Meridian Healthcare boss warns of £3m profit hit
THE boss of Meridian Healthcare, which owns and operates 30 care homes in the North West and Yorkshire says profits will fall by up to £3m over the next two years after it was forced to take fee cuts by some local authorities it supplies.
Alan Firth, Executive Chairman of the Hyde-based group, which champions high standards of care and accommodation for frail, vulnerable and elderly clients, says trading conditions in the care sector are “extremely tough” as a result of the cuts in fees and client placements certain local authorities are imposing on it.
He told TheBusinessDesk.com: “We always reinvest the bulk of what we make in profits back into the business so, if we make less profits, which is certain over the next two years, we will not be able to invest further in opening new facilities.”
“Our focus instead will be on debt reduction and maintaining the high standards of service and accommodation our clients expect in our existing stock.”
Mr Firth, who runs Meridian with his wife Susan, said the company had been most affected by fee and placement cuts in the Tameside local authority area, where 14 out of its 30 care homes (704 out of a total of 1473 single bedrooms) are located.
A block contract for 75% of its operational beds with Tameside Council came to an end in March 2012, which as a result saw occupancy levels drop by as much as 10% across the entire bed stock.
Since then the authority has also imposed a significant cut in the fees they will pay for care following the introduction of a new ‘Quality Framework’ being asked of providers.
Mr Firth said: “Occupancy levels are continuing to fall this year as a result of the changes in Tameside, but we hope in time that they will recover to back to pre-austerity cut times, because all our 14 care centres (out of only 26 within the borough) were all accepted on to the framework.
“A commissioning strategy introduced by TMBC based its purchasing of care for state-funded clients solely on the quality of care they provide to vulnerable adults.”
In the year to the end of March 2012 Meridian Healthcare Holdings saw occupancy levels of 94%, down from 96% in 2011. Occupancy levels throughout 2012 saw a further decrease to around 89%.
Profits fell in the year ended 2012 fell from £7.4m to £6.6m despite turnover marginally increasing from £31.9m to £32.8m.
During the last year, Millbrook in Stalybridge, one of Meridian’s newest properties, developed at the cost of almost £4m, won the Pinder’s Healthcare Design Award for best new development for the elderly in 2012.
In 2013, The Oakes, the latest (and likely to be the last until conditions change), built at a cost of £4.7m, has also been placed on a shortlist of only three for the 2013 National award.
