Deloitte has warned that 2012 will be another tough year for the healthcare sector after the number of businesses going into administration grew sharply last year.
With the health sector accounting for 8% of UK GDP, the firm cautioned that the increase in insolvency in 2011 should be no surprise and the market should brace itself for more.
While the failure of Southern Cross was one of the market's biggest stories in 2011, it noted that NHS budget cuts were also starting to bite and would be increasingly be felt this year.
Deloitte found that firms providing care to the elderly were likely to be hardest hit as their margins were being increasingly squeezed from higher costs and lower local authority funding.
Its figures revealed that firms in the sector falling into administration in 2011 increased by 9% from 47 in 2010 to 51.
Rob Harding, restructuring services director at Deloitte, called 2011 a "bleak year for care providers in the UK, in particular providers of care for the elderly".
"Whilst not an insolvency, the high profile failure and breakup of Southern Cross, the country's largest care home operator, was big news and we have seen the failure of a number of smaller operators," he said.
"Given the importance of this sector to the country as a whole, there has been significant political commentary in respect of how to deal with the funding of social care, however, the position remains uncertain - which is of concern to politicians, the industry and broader society alike.
"In regards to the broader healthcare market, whilst not necessarily at the insolvency stage, we are starting to see the knock-on-effect of NHS cuts (15% savings equating to £20bn) across the sector, resulting in increased restructuring activity," he added.
