Southern Cross Healthcare (United Kingdom)

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Southern Cross Healthcare
Public (LSESCHE)
Founded 1996
Headquarters Darlington, UK
Services health and social care
Number of employees
41,000 (2011)

Southern Cross Healthcare (Group plc) was a private provider of health and social care services, predominantly through the provision of care centres for elderly and some younger people. The group was the largest provider of care homes and long term care beds in the United Kingdom, operating over 750 care homes, 37,000+ beds and employing around 41,000 staff.[1] Following rapid expansion financed by the sale of leases of its homes, its shares fell 98% from early 2008 to early 2011, reducing its market value from £1.1bn to around £12m.[2] It was listed on the London Stock Exchange and a constituent of the FTSE Fledgling Index.


The company was founded in 1996 by John Moreton, who was its chairman and chief executive until 2002.[3] By 2002 " had 140 homes, was the third-largest of its kind in Europe and was heading for the stock market".[3] In August 2002, the management backed by West Private Equity and Healthcare Investments Limited, acquired Southern Cross through an £80m management buy-out.[3]

In September 2004, a secondary buy-out of the business by the management together with Blackstone Capital Partners followed, for £162m. Blackstone then acquired care home owner NHP (Nursing Home Properties) for £564m,[4] which saw a competition investigation by the Office of Fair Trading.[5][6] In November 2005, it also took over the Ashbourne Group of care homes, comprising 10,000 beds in 193 homes, for £85m.[7]

Blackstone reorganised the business under a sale-and-leaseback strategy.[8] Southern Cross Healthcare became a pure operating company, renting care homes from a number of companies, including NHP which became a pure property company. NHP was subsequently sold to investors.[9]

In July 2006, the company was floated on the London Stock Exchange, entering the FTSE 250 Index in September.[10]


In early 2011 the company was in crisis, as it increasingly found its annual rent bill (over £240m on its 750 properties) unaffordable, having sold leases before the 2008 financial crisis to fund expansion. With public spending cuts leading to fewer referrals (and a drop in occupancy rates from 92% to 84%), it was forced into negotiations with its landlords for rent reductions and appealed to the government for support.[2] In early June 2011 it was announced that the company had made its own decision to withhold 30% of rent owed to avoid mass care home closure.[11] Experts warned of a possible collapse into administration.[11] Its shares had already fallen 98% from early 2008 to early 2011, reducing its market value from £1.1bn to around £12m.[2]

By July 2011, attempts to rescue the company had failed, and all care homes were being taken over by their landlords.[12] The largest landlord, NHP, owning 250 Southern Cross homes, hired Chai Patel to transfer management HC-One, a company set up by his old consultancy Court Cavendish.[13][14][15] The former CEO, James Buchan, waived his severance pay.[16]

Media criticism focussed on the split from the landlord entity, as the sale and leaseback strategy implemented by Blackstone Group had crippled Southern Cross with an unsustainable business model. Blackstone denied responsibility, stating that the company had been in good order when it sold it five years previously.[17][18]

Orchid View inquest[edit]

Late in 2011, two staff at the company's Orchid View care home in Copthorne, West Sussex, were arrested on suspicion of ill-treatment and neglect of residents.[19] The case had come to the notice of the authorities due to a whistleblower. A coroner's ruling in 2013 found that 19 deaths at Orchid View were unexplained, but stated that under Southern Cross' former management the home was "mismanaged and understaffed", and rife with "institutionalised abuse". A Serious Case Review was held.[20] Managers closed the home in 2011; it was later renamed and reopened under new management.[21]

See also[edit]


  1. ^ Southern Cross Healthcare, About us, accessed 16 May 2011
  2. ^ a b c Southern Cross chairman quits, The Guardian, 12 April 2011
  3. ^ a b c Will this man finally manage to bring his software venture to AIM’s altar? The Times, 9 February 2007
  4. ^ NHP agrees £564m sale, The Scotsman, 30 November 2004
  5. ^ Brussels refers Blackstone bid for NHP homes to UK watchdog, The Independent, 3 February 2005
  6. ^ Blackstone prepares to float care home giant, Sunday Times, 1 January 2006
  7. ^ Blackstone prepares £1bn flotation of Southern Cross, The Times, 2 January 2006,
  8. ^ Graham Ruddick (5 June 2011). "Is there still life in Southern Cross?". Sunday Telegraph. Retrieved 5 June 2011. 
  9. ^ Olga Craig (5 June 2011). "Old, sick – and homeless?". Sunday Telegraph. Retrieved 5 June 2011. 
  10. ^ Standard Life to enter FTSE 100, BBC News, 7 September 2006
  11. ^ a b Southern Cross slashes rent to avoid mass care home closure, The Guardian, 1 June 2011
  12. ^ Wearden, Graeme (11 July 2011). "Southern Cross landlords to take over all homes". The Guardian. Retrieved 6 September 2011. 
  13. ^ Goodley, Simon (13 July 2011). "Southern Cross shareholders told of NHP role in closure". The Guardian. Retrieved 6 September 2011. 
  14. ^ Wachman, Richard (4 September 2011). "Four Seasons to take Southern Cross's mantle as biggest care homes operator". The Guardian. Retrieved 6 September 2011. 
  15. ^ Southern Cross wins new rent reprieve worth £18m, This is Money, 4 September 2011
  16. ^ Hawkes, Alex; Brindle, David (31 August 2011). "Southern Cross chief stands down with no severance pay". The Guardian. Retrieved 6 September 2011. 
  17. ^ Alex Hawkes, Blackstone denies blame for Southern Cross's plight, The Guardian, 2 June 2011
  18. ^ Richard Wachman, Southern Cross's incurably flawed business model let down the vulnerable, The Guardian, 16 July 2011
  19. ^ Orchid View care home staff arrested over neglect, BBC News, 5 October 2011
  20. ^ Orchid View inquest: Home riddled by 'institutional abuse', BBC News, 18 October 2013
  21. ^ Orchid View inquest: Care inspectors' actions defended, BBC News, 15 October 2013

External links[edit]