Ansell Strategic warns of “imminent” collapse of residential aged care homes – $9 billion in RADs at risk over next 9 months

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The advisory firm has researched the international aged care sector experience with COVID-19 and modelled what Australia can expect across the four stages of the pandemic, producing a nine-page document which it is sharing with the sector HERE.

We are currently in Stage 2, with Stage 3 being the peak (May to August) and then the Stage 4 running to November.

Ansell’s “Urgent Call for Action” to the Government, is seeking to avert widespread insolvencies, closures and displacement of residents.

Our read of the paper identifies three major points.

First, the burdensome regulatory ‘paperwork’, at a time of reduced staffing levels and heightened stress for floor staff, jeoprodises quality of care and ability to maintain staff levels.

Second, vacant beds are going to be taken up by low need hospital patients being triaged to aged care facilities, respite will increase, taking up more beds with less optimal cash revenue, and workloads will increase as palliative services increase.

Third, RADs will be severely hit as new residents can’t sell the family home in a depressed residential market and at the same time operators will be forced by regulations to pay out departing RADs – with Ansell modelling a net $9 billion over the next nine months going out the door – or $37 million a day.

We spoke with Ansell’s Managing Director Cam Ansell who described the current situation as a “time bomb”.

Cam says the drop of lower residential occupancy has been a growing problem, but the coronavirus crisis will accelerate the risk to providers immediately.

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.

The graph above indicates insolvencies on scale commencing in May.

Ansell have made four recommendations they say must take place “immediately” to prevent this happening in Australia:

1. The Government must make available temporary facilities to Providers that are unable to refund RADs (Bond Guarantee Scheme) during the pandemic;

2. 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;

3. Commission Audits should cease in line with international strategies and support must be provided to address immediate resident needs and infection control protocols; and

4. 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.

They only see the recovery and consolidation from the crisis beginning in September/October – the six months also touted by Prime Minister Scott Morrison.

Ansell have also put forward tactical actions that providers can take during these phases that you may find useful.

You can download it HERE.

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