|Private Equity: Simple as ABC?|
|Saturday, 13 December 2008 20:54 | Print page:|
Australia must learn the lessons resulting from the collapse of the private-for-profit ABC Learning centres.
It is obvious to Aged Care Crisis that the farming out of human care services as a profit-making activity, whether it is of the very young or the very old, is simply asking for trouble. And we have just seen that trouble with the collapse of the ABC Learning Centres.
How long, in the current economic environment, will it be before a large private-for-profit aged-care corporation fails? And what happens to the vulnerable frail residents when that happens?
The effects are two-fold. A large proportion of government funds are funnelled into private-for-profit aged care every year. When such a crucial service as this fails tax payers who have to pay even more to bail them out.
"...After all, do we really need our public taxes to be subsidizing Macquarie Bank?..."
The Minister stated in a media release on 4th December 2008 that:
"...Over the next four years, the Australian Government will invest more than $41.6 billion into aged and community care. The Australian Government provides on average $41,500 a year a resident in subsidies..."
We pass over tax-payer funds to corporates and then watch them create huge facilities in order to cut costs and then see the inevitable cutting back on staff. And there is hardly a protest. And it is not only that it is risky business - it is also immoral. Caring for people who are at the end stages of life is a community responsibility. It should not be a means of creating profits for the shareholders of big corporations.
"...If you are planning to retire or are reviewing nursing homes for an aged relative, the chances are the retirement village or nursing home is owned - or will be owned - by a private equity group. As we have heard often enough, be alert but not alarmed for some parts of the aged care sector in this country is now in the hands of the large private equity groups: Macquarie Capital Alliance Group or MCAG, Babcock and Brown, ANZ Capital, AMP Capital, CVC Citigroup and others..."
It is not only the fact that the management company of the facility might withdraw its services at any time, it is undoubtedly true that the ethos, the policies and practices of the ownership entity have significant impact on the actual running of the facility by the management company.
A recent example of this was where legal firm Slater & Gordon were retained by the representatives of some of the former residents of Lifecare's dementia aged care facility in Carrara, Queensland. Lifecare was operated by Lifestyle Care Providers Pty Ltd, one of four companies which collapsed as a result of insolvency. As a result of this collapse, residents and their family members were forced into finding alternative accommodation.
After some months waiting for bonds to be repaid, the resident's family members became concerned that Lifecare had dissipated their bonds and would be unable to refund the bond amount as a result of insolvency. These bond deposits represented a significant proportion of the resident's life savings and were desperately required for the purposes of securing entry into their new aged care facilities.
There are variable issues which arose as a result of this case, and can be fully explored in Slater & Gordon's article Accommodation Bonds. Are they protected?
Aged Care Crisis is firmly of the view that every frail Australian should receive high quality care. We believe that when the main purpose of the aged-care project is to achieve profits for shareholders then the pressures associated with cost cutting drives many of those staff who seek to provide humanitarian and personal empathetic care out of the sector
"...The timing of when Lifecare became an approved provider appears to have created an artificial distinction that is not easily reconciled with the underlying intent and purpose of the Bond Security Act Having disputed this interpretation with the Department we are hopeful that legislative changes will be made. We have since been advised by the Department that it will re-examine the operation of the Act following the Lifecare Case..."