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Care Sector Alert - Spring 2012

Sarah Ellson


United Kingdom

Care Sector Alert - Spring 2012

Nursing Home Sector – Is bank finance still available?  What is the future of investment leases after Southern Cross?

It is well known that the banks have very much lost their interest in undertaking real estate finance unless it is a very safe deal.  Furthermore, the banks have shown almost no appetite for providing development finance.
The good news against this backdrop is that in the nursing home sector, the banks are showing a much more committed interest in funding transactions.  These transactions do need to be of quality homes, well located, and normally purpose built.  Furthermore, the banks will fund development projects.

A number of the development projects upon which I am currently acting for banks are the subject of agreed pre-lets.  After Southern Cross, there was worry as to the future of nursing home investments created by sale and leasebacks or the putting in place of an institutional lease.  Whilst there are lessons to learn from Southern Cross, it is my experience that the lease market is not dead. 

The two key lessons are to ensure that the lease firstly enables there to be satisfactory transparency of the tenant's business and secondly, that there is satisfactory investment by the tenant in the nursing home business the subject of any lease.  A well drawn lease (post Southern Cross) will ensure satisfactory transparency by having (amongst other things) a requirement for an annual budget forecast covering projected income, projected expenditure, occupancy levels, CAPEX, fees and cash flow, provision of quarterly information covering management accounts and actual CAPEX spend and provision of audited accounts for the tenant (and any guarantor).  As to investment by the tenant this will normally comprise an obligation to pay obliged CAPEX spend on a per bed basis and for that spend to increase over time.  If obliged CAPEX spend is not achieved for any particular quarter then the shortfall is paid into a maintenance reserve account.  Withdrawals from that account are only permitted to pay for CAPEX works.

As to the immediate future I do not see any downturn in the appetite of banks lending to the nursing home sector.  The nursing home investment market remains strong. Any lease, however, should take account of the Southern Cross lessons and be granted to a tenant of satisfactory financial quality and with sufficient proven operator experience.

Contributed by: John Nelmes, Partner +44 (0)20 7861 4069

Care Quality Commission

Outpatient survey 2011

Care Quality Commission, 14 February 2012

A survey of 72000 outpatients has revealed that more patients are treated with respect and dignity but the way they are given information about treatments and results needs to improve.

Quick guide to raising a concern about the workplace

Care Quality Commission, 14 February 2012

A survey of 72000 outpatients has revealed that more patients are treated with respect and dignity but the way they are given information about treatments and results needs to improve.

Quick guide to raising a concern about the workplace

Care Quality Commission, 14 December 2011

The Care Quality Commission have published a quick guide on whistleblowing to help people decide what to do next and how they can inform the CQC..

Mental Health Act Annual Report 2010/2011

Care Quality Commission, 8 December 2011

The Care Quality Commission have published their second report on the use of the Mental Health Act. The report points out in particular lack of patient involvement in the care planning process and also restrictions placed on patients.

CQC publishes first reports from its review of services for people with learning disabilities

Care Quality Commission, 8 December 2011

The Care Quality Commission (CQC) has started publishing it's first reports looking at whether people experience safe and appropriate care, treatment and support and whether they are protected from abuse. This is part of a targeted programme of 150 inspections of hospitals and care homes that look after people with learning disabilities.

Sector publications and news

Legal review raises prospect of fines for social workers found unfit to practise
Law Commission, 1 March 2012

The Law Commission has published a consultation to make reforms to the laws governing health and social care regulation, which it says are overly complex and inconsistent.

LGA intervenes after damning adult social care report
The Guardian, 17 February 2012

Following a damning independent review into adult social services failings at Wirral Council, the Local Government Association has stepped in to address adult safeguarding failings by setting up a board to drive improvement.

Councils fined for serious data breaches
Information Commissioner, 13 February 2012

The Information Commissioner has fined two English councils a total of £180,000 for having an inadequate data security policy and failing to keep sensitive information about the welfare of children safe.

Social worker suspended for not reporting underage sex case

Community Care, 9 February 2012

A social worker has been barred from practice for 6 months for not reporting a case of sexual activity between two children aged under 13, in breach of national child protection guidance.

