One of the largest providers of home care in the United Kingdom is in dire financial straits—and the reasons why will sound familiar to U.S. providers.
Allied Healthcare filed a company voluntary arrangement (CVA) on Monday, as a way to restructure its financial obligations while remaining operational. Allied provides care for more than 13,000 Britons and faces a number of debts and cashflow issues, including £11 million in back-pay owed to “sleep-in” care workers, The Guardian reported.
A private equity firm based in Germany, Aurelius, acquired Allied in late 2015 for £19 million.
“Since Aurelius invested in Allied Healthcare in December 2015 it has supported the company’s extensive operational restructuring, reducing overhead costs and improving its historic operational inefficiencies,” the firm stated. “However, in the context of a number of external challenges facing the business and the health and social care sector as a whole, Allied Healthcare, supported by Aurelius, has taken the decision to pursue a Company Voluntary Arrangement.”
As Aurelius emphasized in its statement, other U.K. home care providers have faced similar issues as Allied. About one year ago, provider Mears partnered with a research organization on a report warning that home care in the country was collapsing.
A higher minimum wage is one issue. It took effect in April and added £65,000 per week to the payroll for Allied’s 8,700 employees, the Financial Times reported. In addition, providers have been put on the hook to repay overnight caregivers for shifts dating back six years.
Tighter immigration policies and fallout from Britain’s exit from the European Union have also heightened labor-related challenges by shrinking the pool of qualified workers, according a letter that Allied’s chief executive sent to creditors, which was obtained by the Guardian.
All these challenges are also being faced, to some extent, by home care companies on this side of the pond. They have warned that stricter immigration laws could worsen an already acute workforce crisis. Changes to labor laws over the past few years have driven some companies out of the industry, and live-in care has been an area of special focus and concern.
Under the CVA, Allied will have four weeks to hammer out a revised schedule of payments to its creditors, the FT reported.
In the meantime, the provider is assuring its workers and patients that care will proceed as usual.
“The proposed CVA will not impact on the safe continuity of care that Allied Healthcare provides across the U.K.,” Allied stated on its website. “Under the CVA plan, there would be no redundancies or branch closures as a result of its implementation.”
Written by Tim Mullaney