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Medical group warns of NHS bed blocking crisis.

Byline: Iain Laing

PRIVATE medical group Bupa warned the NHS faces a potential "bed blocking" crisis unless fees paid to care home operators rise.

Bupa, which cares for 18,000 UK residents in over 300 homes, is concerned that the aged care sector will become "seriously underfunded" as a consequence of local authorities reducing the amount they pay.

Darlington-based Southern Cross, the UK's leading care home operator, decided to close in July after it said it could no longer pay the rent on its 752 homes as revenues came under pressure due to falling levels of occupancy and fees.

Bupa, which said it had been approached but decided not to get involved in the restructuring of the Southern Cross estate, added it expects a further contraction of the care homes market unless "fairer fees" are agreed.

It warned this could mean more closures and a potential bed blocking crisis for the NHS.

Chief executive Ray King said a minimum for the industry must be fee rises linked to the underlying rate of inflation.

The group, which is a provident company with no shareholders, said its care services division lifted revenues by 1% to pounds 589m and profits by 2% to pounds 67.7m in the half year to June.

The UK profit contribution fell due to higher catering and utility costs, while occupancy among its homes, which are 70% funded by local authorities or primary care trusts, dropped to 86.9% from 87.2%.

It said it remains committed to the care homes sector and spent pounds 36.8m on its operation over the past six months, mostly in the UK and Australia.

Bupa's profits overall showed a sharp improvement in the latest half-year, jumping from pounds 162.1m to pounds 244.1mfollowing good growth in Australia, Asia and its expat health insurance business.

Sanitas, its Spanish insurance healthcare business, also did well despite the economic problems affecting the country with results boosted by good demand in its dental arm.

Revenues across the group rose by 6% to pounds 3.93bn.

King added: "In UK care services, we continued to control costs carefully to mitigate the impact of extreme pressure on public sector fees and referrals, and delivered further good growth in Australia and New Zealand where market conditions were stable."
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Title Annotation:Business
Publication:The Journal (Newcastle, England)
Geographic Code:4EUUK
Date:Aug 11, 2011
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