This House of Commons Library briefing paper explores the latest developments concerning the financial state of the Four Seasons Health Care Group – the UK’s second largest care home provider – and (for England) the regulatory oversight of strategically important social care providers and the temporary duty of local authorities to meet people’s needs when such a provider suffers business failure. A link to the full pdf report can be found at the foot of this page.Jump to full report >>
On 30 April 2019, Four Seasons Health Care Group (“the Group”) announced that the holding companies that carry its debt had entered administration. The Financial Times (FT) described the step as allowing its principal creditor, H/2 Capital Partners, “to sell the business without any ongoing obligations”.
The Group emphasised that “the operating companies under which the care home and hospital operations sit are not in administration and continue to be run as normal”. The Government said on 1 May 2019 that the regulator for social care in England, the Care Quality Commission (CQC), was “clear that there is no current risk of service disruption”.
Four Seasons Health Care Group has some 340 care homes in the UK, and accounts for 4% of all beds, totalling 17,504 beds across its brands. It provides care home places in both residential and nursing settings for clients who are self-funded or publicly funded (those eligible for either local authority funding support towards the cost of their place, or NHS fully funded care). Care market analysts LaingBuisson noted in July 2018 that the Group had a “high exposure to public pay”, which had negatively impacted its profitability as a result of “government austerity and downward pressure on council paid fee rates”.
The Group was bought in 2012 by Terra Firma, a private equity company, a move which involved the Group accumulating a significant amount of debt. However, the current position is that Terra Firma is now only the nominal owner of the Group: the Group’s creditors, in particular H/2 Capital Partners, took effective control of the Group in December 2017 after a deal was made for a “standstill agreement” concerning a £26 million interest payment that was due.
The Group joins the other three members of the “Big Four” largest care home providers in being offered for sale at present. It was reported in September 2019 that H/2 Capital Partners was “in advanced talks” to buy 185 of the Group’s freehold sites, but in October 2019 the Joint Administrators terminated the conditional sale process although “constructive discussions” were ongoing. In October 2019, the FT reported that Four Seasons had withheld rental payments without warning on its 135 leasehold care homes.
This note provides a brief overview of the Group’s business and an overview of developments since Terra Firma acquired it. For England, it also provides information on the role of the regulator, the Care Quality Commission, in monitoring certain social care providers and about the temporary duty of local authorities to meet people’s needs when a social care provider suffers business failure.
Commons Briefing papers CBP-8004
Authors: Tim Jarrett; Rachael Harker