an extra £2 billion for adult social care.

But experts have suggested that it could be too little too late for a sector in crisis.

  1. Christopher Hawtree Reply

    The links between Sunrise care-home conglomerate and St James’s Place annuity salespersons made very interesting reading in The Sunday Times earlier this year.

Leave a Reply

*

This site uses Akismet to reduce spam. Learn how your comment data is processed.