Should care home providers be forced to have financial health checks to prevent another Southern Cross crisis happening?

Stephen Lowe, social care policy advisor for Age UK

Martin Green, chief executive, English Community Care Association (ECCA)

YES

Age UK, has been campaigning for care home providers to have financial health checks for years.

Its policy advisor, Stephen Lowe says: "We favour a regulatory approach and it needs specific financial expertise so Monitor (currently the independent regulator of NHS Foundation Trusts) would seem to be better placed than the Care Quality Commission (CQC).

"Either the CQC or Monitor must be given a duty to ensure financial viability of care providers and, where necessary, the powers to enforce compliance.

"I accept that Monitor would need new methodologies to regulate care homes, but it is in any case diversifying beyond its original remit of regulating Foundation Trusts so will need to develop new systems."

Last year, Dr David Bennett, chairman of Monitor, spoke at a Westminster Health Forum conference, and said the watchdog may one day act as an economic regulator for care home providers as well.

Mr Lowe would also like to see local authority commissioners doing more as "they are used to vetting the financial viability of large providers and may indeed have contract standing orders that require them to do this".

Care homes should be expected to demonstrate financial viability, according to Age UK.

However if this cannot be done due to the complexity of the provider’s financial arrangements (which is likely to be the case with large private equity owned providers) they should be required to provide an insurance backed bond to guarantee against precipitate closure, claims Mr Lowe.

"Firms should also be required to set up resolution or post-failure arrangements that allow sufficient time and funding for orderly transitions," he says.

Mr Lowe believes that requirements to demonstrate financial viability must apply to all independent providers of residential care, of whatever size.

NO

"In relation to financial regulation we believe that every business should be able to show it is viable but this is required already by the Audit process and by the Care Quality Commission (CQC) so we do not need extra regulation," says ECCA’s chief executive.

Martin Green does not think that any tighter regulation would have altered the outcome of Southern Cross, as he claims "the investment was within the European rules".

ECCA is opposed to the idea of Monitor taking on the role of vetting the financial viability of care homes.

Mr Green believes "Monitor does not have the capacity to regulate business and says "there is enough regulation of business without duplicating it with more layers".

He also questions what experience Monitor has in regulating business and says "regulating Foundation Trusts is different, very different from real businesses".

Mr Green’s problem with this is the cost as he says: "Unfortunately commissioners would want it but not be prepared to pay for it. In other sectors with bonding or insurance, the cost is passed to the customer but in this sector many local authorities do not pay the true costs of care."