The advisory firm has issued an “Urgent Call for Action” to the Government to immediately implement four recommendations to avert widespread insolvencies, closures and displacement of residents as the coronavirus pandemic bites into the $30 billion of Refundable Accommodation Deposits held by the sector.
I spoke to Ansell’s Managing Director Cam Ansell (pictured inset) who described the current situation as a “time bomb”.
Cam says the drop in residential occupancy has been a growing problem, but the coronavirus crisis will accelerate the risk to providers immediately.
Based on the overseas experience – where Government relief packages for operators have been slow to be delivered, older, less seriously ill people with COVID-19 have been triaged to aged care homes and Personal Protective Equipment (PPE) has been diverted to hospitals – Cam says many new residents will be being discharged from hospital or on respite – rather than paying residents – with even long-term residents unlikely to be able to sell the family home to fund a RAD.
If providers must keep paying out RADs – on top of the existing financial pressure in the sector – Cam says they will be unable to meet their operating costs and be forced to close their doors (see graph at the top).
Cam points out that while the government will refund the money to the family, this takes time – undermining confidence in the system.
The fact is many operators are already on the verge of closure or lack the liquidity to face this kind of crisis.
Cam says if the Government does not respond, it is not just the sector going under – “It’s the capacity for us to be able to look after our parents”.
Ansell have made four recommendations they say must take place “immediately” to prevent this happening in Australia:
- The Government must make available temporary facilities to Providers that are unable to refund RADs (Bond Guarantee Scheme) during the pandemic;
- The onerous subsidy claiming process (Aged Care Funding Instrument (ACFI) should be suspended and all residents should be provided with the highest funding level to support higher staffing levels and operating costs, initially for the June 2020 quarter;
- Commission Audits should cease in line with international strategies and support must be provided to address immediate resident needs and infection control protocols; and
- An Aged Care Emergency Response Taskforce should be convened to ensure the swift and adequate allocation of resources to the sector, and the coordination of services between the hospitals and aged care.
To make their point, Ansell has developed a timeline for the phases of the virus in residential aged care in Australia, forecasting community transmission will grow throughout March, April and May before the virus reaches its peak infection rate in May to August.
They only see the recovery and consolidation from the crisis beginning in September/October – the six months also touted by Prime Minister Scott Morrison.
Will the Government take up the recommendations? Time will tell – Cam says advanced copies were provided to the Department of Health last week so they are aware of the risk and exposure.
Ansell have also suggested some tactical actions that providers can take during these phases that you may find useful.
You can download the report here.
