On 22 August 2007, the Department of Health and Ageing announced it had imposed sanctions on the approved provider of Belvedere Park Nursing Home. This case is important for operators and financiers to understand as it demonstrates the speed with which the Department of Health and Ageing can act against an approved provider.
The effects of the sanctions against Belvedere Park Nursing Home are that:
approved provider status is revoked
the Commonwealth ceased paying aged care subsidies to the approved provider effective 23 August 2007
the approved provider could not receive new resident subsidies or bonds.
Belvedere Park Nursing Home is located in Sydenham, Victoria and operates as a 30 bed, high care, facility.
A review audit conducted by the Aged Care Standards and Accredited Agency (Agency) between 6 and 10 August 2007 found Belvedere Park Nursing Home failed to meet 42 of 44 expected care outcomes. This level of non-compliance was unprecedented in the history of accreditation. The Agency also assessed that there was a serious risk to residents of Belvedere Park Nursing Home.
The Department considered the non-compliance at Belvedere Park Nursing Home was widespread, deeply-rooted and intractable. On the basis that there had been a fundamental breakdown in systems and care delivery, the Department considered residents would be exposed to an unacceptable level of risk if the approved provider were allowed to continue its business.
Less than a fortnight following the review audit by the Agency, the Department of Health and Ageing imposed sanctions and revoked the approved provider's eligibility to operate Belvedere Park Nursing Home.
The sanctions that are operative from 23 August 2007, in effect, render the business of the operator at an end. It is understood the approved provider made an urgent application to suspend the effect of the orders and was successful to some degree.
To a lender, the allocated places held by the approved provider, are likely to form a significant part of their security in terms of receiving subsidies and bonds. In this case, that security is rendered, effectively, valueless.
The Department has shown that it can and will act swiftly against approved providers if it considers there is no other option to protect the health, safety and well-being of residents.
Lessons for approved providers and financiers
Several lessons may be drawn from this case:
approved providers must ensure they are meeting their responsibilities under the Aged Care Act and the Aged Care Principles
where compliance issues exist, they should not be ignored. Approved providers should demonstrate that steps are being taken to remedy any non-compliance. In some cases, it may be appropriate to begin a clear and active dialogue with the Department of Health and Ageing to avoid such action
approved providers providing residential aged care through third party management arrangements or joint ventures should have systems in place to monitor their manager's/joint venture partner's compliance with the Aged Care Act and Aged Care Principles, and, to take control of their facility if compliance issues arise
an approved provider, needs to act swiftly to seek orders from the Courts to suspend the operation of such sanctions
financiers operating within the industry should monitor their clients closely to ensure compliance issues do not go unnoticed. Generally, your ability as a financier to monitor compliance will largely depend upon the terms of your lending documentation.
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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