Almost 200 aged care providers at ‘high levels of financial distress’

Paul Hayes

12/11/2019 1:48:22 PM

New research from Australia’s peak national body for aged care providers has identified an alarming risk of economic collapse for 197 centres.

Empty purse
Leading Age Services Australia is calling for an additional $1.3 billion in aged care funding before the end of the year.

The care of up to 50,000 aged care residents could be at risk without an additional $1.3 billion in federal funding before the end of the year, according to Leading Age Services Australia (LASA).
‘The scale of this risk is alarming for residents and their families, as well as stressed staff, financially stretched providers and the Government,’ LASA Chief Executive Sean Rooney said in a statement.
LASA accounting professionals reviewed the latest de-identified data from the Federal Government’s 2017–18 Aged Care Financial Reports, revealing ‘a concerning liquidity ratio result for 197 providers’.
‘That is, for these providers, current liabilities – excluding refundable accommodation deposits – were greater than their current assets,’ LASA reported.
‘These new figures reveal the dire situation facing many services and LASA is calling for $1.3 billion in additional operational funding before Christmas,’ Mr Rooney said.
‘We are also calling for a structural adjustment program to avoid the risk of unplanned closures of distressed services, while maintaining continuity of care for residents.
‘We believe this is particularly critical for regional and remote providers, with the latest evidence given to the aged care royal commission highlighting concerns for country services.’
News of the precarious financial positions comes in the wake of a scathing report on a July shutdown and evacuation at the Earle Haven Retirement Village on the Gold Coast.
Sixty-nine vulnerable male and female residents were left homeless when the centre’s high-care facility was closed due to a dispute between provider People Care and its service subcontractor Help Street Villages.
The dispute ultimately led to the shutdown after Help Street Villages demanded $3.9 million it claimed it was owed.

Lorraine Cook’s husband John was transferred from the Earle Haven Nursing Home following its sudden closure in July. (Image: AAP)

According to the report, a number of ‘hostile confrontations’ occurred between employees of Help Street Villages and People Care during the course of the evacuation.
‘In the most disgraceful of these confrontations, the residents … were caught physically in the middle of heated arguments,’ the report states.
‘We found that Help Street lacked experience in aged care and used this arrangement to enter the sector without having been first assessed by aged care regulators.
‘Additionally, the lack of controls in place to provide oversight of the contract terms and key personnel posed risks to the people living in [Earle Haven].’
It has been reported the evacuation, which came without warning, resulted in husbands and wives of more than six decades being separated, some with only the clothes they were wearing, as well as walkers, dentures and hearing aids being left behind.
Eight of the 69 residents were sent to hospital after the evacuation. Three have since died, one after a fall in the evacuation.
The report, produced by Kate Carnell AO, made 23 recommendations to strengthen federal oversight, including of subcontracting and commercial arrangements. Federal Minister for Aged Care and Senior Australians Richard Colbeck said the Government supports all 23 recommendations.
‘We owe it to the residents and families caught up in this tragedy to do all that we can to prevent situations like Earle Haven occurring again,’ Minister Colbeck said.
‘As I said at the time, this inquiry is about ensuring we understand why the situation occurred, that we do what we can to prevent this type of event in the future, and that those responsible are held to account.’
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