Supreme Court to rule on councils' right to limit care funding
Supreme Court, 7 and 8 February 2012

The Supreme Court is deciding on whether a council should take resources into account in determining the degree of care they will fund for users in a case that could have major consequences for social care funding.

First Tier Tribunal for Health Education and Social Care

EH v Secretary of State for Education (2011)


EH appealed a decision by the Secretary of State, on review, that she should remain on the Protection of Children Act (POCA) and the Protection of Vulnerable Adults (POVA) lists. EH had previously been placed on the POCA and POVA lists, after being found guilty of misconduct, for not reporting an allegation by her husband's daughter of inappropriate touching in 1999 and leaving her husband alone with a six year old child who he subsequently indecently assaulted in June 2002.  The Tribunal found that EH did place a child at unnecessary risk and did fail to protect that child and her behaviour did amount to misconduct.  Further, due to her failure to acknowledge the error she made, EH was not in a position to objectively or properly consider risk to children and in that way she was unsuitable to work with children and vulnerable adults.  The appeal was therefore dismissed.

TM v Secretary of State (2011)

UKFTT 568 (HESC) (28 November 2011)

TM was a Registered Mental Health Nurse working at a care home in Wales when she was arrested in connection with allegations of manslaughter in relation to the circumstances surrounding alleged neglect of vulnerable adults at the care home. TM was provisionally included on the POVA and POCA lists under section 81 of the Care Standards Act 2000 (CSA) and subsequently applied under section 86(3) of the CSA 2000 for the Tribunal to determine the issue of her provisional inclusion on the POVA and POCA lists.  The Tribunal found that TM had failed to provide adequate care to three care home residents and she was therefore unsuitable to work with vulnerable adults and should be on the POVA list. These findings were considered to be equally applicable to a child care setting, as the risks were directly referable to the care of children, and the POCA listing was also confirmed.

Kamara v Ofsted (2011)

UKFTT 697 (HESC) (02 November 2011)

Ms Kamara appealed a decision of Ofsted to cancel her registration as a child minder.  Ms Kamara was registered on the Early Years Register and General Child Care Register and had been child-minding for 11 years.  Inspections dating back to 2008 identified concerns regarding the quality and standard of her care for children.  After Ms Kamara failed to comply with several notices to improve and welfare requirement notices issued by Ofsted, Ms Kamara was issued with a written notice of Ofsted's intention to cancel her registration and, following an appearance before the Objection Panel, the decision was confirmed.  The Tribunal concluded that the sanction imposed was appropriate, having regard to the duration of the concerns and failure to exact improvements.  Furthermore, the Tribunal highlighted the importance of a carer being alert to the potential signs of abuse and act in accordance with good practice.

Pro - Manchester Health Discussion Group: "Are Care Home Fees Fair?"

Members of the Fieldfisher Care Sector team attended a Pro-Manchester Health Discussion Group: "Are Care Home Fees Fair?", which took place on 20 March. Partner, Sarah Ellson, and Associate, Jo Shaw from the Public and Regulatory Group joined the Discussion Group, which was attended by business professionals, including care home owners and managers. Speaking at the event were David Gilbert, Director of Dovehaven Care Homes and a member of Sefton Care Association and Ken Nolan, Operator of Elderly Care Services and Chairman of Lancashire Care Association. David Gilbert shared experience of his involvement in the recent Judicial Review claim brought by Sefton Care Association against Sefton County Council and the landmark ruling regarding freezing payments to care homes. Ken Nolan gave a personal insight into the financial side of running a care home business and challenges faced by the Lancashire Care Association.

Care Sector Seminar:

"Crisis or opportunity?"

On 10 May 2012, we are hosting a Care Sector Seminar: "Crisis or opportunity?" The seminar will include presentations from Sarah Ellson, Partner in our Public and Regulatory Group, and guest speakers Jon Chapman (Pinders), Nik Marshall and Martin King (KMP Healthcare) and Steve Jenner (Chandler & Co).

Our panel of advisors will debate a broad range of issues which affect distressed homes and the care sector as a whole, including regulation, operations and funding.

If you would like to attend the seminar, please click here >

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