Disgusted at profits of care homes going to senior management only

[Aromaticcandles]

From a very close relative who was so disgusted he left his job...

New accountant job taken on for a national care home provider and within a month advised to put in £10 into shares. Of course he did this, all in the team just did it so with the promise of a none risk payback.

He received £136 000 from this investment and as a newly employed senior accountant this was pennies in comparison to the manager/owner who got more than a million! Sadly facts.

Were the people who worked in the homes taking care of the clients around the country offered this opportunity? No, they were grateful to have a £100 bonus at Christmas and/or a box of chocolates.

Was this fair for paying thousands of pounds a week expecting the best care for loved ones and the best quality of food? In reality the management was employing accountants to ensure the lowest cost for food, when short staffed they had to work harder as was calculated feasible to do so.

My cousin was over the moon with the bonus but his morals were more important and he couldn't carry on in a role that subjugated vulnerable people to sloppy tasteless food, employees who were taken advantage of and management who reaped so much profit at the expense of them all. One part of the home was dementia patients and the attitude from meetings was that they didn't know what they were doing/eating/being hydrated and properly cared for.

This is absolutely disgusting and he has filed a complaint about the inequality, moved into another sector for a charity based company with less earnings.

I don't think your numbers are right, but yes, welcome to capitalism, this is what we get for voting for right wing parties over the years.

Did he donate his share to the home and split equally between the lower paid staff when he left?

Its a private business yes? Not an NHS home? In which case, perfectly legal. He and you can be as disgusted as you like but this is a capitalist economy and unless we are prepared to pay far more in tax to provide an excellent standard care cradle to grave for all, including those who have never or rarely worked, this is what we have. Business ethics n a capitialist society ultimately.comes down to legal or not, profitable or not.

This is called capitalism.

Sounds like your relative got a reasonable return on his investment, no?

Why would a company continue to run if it wasn’t for profit? I don’t get your post. Not sure finance is your field. £10 to £136k return!

I doubt he bought £10 of shares and ended up with £136k. Something awry there.

It is typical in a private business to use shares in place of salary to incentivise senior people. ‘Stay for X time and there will be a big payday’.

What’s the point of the owner setting up and running a company if they can’t make money from it? Thats the incentive to do it in the first place.

I don’t contest that the fees for care homes are far too high, and quality of care may be patchy in some.

Your numbers don’t make sense but this set-up is normal in a private business. Are you both normally public sector workers?

£136k off a tenner? Come on OP, you must smell a rat here?

As an accountant who worked in an industry that traditionally pays high bonuses I don't believe it. The numbers don't stack up and the story sounds make believe.

We got a £5 Love2Shop voucher at Xmas when I worked in care a couple of years ago.

He may have had £10 nominal value of shares but could have paid £50k to get them.

We live in a market economy where you have to try and make your own luck.

The opposite of a care home making money is one losing money.

This person may also have guaranteed big loans using his own house. (Personal guarantees)

50k to 136k for all that risk, stress, long hours etc.

There is probably a bit more to the story

Your disgust is misplaced.

Why, in the 5th wealthiest country on the planet, is social and elderly care placed in the hands of greedy profiteers?

@RhaenysRocks "... unless we are prepared to pay far more in tax to provide an excellent standard care cradle to grave for all, including those who have never or rarely worked, this is what we have."

The majority of the money paid to care home providers comes either from the State, i.e. the taxpayers, or from the bank accounts of the better off, who end up paying out of their savings and capital when they might have been better off paying more tax in the first place. If the government, NHS or local authorities were being paid this money, the profits would be re-invested into care - just as it is in most developed countries in the western world. In the UK it lines the pockets of the care home owners (and their accountants).

@MidnightPatrol "What’s the point of the owner setting up and running a company if they can’t make money from it? Thats the incentive to do it in the first place."

Why have private companies been granted a virtual monopoly to provide care in the UK? Why are there not more organisations (charities, local authorities, mutual societies etc) that provide care on a non-profit basis - the incentive being the concept of doing good for your fellow humans.

While I agree with your first point that private business may not be the ideal mechanism to run care homes, I'm not sure public authorities are well placed either.

Care homes are expensive and complex to run. Where is the money/resource/expertise going to come from?

