Four Seasons, the UK’s second largest care home group, has withheld payments from private landlords as it attempts to persuade them to reduce costs, which it claims are “crippling the business”.
Earlier this year Four Seasons’ parent companies fell into administration under the weight of a £625million debt. Over a third of its 320 care homes, which serve about 16,000 residents, are rented from landlords.
The decision this month affected the landlords of 135 leasehold homes not included in a proposed deal to sell 185 freehold sites to Four Seasons’ largest creditor, H/2 Capital.
According to the Financial Times one landlord is considering other leasing options, including holding takeover discussions with other operators, or also possibly issuing notice to the tenants and leaving local authorities to find alternative accommodation for residents.
Four Seasons has made over £100m in rental payments to landlords over the last two years.
A Four Seasons spokesperson said: “Continuity of care has been and remains our priority throughout this process. The decision to withdraw rent payments is part of the lease negotiations which we announced recently. We are actively engaging with landlords and we are confident that we will reach an agreement that will put the Group into a more sustainable financial position for the long term. In turn, this will deliver a more sustainable return for landlords.
“It is important to emphasise that this renegotiation is not prompting changes for any of our care homes, the people in their care, their employees or suppliers due to the funding we have in place. All other running costs, including payment to suppliers and employees, continue to be paid as normal and the Administrators remain in discussions in relation to the restructuring and independent sales process with a view to completing the process by the end of the year.”
Kate Terroni, Chief Inspector of Adult Social Care at the Care Quality Commission said: “CQC’s Market Oversight function is fully aware of the developments with Four Seasons Health Care and remain in regular contact with them as we continue to monitor their position. We are clear that all people using any adult social care service, as well as families and carers, need to have confidence that the provider will ensure good quality care which can be sustained into the future. Our Market Oversight regulatory responsibility is to advise local authorities if we believe that there will be likely service cessation as a result of likely business failure. We do not believe this to be the case at this time.”
Caroline Abrahams, of Age UK, said: ‘We remain deeply concerned about the long-term sustainability of the care market. This is yet another example of why the system is broken and in need of urgent reform.’