SOUTHERN CROSS Healthcare shares lost around three-quarters of their value last week, diving down to 78p a share from 313p. The company is obviously in deep financial trouble and could face bankruptcy.
The company's chief executive Bill Colvin blames its problems on "higher than normal attrition rates" as the number of people leaving his homes, mainly by dying, had reached about 90%. "The people getting admitted to the homes are very frail," he complained.
What kind of homes is Mr Colvin's firm running? Hospitals for wounded athletes? No. Southern Cross runs 730 nursing homes and the average age for its 'adult care' patients is 87, so a bit of frailty is not unexpected.
But the Labour government's enthusiasm for privatising health and welfare services seems limitless. So, if Southern Cross's financial problems lead to bankruptcy or a hostile takeover by other firms, a future of worry and uncertainty could await many of the 33,000 old people in their homes.
Southern Cross is Britain's largest private nursing home operator. It grew rapidly in recent years - by blatant property speculation. It bought up large residential care properties, sold the facilities to gain from rising house prices, then leased them back.
Now after months of sharp slump in the property market the, by now heavily indebted, Southern Cross missed the deadline to repay £46 million of an £82 million loan it raised to buy 20 nursing homes. It could not sell some 'property assets' to repay these expensive loans from fellow capitalists, who previously agreed to Southern Cross's debt-fuelled acquisition progamme.
Colvin and two former Southern Cross directors pocketed huge windfalls from previous share sales - Colvin made £6.6 million, Graham Sizer made £7.9 million, while Philip Scott got away with £11.1 million (he is now a director of Priory Group, a private supplier of mental health care).
Privatisation of care services leaves society's most vulnerable people at the mercy of predatory companies and the whims of a capitalist economy. Capitalists don't run care homes out of concern for the elderly and fragile but for profit. If the profitable venture flourishes, there may not be big problems, especially for shareholders. But when capitalist ventures crash, the supposed objects of care, the elderly, are forgotten.
Already other homes, in this case dealing with children, have gone bankrupt (see The Socialist 506). The type of questions we asked then are still important: Why is there a commercial market in the misery of old and frail people? Why aren't local health services or council social services departments well enough financed and staffed to deal with the problems of old age and infirmity?
No more privatisation of vital social and health services! Care homes owned by private corporations such as Southern Cross should be taken into public ownership and become part of the NHS or of a well-financed local council's social services department.