New funding models shifts burden to aged care providers
Partner and leader of the Deloitte Senior Livings Group, Tapan Pareh, has warned the sector of the challenges of the new Aged Care Financing Authority. His two major points relate to provider uncertainty. The first is that the resident will have 28...
Partner and leader of the Deloitte Senior Livings Group, Tapan Pareh, has warned the sector of the challenges of the new Aged Care Financing Authority. His two major points relate to provider uncertainty.
The first is that the resident will have 28 days to decide whether they will make a lump sum payment (i.e. a bond and now known as a Refundable Accommodation Deposits -RADs) or alternatively make a Daily Accommodation Payment (DAPs). Tapan points out the provider in effect loses control of their business because they will not know whether one bond paying client is going to be replaced by another bond paying client or instead a daily fee paying client and they wont know this for up to 28 days after they become a resident.
The second is the return that the accommodation deposit is going to make. When interest rates are low the admissible return will be low. Tapan states the maximum the accommodation deposit looking forward will achieve at best 6% interest return compared to up to 9% currently [i.e. one third less].
The new system is expected to be operational within 12 months, with providers expected to have self-assessment processes in place regarding the quality of each bed in each facility before April 1, 2014. Of course there is an election in between.
