Meridian boss wary as councils cut care budgets
MERIDIAN Healthcare, the independent operator of care homes in the North West and Yorkshire says a tougher stance by local authorities on care budgets, will dent profits in the future.
Chairman and founder Alan Firth said that because Hyde-based Meridian invests its profits in the business, future investment will be hit.
In the year to the end of March last year Meridian Healthcare Holdings, parent company of the business, grew profits from £5.6m to £7.4m on turnover of £31.9m, up from £31m in 2010.
Occupancy levels at the 1,343 bedrooms were 96%, unchanged on 2010.
Mr Firth said: “Whilst our results have been good, it is without question that we are going to come under pressure in the next year as occupancy levels in this financial year (2011-12) are down 5-6% as a result of cuts.
“Tameside Council, which is one of our biggest customers, is trying to propose a fee cut of up to 10% from April, which will clearly make 2012/13 very challenging.”
Despite such pressures, Meridian, which prides itself on its high-care standards and facilities, has continued to invest in new properties, spending £4.7m on The Oakes in Huddersfield and £3.9m on Millbrook in Stalybridge.
The opening of The Oakes, which will create 60 jobs, will be Meridian’s 30th care home and will take its bed stock to 1,473, of which 1,200 are ensuites. It owns 29 of the sites, with the other being a 20-bed unit managed under contract from Oldham Council
In an industry rocked by the financial crisis which last year engulfed and eventually drowned Southern Cross Healthcare, Mr Firth said: “We have always grown slowly and sustainably, never over-committed ourselves or taken risks or stripped money out of the business.
“We have re-invested and created what I believe is a stable business which will allow us to ride out the pressure which are being exerted on the sector at the moment.”
Mr Firth, whose wife Susan is group managing director, said he is “baffled” by how some other care home operators make money due to the way they are financially structured.
“We were offered some of the Southern Cross properties, but we just couldn’t make the numbers work.”
