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28th May 2015
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Dr Mark Porter

In conversation with Roy Lilley - this is warming up to be a really good 'conversation'!

Chair of the BMA - just how relevant is the BMA; does anyone listen to them
Is the BMA a busted flush?  The British Moaners Association or the British Machiavellian Army?

Let's find out.  Health Chat at the King's Fund 18th June Details here.

Crisis, what crisis? 
News and Comment from Roy Lilley

Crisis. It's an overused word. Everything is in crisis, so crisis becomes the norm. We are depleting the power of language. Some words are special and have to be used sparingly otherwise they lose their currency and impact.

 

Crisis; predicament, crunch, watershed. Take your pick but I think there is a valid reason to use one of them in connection with the home and domiciliary care sector. I don't think it is an overuse.

 

The story started when the Telegraph's Marion Dakers, financial services editor reported (in January 2015) that Saga was selling its publically funded care home business. In what turned out to be a misbegotten venture, in 2011, Saga took-over Allied Healthcare. It looked like a logical and natural step for Saga, specialising in products and services for the +50s. Allied were the biggest providers and employed 15,000 staff.

 

It wasn't long before Saga tried to pull out of the business. Lance Batchelor, Saga boss said; "...the margins were not enough to justify the investment needed to grow the business..."  In English; 'we can't make any money'.

 

This is important because Allied claimed that 93% of local authorities contract with them.

 

Last Tuesday David Brindle (big social and health cheese at the Guardian, who doesn't write nearly enough and who gave me my first break writing for the national press) reported:

 

"... the Saga group quietly slipped out preliminary annual results recording a loss of 220m on its 'discontinued' Allied Healthcare business, largely through writing down its balance-sheet value to nil."

 

There was more:

 

"... this value has been determined by considering the current asset and liability position of the business; the future profit cash flows and the associated capital investment set out within the management's five-year plan for the business; the risk attaching to the various cash flows and the costs of disposing of the business,"

 

Saga said. "There are a range of ways of valuing the business and it is our expectation that an appropriate buyer will ultimately value the business higher than nil."

 

Get that? Value the business higher than nil... nothing. Zero.

 

What have we got here? One of the biggest providers of care and care homes to health and social care is fundamentally broke. They will say, on the revenue side, there was a small increase in earnings but that will be hit by interest, tax, depreciation and amortisation.  Not enough to keep them interested.

 

Considering the margins and liabilities involved; loss of reputation and brand value if something goes wrong, bad publicity or a serious, sustained quality failure... this is a toxic business. No one in their right mind will touch it. The business is worth nothing.

 

Why? Saga have a great reputation. I like Saga, I used to insure my Honda CB600 with them. Very good rates! But, they can't make a go of looking after yer granny. Sounds crazy? We have more grannies that need looking after than we have ever had before. There is huge demand.

 

There is a missing piece in the business jigsaw. There's no money in looking after yer granny.  The saintly No-man Lamb, when the Care Minister (don't let him anywhere near the Lib-Dem leadership) spectated as councils' budgets were cut by 27% .

 

There's not enough money in the fees to do a decent job. 

 

You may not have any sympathy for companies and their travails but you will probably have a granny. You may wonder why Trusts get choked-up with 'delayed transfers of care' and struggle with daft targets like 'discharge by noon'. Social care is destroyed by cuts and the companies providing services on fag-paper thin margins will go broke.

 

The CQC thrash around complaining that a third of care homes aren't fit for a dog. The other part of their job is to assess the finances of care homes. Whilst they try and find their calculator I can tell you; I'd bet the farm, none of them will be in a sustainable business.  What happens next?

 

Did you notice in the Queen's speech?

 

'...my government will secure the future of the National Health Service... (by)... integrating healthcare and social care.'

 

No Ma'am; secure the future of social care more like, by giving them access to NHS budgets.

 

Crisis, what crisis? 

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  Contact Roy - please use this e-address

roy.lilley@nhsmanagers.net 

Know something I don't - email me in confidence.

Leaving the NHS, changing jobs - you don't have to say goodbye to us! You can update your Email Address from the link you'll find right at the bottom of the page, and we'll keep mailing.

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HealthChat
Dr Mark Porter
Chair of the BMA
Is the BMA the force it once was?
Are they still relevant.
Where are all doctors going to come from? 
Filling up fast
Get your ticket now.
18th June 2015
King's Fund
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Lord Darzi
Politician, surgeon, innovator.
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