CARE homes could be regulated to prevent a repeat of the Southern Cross crisis.
Care and Support Minister Norman Lamb will today launch a consultation into proposed measures which would protect residents if care providers fail.
Under the proposals, a regulator would monitor the financial health of the largest providers.
The abrupt collapse of Southern Cross, Britain’s biggest care homes operator, caused turmoil for more than 30,000 elderly and vulnerable people last year.
The firm was crippled by having to pay a £250m rent bill as councils sought to cut fees in the wake of the first credit crunch.
Mr Lamb said: “We want to make sure every person receiving care and support will continue to get the care they need if a provider exits the market, regardless of whether they are paid for by the state, or pay for care themselves.
“Southern Cross demonstrated that we need greater oversight of providers’ finances and better plans to support people if their independent provider goes out of business.
“We want to make sure care providers have plans in place to get their finances back on track and if this is not possible then a co-ordinated exit from the market happens. This will mean care service users know their needs will continue to be met.”
Peter Carter, chief executive and general secretary of the Royal College of Nursing, said action was needed to minimise the risks of homes failing.
“For some time we have been concerned about the ability of providers to deliver high quality care and run on a sound financial footing,” he said.
“When a patient or service user is moved from one care setting to another due to providers failing, it can have catastrophic effects on their mental and physical health.
“The RCN raised these concerns throughout the passage of the Health and Social Care Act and today’s news is a welcome step forward.
“It is right that robust plans are put in place to minimise the risk of services failing and that there is scrutiny of their business models.
“We look forward to seeing these plans in more detail and in particular how they fit in with the Care Quality Commission and Monitor.”