The word crisis is over-used that it has lost almost all of its punch. However, if a trusted institution like BBC Radio Four uses the word alongside supposed facts about the care home industry’s £4 billion of debt, and its conclusion that a quarter of care homes face closure as a result, then people tend to sit up and take notice.
This is the case today as a BBC Radio Four investigation for its consumer rights programme You and Yours announced that it had discovered the massive debt pile lurking on the balance sheets of over 5000 care home operators.
The same balance sheets showed that the average care home is generating profit of just £17,647 per year before tax.
Radio Four used researchers to look at accounts filed at Companies House to uncover this data – a method that I have used myself and, trust me, is ludicrously inaccurate for an industry that has thousands of tiny businesses that file only limited accounts.
These accounts rarely include hard facts on revenue, profit or balance sheet debt. Those that do are normally years out of date.
The best data comes from the largest companies such as Care UK and Four Seasons Health Care. These companies do, indeed, carry considerable levels of debt. But to extrapolate their balance sheets across an entire industry is a shot in the dark.
Even if the £4 billion figure is correct – and I have no evidence to say it is not – the debt does not seem out of control for an industry worth almost £16 billion last year, according to LaingBuisson.
The programme even seems to concede this point. It says that the debt is not unmanageable in itself, but might put investors off pumping more capital into the sector.
This is patently untrue. Pension funds, private equity and REITs have more money primed and ready to spend on care homes than the industry is able to build.
I can understand that the Daily Mail sells newspapers by scaring pensioners, but I hardly feel that this is good use of the BBC license fee. Cries of crisis do considerable damage to an industry that certainly is facing difficulties, not least in recruiting qualified nurses.
Most operators I speak to deserve far more positive headlines for the tireless work they do to take care of the country’s most vulnerable citizens, particularly if, as the BBC incorrectly tells us, there is no profit in it.