Sarah Whitebloom looks at the difficulties in finding out exactly who owns who in UK care
Quis custodiet ipsos custodes? Who guards the guards? Depending on the translation, it is the watchers who need watching. Maybe, though, it should be ‘the carers’, since Juvenal’s question is particularly apposite in terms of the UK’s opaque care industry.
Complex webs of companies and ownership structures have developed over the last few years, many complete with ‘sinister’ off-shore links and strangely-named holding vehicles, making it difficult for the Care Quality Commission (CQC) – and the public – to know who owns whom and where ultimate control lies. And market experts believe the trend is set to continue as smaller, formerly family run, businesses get snapped up by larger, more complex competitors.
It is not a secret that many seemingly independent enterprises are, in fact, now linked by virtue of a common owner and it is a fact that the control of numerous UK care companies lies beyond the boardroom or indeed British shores. And it is not just the largest players which now have private investors and offshore vehicles in their ownership chains. It is far from unlikely that the effective controller of a modest care home in Cornwall enjoys much warmer seas than wild Atlantic.
Does it matter?
Before Christmas the nation was obsessing about tax havens. Public figures, from royalty to football pundits, were named and shamed for stashing their cash off-shore, presumably because of advantageous tax arrangements elsewhere. But it is not just a matter of prurience or envy that leads to worries about the off-shore ownership of care companies.
When it comes to taxpayers’ money, questions are certain to be asked about where it is going to end up. It may not be enough, but there is public funding for adult social care to the tune of more than £8 billion annually.
When such sums are involved, it is inevitable that questions will be asked and concerns voiced if that money ends up in offshore accounts. And interest is certain to focus as well on any ownership which appears divorced or disinterested from the provision of care and the management of residential homes.
Scratching beneath the surface
It is certainly something that is exercising the CQC. The regulator is a pains to point out that it is not about to launch a new financial regime around off-shore ownership or around legal entities as owners. However, the regulator sees the leadership of care organisations as a key factor in making sure firms deliver a quality service.
From its inspections, it has become clear to the CQC that, whether an organisation can lead itself well and how stable that leadership is, are fundamental to the provision of good care. It is also important for consumers to be given full information about ownership: it is these two factors which are set to have an impact on the industry in the next financial year.
Firms will not, for the present, see any alteration in procedures around registration. The CQC does not, in fact, have the jurisdiction to register overseas providers. But the regulator is going to be asking questions about ultimate ownership and publishing information about overseas entities which may be concerned with care.
It is concerned that the public be given new information about leadership and ownership and about the links between companies. According to LaingBuisson founder William Laing, it is ‘only reasonable’ for the CQC to wish to know where decisions are made affecting care.
In some cases, a group may have a hundred subsidiaries and it is important, according to Laing, for the regulator to be able to know ‘where the buck stops’ and to be able to have a ‘dialogue’ with the people who are actually running the service.
Chains of care homes can be linked at the intermediary level and share the same ultimate owner, who may be an offshore company which is owned by bondholders, in another country. The CQC needs to know whom to talk to. And Laing believes the trend is likely to continue.
Although there may be some deconstruction at the top end of the industry in terms of very large players, further consolidation seems likely. With some care groups looking to expand by acquisition, smaller firms are vulnerable to being taken over by more complex enterprises.
In the last few years, the impact of new-style ‘investment’ ownership on the operation of care groups has become evident. Two well-known groups, outside of the major players, underwent total management changes and one rescheduled its debt with no public announcements.
Orchard Care Homes which boasts a portfolio of some 80 homes with 5,000 beds, now operates through a complex structure of companies including an offshore enterprise.
In 2017, it saw the complete change of its top team, with Paul Mancey and Philip Tomlinson being replaced by Thomas Brookes, Deborah Johnson and Lee Lorraine with Frits Prakke, from its offshore investors, also joined the board.
Mancey and Tomlinson, who had been with the group for a decade, left with no announcement, but are now with Larchwood Homes. Meanwhile, Akari’s 39 homes, formerly part of the Bondcare empire, are now owned by the US asset manager Argyle Group, through a series of holding companies and a Cayman Islands vehicle.
Akari underwent a massive financing restructuring last autumn, which saw US Bank Trustees take over the group’s debt. Previously, Bank of Scotland was the group’s banker.
A whole new management team (to Akari) had been brought in during 2016. Alastair How, formerly of Four Seasons, now runs the group, along with Oliver Lightowlers and Kevin Roberts, formerly of Voyage Care.
In the holding companies’ boards, sit Carlyle directors, Merrill Goulding and Pavlin Kumchev. The previous top team, led by Kevin Groombridge, Anthony Stein, Philip Smith and Tony Lumb, departed in 2016. No announcements were made about either of these moves.
What’s around the corner?
The CQC has said that it will roll out changes and seek the new information during the next financial year. This approach follows the regulator’s Next Phase of Regulation consultation last summer.
It has not yet decided how the information will be made available to the public. It may be put on the website of the CQC and firms may be required to display such information on their websites and marketing literature. And it may be that homes will have to display such information at premises, alongside the latest CQC rating.
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