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Financial Crisis at Southern Cross an Unfortunate Case of Profit Before People

Southern Cross' financial crisis raises concerns for the many elderly and vulnerable people facing an uncertain future. But it also leaves a question mark over plans to reform the NHS by contracting services to private providers.

What happens when those providers fail to provide or go bust? Until this week the government's response to the care home crisis was that this is a contractual issue for local authorities to resolve with Southern Cross. It has now stepped in by announcing a 'guarantee' of alternative accommodation to residents if the company goes under. That may be of some consolation to elderly people worried about being made homeless although the prospect of a major upheaval will still be alarming for many, particularly given recent revelations of abuse and neglect in care homes.It is important to learn from all this. There are 3 key lessons. First, the private sector - with its goal of making profit - is inherently unstable.

If we are looking to it to provide uninterrupted services there must be a mechanism to step in when providers get into financial trouble. Secondly, the government must retain clear responsibility and accountability for services provided privately. Thirdly, we must all know who is responsible for what. Southern Cross residents do not know what happens in the event of insolvency - no one does because no one has addressed the issue. As a clinical negligence solicitor I often have to sort a complete muddle when the NHS pays for patients to be treated privately and things go wrong. It is extremely difficult to find out who is legally responsible and to force anyone to hold up their hands.Unless we learn lessons from this, Southern Cross' crisis may be just like the warning tremour signally the earthquake to come.

Paul Sankey is a solicitor specialising in clinical negligence. If you or a member of your family have a clinical negligence enquiry please call our expert clinical negligence solicitors on 0800 916 9049, fill in our short online claim form and one of our specialist clinical negligence team will contact you.

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