The aged care system in Australia aims to provide its aging population support either through home assistance or through retirement living in residential aged care. According to the Australian Institute of Health and Welfare, the number of older Australians needing aged care services grew through the years. During the 2019-2020 period alone, over 1 million people received support from Australian aged care facilities.
As the number of admissions in aged care facilities increase so did unpaid invoices. Since Slater Byrne Recoveries opened its doors, we’ve helped several aged care service facilities in the NSW and Victoria areas recover unpaid debts. For one specific client, that amounts to over $600k collected in bad debt. We will discuss this process in more detail below.
Issues in the Aged Care Facility Industry
Operating an aged care facility requires the dedication and full-time commitment of the staff. Our aged care facilities clients are pleased that Slater Byrne are able to take off the pressure off their staff to allow them to focus on what they do best, protect and look after the older people in our community.
By hiring a debt collection agency, they were able to focus on their core operations.
As a background, here are some of the fees that need to be paid when one enters an Aged Care Facility:
Basic Daily Fee. This is paid by everyone and is 85% of the single pension or approximately $53 per day.
Accommodation Cost. This is means-tested so there are three scenarios:
- The Government will cover this cost fully.
- It will be partially subsidised, and the resident pays the rest.
- The resident will need to pay the full amount.
For the third option, the resident can pay weekly, fully purchase a room or a mixture. If they fully purchase the room, this is known as a Refundable Accommodation Deposit (RAD).
As the name suggests it is refundable in that it is returned to the family upon the passing of the resident. Any arrears at the time of passing can also be deducted from the RAD.
Means-Tested Fee. This is determined by what assets you have and can be anywhere to $259 per day and is paid to the government via the Facility. This is where most aged care debts arise as it will often not be paid as the family, or the resident may think the amount is too high.
The family and resident can apply to have the amount reassessed, however it still has to be paid while the reassessment is taking place so the facility will be charged and they then in turn need to collect from the resident or family.
If the reassessment shows that the amount being charged is too high, then a refund is given which is often back dated.
Solutions Used by Slater Byrne
Slater Byrne Recoveries’ aged care facility debt recovery policy is anchored on compassionate treatment of family and debtors. As part of our debt collection process for the aged care facilities, we take all reasonable steps to establish a payment arrangement or negotiate a settlement of the outstanding debt.
However, in the case of recalcitrant debtors, we are not afraid to suggest legal action, especially in the cases of deceased estates where the family may seem to think they no longer have to pay the debt to the Aged Care Facility.
Proof of Slater Byrne policies in helping people get out of debt
This was a recent email received to our firm by a resident of an Aged Care facility.
“Alleluljah! Thank you for the large part you played in this miracle. And also thank Garth please for his patience and gracious way in his dealings with us. It makes a big difference to a sick person how you are treated.”
Over $600k Recovered to date
Using internal data gathered from 2015 up to March 2021, Slater Byrne have been engaged to recover millions of dollars in unpaid fees in the Aged Care sector.
For one of our main Aged Care clients, we have recovered over $600k of bad debt due negotiation and understanding of the process in getting these debts recovered.
Tips to improve debt collection in the aged care facility:
Having worked with aged care facilities since 2015, here are some of the lessons we have learned on how a similar business can improve its debt collection:
- Make sure that all contracts are signed, and the payment procedures are in place before the resident moves in.
- Explore securities to assist with recovering payments, such as RADs or pre-payments, if permissible.
- The contract must also include clauses that deal with late payment or clauses that encourage early payment. Aside from this, the agreement must include a clause that allows caveats to be lodged over real estate the resident may own.
- Agreements must include a clear itemised statement of fees that include all payables and how these fees are calculated.
- Ensure that your documentation is proper. You can use these to support your claim for payment later.
- If the agreement is signed under Power of Attorney, ensure that a copy of the Power of Attorney is obtained and maintained on file.
- Where possible find out who has been appointed Executor of the Estate upon the passing of the resident.
Read two of our case studies for aged care facilities here where, in the first case, Slater Byrne recovered the full amount, plus the costs, and, in the second case, we negotiated a 5-month payment plan for a $100k debt.
You might be interested to read more of our articles:
- 4 Tips To Make Your Customers Pay On Time
- How SBR Uses Debt Negotiation Skills Without Need for Legal Action
- Can you go after the director of the company who owes you money?
- 4 Key Cash Flow Management Tips to Start the Year Right
- Top 10 Debt Collection Articles You Might Have Missed in 2021
Liam White joined the Slater Byrne Recoveries team in early 2013. He has worked across the credit & dispute resolution industry for a number of years. He is currently working in a Marketing/Head of Sales capacity at Slater Byrne Recoveries.