UK’s biggest care home chain paid £4.8m to owners while requesting state aid
The UK’s biggest care home chain paid out at least £4.8m to its owners last year while it received additional government funding to support it through the pandemic.
HC-One, which has 321 care homes and employs about 20,000 staff, called for local authority support in spring last year to help it cope with the crisis and received £18.9m from the government’s infection control fund.
It earns about £770 on average per bed per week from councils and the NHS for state-funded residents and also has privately funded customers.
Nick Hood, analyst at Opus Restructuring, which advises care businesses, said: “Any possibility that funds are being diverted away from front-line care to reward offshore investors will be a real public concern about a group, which relies heavily on taxpayer funding for so many of its residents’ fees.”
A BBC Panorama programme on Monday is expected to reveal more details of the company’s structure, its finances and its performance during the pandemic, based on the work of the Centre for International Corporate Tax Accountability and Research, an Australian non-profit funded by trade unions.
HC-One was founded in 2011 from the collapse of Southern Cross — then Britain’s biggest care home operator. The company was formed by Chai Patel, a former owner of the Priory hospitals chain.
It is owned by a consortium of investors including private equity firm Safanad, which took a majority stake this year, and Court Cavendish, a management company run by Patel. It also has a £540m interest-only mortgage from Welltower, a New York-listed property investor.
The £4.8m relates to the year ending September 30 2020, and, although it was initially suspended, was paid in May this year. HC-One has said it has not paid dividends to its investors since 2017 and that the payout consists of a £3.1m asset management fee to Court Cavendish and other investors as well as £1.7m of interest on a third party loan.
Tracing the flow of money is difficult because HC-One has a complex corporate structure, including a parent company and several other subsidiaries in the Cayman Islands. Other care home companies, such as Four Seasons Healthcare, have similarly complex structures.
James Tugendhat, chief executive of HC-One since September last year, has promised to cut the number of companies from 81 to 37 by the end of the year, but concedes that overseas ownership means it will not be able to simplify completely. The group’s consolidated accounts do not include the finances of its subsidiaries, including many of its offshore companies.
HC-One said its owners’ had invested £145m over the past five years, more than they had taken out of the business. It recently announced that carers who had worked for more than two years — half its workforce — would receive the living wage of £9.90 an hour, or £11.05 in London. “Their financial support enables us to invest at scale into our residents, colleagues and homes across the UK,” it said.