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DHSSPS was 'prepared for Southern Cross failure'

The Department of Health, Social Services and Public Safety (DHSSPS) was engaged in a series of meetings with the failed care homes provider Southern Cross prior to the transfer of operations of the homes to other businesses.

The disclosure was made to Business Month in response to a Freedom of Information Act request.

Contingency meetings were convened by the Health and Social Care Board, at which both Southern Cross and DHSSPS were present, dating back to June this year. In the initial meeting, the Southern Cross representative suggested that it was “unlikely” that any landlord would take legal action against the company for non-payment of rent, “the only scenario that would force Southern Cross to go into administration”.

Yet Southern Cross — the largest care-homes operator in the UK — is to cease trading before Christmas. It has now transferred 743 homes across the UK to other operators, leaving just five operational homes and four non-operational homes to be transferred.

In the meetings, Southern Cross warned Government officials that “fees in Northern Ireland were less than the total cost of providing care”. It was also clear from the meetings’ minutes — although detail on individual homes was redacted — that at least one of the 25 Southern Cross homes in Northern Ireland required significant investment.

As the summer passed, the financial crisis at Southern Cross intensified because of the company’s commitment to pay above-inflation rental increases to homes’ landlords at a time when occupancy rates were falling.

Officials responded by holding weekly teleconferences to keep abreast of the situation and to plan for the transfer of Southern Cross homes to other operators. The conversations involved the other devolved governments in Scotland and Wales, the Department of Health and the Association of Directors of Adult Social Services.

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Minutes of the meeting make clear that Health Minister Edwin Poots was aware of the actions taken. The report was told “the minister appeared content with the current approach, ie it was the responsibility of the Southern Cross Company to deal with its own financial affairs and that HSC only intervene (press statement) when necessary”.