Balmanno House: unsustainable cash flow issues

One of the UK’s longest-operating care homes has appointed administrators amid challenges over rising costs and staffing.

Balmanno House, which can trace its roots as a care home back more than 200 years and was a registered charity, was suffering from “severe and unsustainable” cash flow problems.

These include staff shortages, costs of sourcing agency staff, rising food and energy bills, compliance costs and falling occupancy levels.

Joint administrators Blair Milne and James Fennessey, partners with Azets, will continue to trade Balmanno House during a managed wind down of the business to minimise the impact on residents, families, staff and suppliers. 

A specialist interim care home management business, Healthcare Management Solutions, has been appointed.

Balmanno House is a Victorian villa built in 1874 at the junction of Great Western Road and Cleveden Road in the west end of Glasgow. The building will be marketed for sale through Savills.

The house has 51 rooms but occupancy levels were consistently at or below 85%, which, along with a sharp increase in operating costs, has contributed to trading losses. However, there have been no redundancies among the 68 full and part-time staff.

Mr Milne said: “The challenges facing care home operators are well documented, the most significant of which is recruitment and retention of nursing staff. 

“In order to maintain the safety of residents, care providers have become increasingly reliant upon agency workers which is very difficult to sustain commercially, even for short periods.

“The increased cost of providing nursing staff, added to the sharp rise in the costs of energy and food, has resulted in trading losses for Balmanno.  Despite the best efforts of the directors to control operating costs and to increase revenue it has sadly not been possible to return the business to profitability. 

“Our priority will be to stabilise the business and ensure that Balmanno House can operate as normally as possible. 

“We will work closely with the Care Inspectorate, Glasgow Health and Social Care Partnership and local authorities to achieve an orderly closure of Balmanno whilst fully supporting residents and their families through every step in finding a suitable new care home.”

Chairman Allan Carrick said: “Sadly the unsustainable costs and challenges affecting the care sector in Scotland have made it impossible for Balmanno House to continue providing the high standard of residential care which has for so long been our hallmark.

“Balmanno House is very much a family and community facility, and we are acutely aware that it will be sorely missed.  Our priority now is to ensure that we minimise any disruption during the transition phase, a process that will take several weeks to complete.”

Any surplus funds generated from the sale after all debts are met will be distributed to other charitable causes.