BUPA healthcare provider and UK insurer has chosen to auction 200 (around 65%) of its care homes. Reduced government funding for the elderly and new EU rulings triggered the BUPA care homes sell-off.
BUPA UK: Established in 1947, BUPA was first named the British United Provident Association.
They went on to form a company that now provides home healthcare for the general public.
But, financial turmoil and widening losses in the sector have forced BUPA into the big sell off. So, is BUPA selling its care homes?
They have enlisted the BUPA adviser Knight Frank property to run the auction. The BUPA home healthcare sale could involve the transfer of around 20,000 staff to the new owner.
BUPA earns close to 70% of its revenue from health insurance. They also get high returns from their hospitals and medical clinics. BUPA operates these along with their care homes.
Despite this, the company reported a £1.2 million loss in 2014. That proved to be a stark drop in revenue compared to a £16.2 million profit the year before.
The blame rests with new European Union Solvency II regulations. They aim to ensure insurers have enough capital to cover unexpected shocks in the industry. The new rules take effect from January 2016.
The four biggest care homeowners in the United Kingdom issued their concern. They say a surprise increase in the UK national living wage adds extra pressure to their costs.
A UK-wide shortage of nurses also exacerbated trading problems for the healthcare provider. This places a bigger reliance on paying for agency staff, which are more expensive.
Their report suggest that around 70 per cent of industry costs attribute to employee pay.
Analysts also express concern for the future of Britain's largest care home operator.
Four Seasons Health Care provides inpatient mental healthcare and brain injury rehabilitation. They are an independent British provider of health and social care services. Four Seasons operate care homes in 440 different locations housing more than 22,000 beds.
The 200 BUPA care homes to be sold is certain to attract widespread interest from business and finance investors. But high expectations come with the BUPA home healthcare sale despite BUPA health funding pressures.
This type of acquisition is a huge attraction for large private equity houses. A BUPA home healthcare sale will also attract North American, Middle Eastern, and sovereign wealth funds.
Knight Frank auction group suggest there is around £7 billion earmarked for investment in the BUPA care home sell-off. They expect the funding to come mostly from overseas investments and others from within the United Kingdom.
But, there are greater concerns of a reduction in local authority-funded beds. LaingBuisson are health consultants in London. Their figures show 3,000 more beds closed than actually opened in the first half of 2015. To prove a point, capacity in BUPA homes has already fallen for the first time this year.
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BUPA Care Homes For Sale at Knight Frank Auction in the United Kingdom