Recent reports in the media suggest severe financial difficulties being suffered by the UK’s care home sector.
The Advinia Group is apparently under scrutiny from the CQC in terms of its cash flow and financial management. Advinia operates 38 homes in England and Scotland including 22 homes that it took over from BUPA in 2018, and is the UK’s 10th largest care home operator. It has been asked to submit to an independent audit of its finances under the CQC’s market oversight scheme. The Guardian newspaper reported on 6 October that leaked papers it had seen showed Advinia was not generating enough cash to meet capital and interest repayments, and had refused to submit to the independent audit. The CQC notified local authorities at the end of August of its concerns regarding the Advinia Group.
These reports demonstrate that even the largest operators in the Care Sector are under financial scrutiny from regulatory bodies, and potentially struggling with tight financial margins. Our blog last week covered the potential effect of a ‘No Deal Brexit’ on the care sector as set out in Operation Yellowhammer documents, noting that the care sector was fragile already and could be severely affected by leaving the EU without a deal. The combination of all these factors will only serve to put pressure on elements like staffing costs and investment in equipment, which in turn could lead to an increase in claims against the sector.
Written by Jennifer Johnston, associate at BLM