The numbers are possible btw. If this was an EMI scheme, or the shares were heavily discounted as he was an employee - I’ve seen many scenarios not dissimilar to this numbers wise. There would usually be a number of years between the investment and sale though, but £140k bonus structure through shares for an interim FD that takes someone through a sale is easily within the realms of possible.

That's absolutely lovely in theory but how many people are actually in a position either financially or personally to do this? The reason most older people are in these homes is because their middle aged children are not able or willing to care for them themselves. Care work is like childcare..it's v v expensive for the paying person but the hourly rate of the carer is v poor in terms of cost of living. I don't know what the answer is but, much like food banks and hospices, I'm pretty appalled that the UK is so dependent on charities to plug gaps in basic needs for it's citizens.

There was no capitalism under labour? Wow, I did not know this…

I've never met a poor care home owner, although I've met plenty of care home workers on the breadline.

Were the people who worked in the homes taking care of the clients around the country offered this opportunity? No, they were grateful to have a £100 bonus at Christmas and/or a box of chocolates.

I bet he didn’t offer any of his earnings to these employees?
Did the manager/owner put in more money to get a greater outcome?

Well I know someone who completely bankrupted themselves in this business. Again, that's capitalism, big risks, uncertain rewards.

And low skilled workers in any industry don't tend to get rich from their jobs.

If the employees want more, then they can buy a share in the business surely?

Legally under the Companies Act, a company's first duty is to its shareholders.

Much of Europe manages to have non-profit organisations providing care, based on the concept that vital care services should not be provided for profit (with the accompanying downside that if it isn't profitable or affordable, it isn't available to many people).

Where I live in Europe, the local authority (in this case the equivalent of the town council) and the public Health Insurance Scheme provide social and elderly care. Almost every town and village has a care home (or several homes in large towns) that provide everything from supported living to dementia support and end-of-life care. One huge benefit of this is that as far as possible, older prople are able to remain in familiar surroundings, close to their networks and families.

The money comes from the taxpayer - so taxpayer money does not funnel into the pockets of private company shareholders - and from the public Health Insurance Scheme. Staffing and expertise come from the same place as it does in the UK's private sector; i.e. from qualified care staff, doctors, professional managers, caterers etc. One feature here is that the local regonal hospital is a training hospital, and when nurses are undertaking their training, they spend some of their practical time working in the care homes as well as working on the geriatric wards in order to cover their training with older patients.

There are also homes run by charities, particularly religious charities. These operate broadly on the same lines as the public authority homes as non-profit enterprises run in conjunction with the public Health Insurance Scheme.

@MrThorpeHazell "Legally under the Companies Act, a company's first duty is to its shareholders."

This perfectly sums up the situation in the UK. Care homes are being run for the benefit of shareholders, not for the benefit of the residents and patients. They suck up taxpayer money and empty the bank accounts of the slightly better off and funnel the profits into the pockets of care home owners and shareholders.

Which is fine so long as people are willing to pay the additional tax that this would require.

But people in these countries are not paying an additional tax - and the taxes that they do pay are fully benefitting the public stakeholders (the patients, their families, the employees and the local community) and not being syphoned off into the bank accounts of private companies and their shareholders.

It is the British public that is paying for what is really a very poor care service. Not necessarily through taxes, but through having to sell their assets or use their savings, through people having to give up work (and therefore reduce their income) in order to care for relatives and through a lower quality of life.

The only reasons why this has happened in the UK are that the voters have voted for parties that falsely believe that the Free Market is more efficient than any other option and these politicians have decided to spend money in other areas while abdicating responsibility for elderly care to this mythical Free Market which only ever provides that which is profitable, not that which is needed.

it's shit. But it is what it is.
Volkswagen announced all bonuses were cancelled this year because no money (all workers get some kind of bonus depending on profits that year - according to their payscale)

And then suddenly found enough money to pay all board members a massive bonus. But nobody else got one.

But the money has to come from somewhere, which means taxes.

Most of these countries will have a higher tax load than the UK or, if not will have deprioritised areas of spending that are prioritised in UK.

"So the question is are people prepared to pay more to do it this way? Or divert some of the tax base to this cause? I'm not sure the answer to this is clear cut. As things stand, not everyone ends up paying for nursing care.