The Department of Health and Aged Care has released new details of Financial and Prudential Standards, which are still open for consultation but due to take effect from 1 July 2025.
A webinar hosted by the new Aged Care Quality and Safety Commissioner Liz Hefren-Webb, providing details of the three new Financial and Prudential standards, who they apply to, and how they will work, had 6,000 registered attendees.
The proposed new Standards are:
- The Financial and Prudential Management Standard: will apply to all non-government residential and home care service providers
- The Investment Standard: will apply to all non-government residential providers
- The Liquidity Standard: will apply to all non-government residential providers
One of the key details are the new minimum liquidity ratios as part of the Liquidity Standard: 35% of cash expenses for all residential aged care providers plus 10% of refundable deposit liabilities for providers with refundable deposits.
The "35 and 10 threshold", as they were referred to in the webinar, were raised at the end of the session by an attendee who said their organisation will not be able to meet the liquidity thresholds on 1 July 2025. "What will happen to me?" they asked.
Elly Osborne, Director Compliance and Proactive Monitoring with the ACQSC, said in such situations "we will work with providers".
The ACQSC will work with providers to understand the strategies they can use that gives them the financial capacity to manage risks, and they will seek evidence of those arrangements. In these situations, the ACQSC might put conditions on the provider's registration to ensure they report any changes to those arrangements.
The regulator also expects "the provider to work with us to show evidence of their plan to meet the regulatory requirements of that new liquidity threshold."
"Where there are concerns that a provider isn't meeting its regulatory requirements, we'll contact them directly and providers who disregard or aren't interested in managing risk and achieving compliance will be subject to compliance action," Elly said.
The Royal Commission into Aged Care Quality and Safety found that the delivery of safe, quality care requires providers to manage a range of risks, including financial risks. In response to those findings, responsibility for regulation and monitoring of prudential standards was transferred from the Department of Health and Aged Care to the ACQSC.
The aim of the new Financial and Prudential Standards is to enable the ACQSC to intervene earlier when they see signs of emerging financial problems that, if left untreated, could impact quality and safety of care delivery.
Information about the new Standards is available here.
Read about consultation on the changes here.
