Five leading care home providers are around £150 million a year in council fees for underperforming services, an investigation has found.

The Guardian revealed the council funding was being spent on Inadequate and Requires Improvement homes at HC-One, Runwood Homes, Bupa, Four Season Health Care and Barchester Healthcare.

The news follows research by the paper last week showing that English councils spent £480 million on Inadequate and Requires Improvement homes.

Citing estimates from public spending records, the research found HC-One was paid around £50 million in 2022 for underperforming homes.

Four Seasons, which is currently operated by administrators after falling into debt under private equity ownership, earned an estimated £38 million from councils for Inadequate and Requires Improvement homes, while Runwood Homes, Barchester Healthcare and Bupa each received around £20 million for Requires Improvement homes.

A spokesperson for HC-One pointed out that if council funding were to cease in homes if they received a Requires Improvement or Inadequate rating there would surely be serious implications to the sustainability of the care market and ultimately risk the existence of critical services.

The spokesperson added: “As the Kind Care Company, we are committed to providing the best possible care to our residents, and their wellbeing is always our number one priority.

“We are proud to be above the national average for the number of homes rated Good or Outstanding by the CQC. We are clear, however, that any home that is not rated Good or above is not in line with our high standards of quality and comfort which our residents expect and deserve. Where a home is temporarily not rated in the two top tier categories by the CQC, it is due to specific local circumstances, which we immediately address through our robust internal processes.

“Great care outcomes and a sustainable, thriving care market cannot be achieved without the necessary, consistent, funding in place, and we continue to be the only provider investing at scale in local authority-facing care services. Our multi-million-pound investments in the dedicated, skilled people providing care in our homes, the quality of care homes, and our quality assurance and monitoring systems will make sure that we consistently provide the highest standards of care.

“Our mission to be the first-choice provider in every community we serve does not waver, and we will continue to work together with our local authority partners to ensure that everyone can access high-quality, affordable care which meets their needs.”

A Four Seasons spokesperson said: “The ownership of the group has no impact on the day-to-day care of our residents, which remains our first priority. The Four Seasons Health Care Group works with regulators and local authorities to continuously improve ratings and we are pleased to say we have made progress since 2022.”

Runwood Homes commented: “Whilst the majority of our homes are rated as Good or Outstanding, we recognise that a small number of homes within the group fell below the high-quality care and standards that our residents expect. Runwood Homes remains committed to making the necessary improvements to ensure we return those homes to the minimum standard of Good or above. We will continue to work closely with regulators and local authorities on agreed actions plans to ensure ongoing service improvements are made and sustained.”