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Southern Cross Healthcare to keep trading, says chief | Southern Cross Healthcare to keep trading, says chief |
(7 months later) | |
Troubled care home group Southern Cross Healthcare will reach an agreement with landlords and continue operating, its chief executive has told the BBC. | Troubled care home group Southern Cross Healthcare will reach an agreement with landlords and continue operating, its chief executive has told the BBC. |
Jamie Buchan said the group was under pressure from high, "unsustainable" rents and local authority cuts but would find a way forward. | Jamie Buchan said the group was under pressure from high, "unsustainable" rents and local authority cuts but would find a way forward. |
All stakeholders were acting responsibly, he said. | All stakeholders were acting responsibly, he said. |
Last week, the group said it was in talks with the government over its "financial difficulties". | Last week, the group said it was in talks with the government over its "financial difficulties". |
The firm has appointed KPMG to look at restructuring options. | The firm has appointed KPMG to look at restructuring options. |
The group's troubles have led to concerns that it may be forced into administration. | The group's troubles have led to concerns that it may be forced into administration. |
Rental agreement | Rental agreement |
Mr Buchan said that "uninterrupted" care was being provided to the more than 31,000 residents at its homes. | Mr Buchan said that "uninterrupted" care was being provided to the more than 31,000 residents at its homes. |
However, he said the business was under "twin pressures - the reduction in local authority expenditure on frontline services and rises in rental costs which have become unsustainable". | However, he said the business was under "twin pressures - the reduction in local authority expenditure on frontline services and rises in rental costs which have become unsustainable". |
But he said the business would continue operating because it was in the interests of the landlords to allow it to do so. | But he said the business would continue operating because it was in the interests of the landlords to allow it to do so. |
"Landlords and Southern Cross are flipsides of the same coin - they own nursing homes and we operate nursing homes, so our fortunes are inextricably linked. | "Landlords and Southern Cross are flipsides of the same coin - they own nursing homes and we operate nursing homes, so our fortunes are inextricably linked. |
"I believe there will be an equitable solution." | "I believe there will be an equitable solution." |
Mr Buchan added that all stakeholders in the business were acting responsibly and that its bankers were being "very supportive". | Mr Buchan added that all stakeholders in the business were acting responsibly and that its bankers were being "very supportive". |
Government cuts | Government cuts |
However, he said local authority cuts as a result of the government's attempts to reduce the nation's debt levels were a "more difficult" issue. | However, he said local authority cuts as a result of the government's attempts to reduce the nation's debt levels were a "more difficult" issue. |
In real terms, fees from local authorities had fallen by between 5% and 7% last year and this year, Mr Buchan said. | In real terms, fees from local authorities had fallen by between 5% and 7% last year and this year, Mr Buchan said. |
This was on top of a fall in the number of elderly people being placed in care homes due to cuts in government grants to local authorities, he added. | This was on top of a fall in the number of elderly people being placed in care homes due to cuts in government grants to local authorities, he added. |
"It is up the government to find a funding solution for care of the elderly that works in the long term," he said. | "It is up the government to find a funding solution for care of the elderly that works in the long term," he said. |
Despite Mr Buchan's words of reassurance, shares in Southern Cross fell by 14% on Monday, and have now fallen by about 30% this year. | Despite Mr Buchan's words of reassurance, shares in Southern Cross fell by 14% on Monday, and have now fallen by about 30% this year. |
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