It is a sad indictment of the greed of the money markets that British taxpayers may have to rescue more than 30,000 pensioners at Southern Cross, Britain’s largest care provider. The bailout would likely cost hundreds of millions of pounds after ruthless city venture capitalists left Southern Cross Healthcare in a potentially insolvent situation.
US private equity company Blackstone acquired Southern Cross for £160million in 2004 and allegedly quadrupled its investment when it sold it three years later. It achieved this by selling off the company’s property portfolio, depriving Southern Cross of its capital and forcing it to lease the properties back from the company the homes had been sold to.
This is yet another example of why ‘free market forces’ do not work in social care and health organisations. We should be very wary about the government’s proposal to increase ‘competition’ into the NHS because of what has happened to Southern Cross. We need to redefine the beliefs and values that are the basis of the NHS as the nation’s healthcare provider. The SouthernCross example shows that the private sector will invariably serve the interests of its investors first. Ar the BBC’s Business Editor, Robert Peston said “At what point (if ever) would the private sector’s clout within the NHS be so great that private providers would be able to hold to ransom taxpayers who finance them (pay us more, or else), eroding the productivity gains? As we’ve seen with the financial crisis at the care home provider Southern Cross, the threat of an interruption of a vital service is quite a bargaining chip for a health provider”. http://www.bbc.co.uk/news/business-13614475
Competition in the NHS is not the answer to the improvement of healthcare provision and the government must learn from the abuse that took place in the financial management of Southern Cross.