Financial ratings agency Fitch says that UK care homes reliant on local authority funding are under pressure though the outlook for each credit can vary.
Since 2011, the UK’s leveraged care home sector has suffered from a real-term reduction in local authority fee rates.
The rating agency is used by financiers looking to provide funding for care home groups, with poor ratings making it harder to raise money from banks and other investors.
Operators that are most dependent on local authority funding are seeing this risk factor built into their ratings.
Fitch names Voyage, with its raging of B/Stable, as a group that is relatively resistant to the funding cuts of local authorities because of its focus on disability care.
Care homes more at risk will be those catering for residents with less complex needs such as Four Seasons Health Care, rated CCC, and Care UK, Fitch says.
“UK care homes operators funded by local authorities contrast with those funded by NHS, which so far are protected from a cut in fees and benefit from a positive momentum driven by an ongoing trend of outsourcing by NHS,” the agency notes.