The chief executive of a major aged care provider says the sector is sitting on a $30 billion house of cards, creating a risk that could result in a cashflow crisis. Source: Sydney Morning Herald.
Chris Mamarelis, the chief executive of the Whiddon Group told the Royal Commission into Aged Care Quality and Safety on Monday he was surprised the commission “wasn’t knocking on providers’ doors” and asking to see indications of their "liquidity".
He said the sector faced a “lot of risk” from falling occupancy rates and the loss of refundable accommodation deposits that are paid by some residents.
His comments follow warnings about a continued fall in occupancy as people shied away from aged care because of fears of COVID-19, a drop in refundable deposits and a shift to daily fees that could also limit the ability of banks to lend to the sector.
According to a report by accountancy firm StewartBrown, there are 90,899 refundable deposits and accommodation bonds held by approved providers totalling $27.98 billion.
Under legislation, these are the responsibility of approved providers. But if operators fail, the Commonwealth has responsibility to refund the payment.
Average refundable accommodation deposits – paid by incoming residents – were $427,023 in the nine months to March. That was an increase of $27,567 on the nine months to March 2019.
Mr Mamarelis said that given current perceptions about residential aged care, the ability to replenish these deposits is diminished “and so that risk is becoming more and more real” with the industry sitting on a “$30 billion house of cards”.
Commonwealth health secretary Dr Brendan Murphy confirmed on Friday there had been for a small number of facilities “a significant outflow”, which the department was watching “very closely”. It was also monitoring the financial viability of providers in Victoria.
Residential aged care sitting on a $30 billion house of cards(By Julie Power, Sydney Morning Herald)
Due to an error in the reporting by the source publication, CathNews incorrectly attributed comments to Catholic Health Australia’s Nick Mersiades that were made by Mr Mamarelis.