Aged care providers will be able to meet new liquidity standards by demonstrating to the Aged Care Quality and Safety Commission (ACQSC) that they have robust liquidity management processes in place, rather than adhering to a strict financial ratio, according to a member alert from Ageing Australia, the peak body for aged care providers.
The ACQSC has yet to confirm the final liquidity ratios, which, when first released for consultation in February, unexpectedly required residential aged care operators with independent living units (ILUs) and retirement village operators to retain 10% of refundable amounts from ILU and village residents starting 1 July this year.
Following consultations with the aged care and retirement living sectors, which Aged Care Quality and Safety Commissioner Liz Hefren-Webb described as "robust", the ACQSC has now said there are two ways providers can demonstrate compliance with the liquidity standards:
- apply a formula or
- give the ACQSC assurances about liquidity management.
The update follows a report by the Weekly SOURCE on Tuesday that the required liquid funds for residential aged care providers with ILUs and retirement villages has been reduced to 2% of refundable amounts – down from the originally proposed 10%.
Grant Simpson, CEO of Not For Profit aged care provider NoosaCare, which has two aged care homes on Queensland's Sunshine Coast, told The Weekly SOURCE, "We welcomed the latest response regarding liquidity ratios.
"The option for providers to either apply a formula to assess liquidity or submit their own liquidity policy and strategy is a much more flexible and reasonable approach than the initially proposed fixed percentage compliance model.
"This adaptability is crucial for diverse providers operating under varying financial circumstances."
Ageing Australia wrote to provider members saying, "Ageing Australia welcomes this clarification, as it addresses concerns we raised with the Commission on behalf of members."
The ACQSC is expected to issue a report on the liquidity ratio consultations next month.
