Southern Cross Healthcare to keep trading, says chief

Troubled care home group Southern Cross Healthcare will reach an agreement with landlords and continue operating, its chief executive has told the BBC.

Jamie Buchan said the group was under pressure from high, "unsustainable" rents and local authority cuts but would find a way forward.

All stakeholders were acting responsibly, he said.

Last week, the group said it was in talks with the government over its "financial difficulties".

The firm has appointed KPMG to look at restructuring options.

The group's troubles have led to concerns that it may be forced into administration.

Rental agreement

Mr Buchan said that "uninterrupted" care was being provided to the more than 31,000 residents at its homes.

However, he said the business was under "twin pressures - the reduction in local authority expenditure on frontline services and rises in rental costs which have become unsustainable".

But he said the business would continue operating because it was in the interests of the landlords to allow it to do so.

"Landlords and Southern Cross are flipsides of the same coin - they own nursing homes and we operate nursing homes, so our fortunes are inextricably linked.

"I believe there will be an equitable solution."

Mr Buchan added that all stakeholders in the business were acting responsibly and that its bankers were being "very supportive".

Government cuts

However, he said local authority cuts as a result of the government's attempts to reduce the nation's debt levels were a "more difficult" issue.

In real terms, fees from local authorities had fallen by between 5% and 7% last year and this year, Mr Buchan said.

This was on top of a fall in the number of elderly people being placed in care homes due to cuts in government grants to local authorities, he added.

"It is up the government to find a funding solution for care of the elderly that works in the long term," he said.

Despite Mr Buchan's words of reassurance, shares in Southern Cross fell by 14% on Monday, and have now fallen by about 30% this year.