Any kind of overhead that is fixed or rising, at a time when revenues are under pressure, can bring down a business, says BBC business editor Robert Peston.
And in the case of Southern Cross, it is not the burden of large debts that threatens its survival. In fact what is striking about the financial performance of the UK's leading care-home provider over the past few years is that its net debt and interest bill has fallen very sharply.
What has done for Southern Cross is all the rent it has to pay on its 750 care homes, at a time when revenues from local authorities for residential care for the elderly is under pressure. Which is why it has unilaterally imposed a reduction of a third on the rents it is prepared to pay landlords.
Now to add to the pressures on the private care-home industry, some of Southern Cross's landlords operate their own care homes. In other words, Southern Cross's woes are adding to the woes of other private-sector care home providers, including Four Seasons, which is Southern Cross's nearest rival.
Click to read the full story in the BBC website
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