Apart from the tragedy of so many deaths in UK care homes during the pandemic, it is evident that there is another untold story of the care home business. From the 1980’s onwards, the proportion of UK care home beds provided by the NHS, or local authorities, has declined while the proportion provided by private companies has risen.
Today in Scotland dozens of care home buildings are owned by companies based in tax havens and controlled by global hedge funds, private equity and the Chinese government; yes, this is correct the Chinese government. Data obtained from Registers of Scotland shows that as of the end of 2019 at least 44 Scottish care homes were owned by companies based in tax havens such as Jersey, the Isle of Man and Gibraltar.
Thanks to the Ferret, an award-winning investigative journalism platform, this information is in the public domain and revelations show that the gradual privatisation of care homes since the 1980s has clearly failed. They claim resources have been diverted from taxpayers, care home workers and residents, into the pockets of “cutthroat capitalists”.
The UK’s biggest care home provider is HC-One, which calls itself the “kind care company”. Back in 2017 controversial businessman Chai Patel bought 122 care homes from Bupa in a debt-fuelled deal that raised concerns. HC-One became the country’s biggest care home operator after the £300 million purchase, with 22,000 beds in 350 homes.
HC-One is ultimately owned, via a Cayman Islands company, by private equity funds Formation Capital and Safanad Limited and a “social care turnaround company” called Court Cavendish. Registers of Scotland data shows that HC-One rents six of its care homes from HCP UK Investments (Jersey) Limited.
HCP is largely owned by the Chinese Ministry of Finance through the Cindat investment fund and China Cinda bank. Recent activity indicates that the company is ready to enter growth mode once again. The $16 billion market cap company currently has more than $1bn of development projects in the pipeline.
As well as renting care homes from HCP, HC-One also rents 23 Scottish care homes from its own sister company, FC Skyfall IOM Properties Limited, which is registered in the Isle of Man. Vivek Kotecha, research manager at the Centre for Health and Public Interest, said that most of the UK’s biggest for-profit care providers split their business so that one company provides care and another owns the building.
Kotecha said this model allows the building owning branch of the company to charge the care providing branch high rent. The care provider passes these costs on to their customers. Yes this is passed onto the local authority or care home resident. This practice is perfectly legal.
Land registry records show that HC-One’s property company pays an independent company £76,500 a year to lease Redmill Nursing Home in West Lothian. The property company then sub-leases the building to HC-One’s care company for £293,000 a year.
Another problem, according to Kotecha, is that this system means the care provider has few assets. So, if a resident or their family sued the operating company for malpractice, the provider may not have much funds to pay any compensation.
Welcome to the real world of care for the elderly in the UK.
Gordon is the former president and chief executive of BMMI. He can be reached at [email protected]