Care Home Profits

 Dementia is a growth market with 1.6 million people predicted to be living with the disease by 2040, up from 900,000 today. Four out of five older people in residential care homes in England are now looked after by private providers – over 300,000 people – far more than in not-for-profit, council and NHS care homes

Gordon Sanders owns Runwood Homes, the UK’s sixth largest for-profit care home group, which charges residents more than £1,000 a week, with bills often covered by the taxpayer. Runwood bought many of its homes from local councils struggling to afford their operation including several from Essex county council in 2000, six from Nottinghamshire county council for £1.2m in 2011 and five from Doncaster council for £1.5m in 2012.

Problems reported by inspectors include not enough care workers, meaning residents unable to get to the toilet, stuck in bed, lacking activities, feeling “trapped” and “at risk of harm”. Inspectors heard reports of “awful” food and found some staff who were not trained or checked for criminal records. In one home, inspectors found residents were restrained by staff strapping a table top to a chair. Several of the homes breached Care Act regulations including for a lack of staff to look after people safely and protecting people from abuse. In 2018, an official investigation into Runwood’s Dunmurry care home in Northern Ireland found “a horrific catalogue of inhuman and degrading treatment”. The commissioner for older people for Northern Ireland concluded many people spent the last months of their lives “in appalling circumstances”.

Sanders paid himself at least £21m in five years despite inspectors finding multiple breaches of staffing, safety and leadership rules, with residents left in dirty incontinence pads and staff accused of rough handling. He owns a mansion in Essex and a flat in London’s Knightsbridge that Zoopla estimates suggest are worth about £4m and £4.7m respectively. In addition to £18.6m in dividends paid in the last five years to Sanders, who holds 100% of the share capital, Runwood’s accounts show Sanders drew £2.2m in salary in 2017, as the highest paid director. The highest paid director between 2019 and 2021 received £10.1m in total. That person is not named in accounts but may be Sanders, who served as chief executive until last summer, potentially pushing his five-year earnings to £31m.

Runwood also reported it accepted £12.3m in government grants in 2020 and 2021 related to the Covid pandemic, including for infection control and the job retention scheme. Over the same years it awarded salary to the highest paid director and dividends totalling £14.3m.

Another beneficiary has been the former chief executive Nadarajah Logeswaren, 59, who was paid £15.8m in 2018 “in relation to a long-term incentive scheme”, accounts show. Directors’ salaries and dividends drawn from the company totalled £57m over five years.

Runwood provides close to 5,000 beds. In the last two years for which accounts are available the firm made £43m in profit after tax on turnover of £301m – a 14% margin.

Profitability among the largest care home chains in the UK ranges from 11% to 42% of revenue. The five largest groups made £578m in profit in 2020 – a 22% average return when counted using the profit measure known as Ebitdar. Unlike Runwood, which is a family-owned business, several of the other large chains are owned by private equity firms, offshore investors or international investment trusts, making their profits harder to trace.

The earnings illuminate the cash generated by some care businesses at a time when there are warnings of a “national crisis” in care safety. More than half of residential homes in England offering dementia care reported on by inspectors last year were rated “inadequate” or requiring improvement – up from less than a third pre-pandemic.

There are 165,000 staff vacancies and rising in England’s care homes. That is equivalent to more than one in 10 posts unfilled. Wages averaged £9.50 an hour last April. Care assistant jobs are currently being advertised by Runwood at £10 an hour – the same as a McDonald’s crew member. The current national minimum wage for workers aged over 22 is £9.50 rising to £10.42 on 1 April.

Helen Wildbore, the director of the Relatives & Residents Association, said: “There will, rightly, be anger from residents and their families at these eye-watering payouts whilst they are suffering the impact of such poor care.

“Supporting people affected by dementia should be an honour and a privilege, not a way to make millions. This highlights the sad reality of care as a commodity, where owners have very little accountability to those they should be serving.”

Owner of UK care home group paid himself £21m despite safety concerns | Social care | The Guardian