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 a provider suffers business failure. A link to the full report in pdf format can be found at the foot of this page.Jump to full report >>
On 30 April 2019, Four Seasons Health Care 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 joins the other members of the “Big Four” largest care home providers that are also currently being offered for sale; the FT reported the other members of the “Big Four” – which were put up for sale during the period April to July 2018 – were “struggling to find buyers as a result of a Brexit-related downturn in commercial property sales and a long-term decline in fees paid by local authorities for elderly care”.
Four Seasons Health Care 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 over 250 care homes in the UK, and accounts for 4% of all beds, totalling 17,504 beds across its brands (figures as of May 2018). 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). 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 run by Guy Hands, a move which involved 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, have taken effective control of the Group since December 2017 after a deal was made for a “standstill agreement” concerning a £26 million interest payment that was due.
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 because of their size, geographic concentration or other factors which would be difficult for one or more local authorities to replace, and therefore where national oversight is required. In addition, the temporary duty of local authorities to meet people’s needs when a provider suffers business failure is highlighted.
More information on the wider care home market can be found in the Library briefing paper, Social care: care home market – structure, issues, and cross-subsidisation (England).
Commons Briefing papers CBP-8004
Author: Tim Jarrett