The news that Southern Cross Healthcare is to is to close all its care homes has prompted calls for greater monitoring of the financial stability of care home providers.

Michelle Mitchell, charity director at Age UK, said: “The current situation only serves to highlight the need for Monitor, the new regulator for health and social care, to be given greater powers including responsibility for ensuring the financial viability of care homes. Companies that are not able to show that they have a sustainable business model should not be allowed to run care homes.

"We would urge everyone involved in the potential transfer of the Southern Cross homes to put the needs of the residents first, remembering that those living in the homes are very vulnerable and frail,” she said.

The group had been in talks with its landlords and lenders since March regarding the future of the business and the 31,000 residents in 752 care homes.

In a statement the group said that while restructuring details have yet to be settled, all its landlords have indicated their intention to leave the group. To which end a plan is being formulated to facilitate the smooth transition of homes to landlords and, where appropriate, their new operators. 

The statement said: ‘As part of the plan, in addition to ensuring continuity of care to residents, all payments to trade creditors are to be maintained and all home based staff transferred on their current terms.’

Christopher Fisher, chairman of Southern Cross, said: "We are now able to begin clarifying the arrangements for the future operation of our homes.  The process of change on which we are now embarking involves considerable effort on the part of our management and staff and their commitment and loyalty is much appreciated. We anticipate that the period of uncertainty which we have been experiencing will now draw to a close.  We regret the loss of value which shareholders have experienced."