By Richard Johnstone | 3 December 2012
The government plans to inspect the finances of independent adult care homes as part of efforts to avoid another Southern Cross-style collapse.
Care and support minister Norman Lamb launched a consultation on the proposed new checks over the weekend. He said they were aimed at giving an ‘early warning’ of financial problems.Among the proposals are for a regulator to examine the financial performance of firms owning care homes and to highlight any business models that could be unsustainable. This would be undertaken by an existing regulator, probably the Care Quality Commission or Monitor.
The regulator would judge whether an individual firm’s failure could create 'a high risk' to service provision. A company deemed to be high risk would be required to reassure the watchdog that its business model enabled continued provision of quality care services.
Firms would also have to prepare contingency plans in case they face difficulties. Known as ‘living wills’, these would contain both a recovery plan and a resolution plan. The recovery planwould state how managers intended to resolve certain financial difficulties, while a resolution plan, prepared by the regulator with councils, would contain procedures to transfer homes to new ownership.
The new checks follow the collapse of Southern Cross last year after the firm was unable to meet its rent payments in the homes it operated.
Lamb said the new arrangements would help ensure ‘every person receiving care and support will continue to get the care they need if a provider exits the market’.
He added: ‘Southern Cross demonstrated that we need greater oversight of providers’ finances and better plans to support people if their independent provider goes out of business.
‘We want to make sure care providers have plans in place to get their finances back on track and if this is not possible then a co-ordinated exit from the market happens. This means care service users know their needs will continue to be met.’
Following the consultation, which ends on March 1 next year, the proposals will be added to the draft Care and Support Bill and could be in force by April 2015, Lamb said.
