Southern Cross feels effect of cutbacks

Southern Cross Healthcare said it continued to experience a reduction in admissions from local authorities during the quarter to June 30, when average occupancy in its estate fell to 85.4 per cent from 87.5 per cent in 2009.

Self-funding residents account for 17.4 per cent of total occupancy and Southern Cross said increasing this area of the business remained an area of focus.

It will lobby the Dilnot Commission into funding of social care as it looks to prove that residential care by the private sector represents the lowest cost to the taxpayer and best experience for those requiring care.

The company said: "Whilst the longer-term fundamentals for residential care remain positive, the short-term outlook is challenging as pressure grows to reduce overall public sector spending.

"As a result of this pressure, the group has continued to experience a reduction in admissions from local authorities during the third quarter."

Underlying earnings in the three months fell to 12.1m from 19.9m a year earlier and is expected to drop to about 53m for the whole financial year, down from 72.5m in 2009.

The company has 730 care homes and 37,000 beds under the Southern Cross and Ashbourne Senior Living brands.

Southern's revenues in the third quarter were up 0.8 per cent to 238m as a result of an increase in its average weekly fee rate of 1.6 per cent to 564.

It added service quality ratings from the Care Quality Commission showed 83 per cent of homes in England had 2 or 3 stars, up from 81 per cent at the end of the previous period. However, the number of homes with a zero-rating rose from 12 to 16.