Care UK, which is owned by Bridgepoint, has been awarded a contract to run all of Suffolk County Council's care homes.
The £60m (€73.8m) deal is part of an outsourcing drive by local authorities as budgets shrink. Earlier this month Leicestershire County Council sold nine care homes for £3.2m to Southend Care. Data from Laing & Buisson reveals that in 1985, local authorities provided 137,200 residential places in nursing homes, compared with 28,800 today.
As part of the deal, more than 1,000 council employees with transfer to Care UK and 16 care homes will close to be replaced by 10 new ones. The contract will last for three and a half years.
Care UK operates 86 care homes, of which 27 were formerly owned by Southern Cross, the care home operator that collapsed last year as a result of its aggressive debt structure.