THE STRUGGLE FACING SOUTHERN CROSS

Q. WHY IS SOUTHERN CROSS IN SO MUCH TROUBLE?

A. Cuts to local authority budgets are hitting private sector firms that deliver public sector services hard. Southern Cross is faced with a real terms cut in fees from councils across the country, while authorities are also reluctant to place as many pensioners into full-time care. It also does not have as many private sector customers as many of its peers. Added to this, Southern Cross is unusual amongst other care home operators. It does not own the buildings it runs and is locked into lengthy and expensive contracts.

Q. WHAT HAPPENS IF THE COMPANY GOES BUST?

A. Going bust would be the worst possible outcome for all those involved with Southern Cross. Landlords would be left with care homes to run and the banks would have to fight to recoup the money owed to them. To avert disaster, should rent negotiations fail, a buyer could be found for all or part of Southern Cross’s business.

Q. WILL SOUTHERN CROSS PATIENTS BE AFFECTED?

A. Worryingly, the possibility of a slip in standards is not out of the question. The firm said failure to achieve quality standards was among the fundamental risks it faces. However, a spokesperson insisted the standard of care would not slip. The spokesperson added that the standard of care in homes operated by Southern Cross had gone up.