Aged care business falls into administration after being struck by government sanction

Two aged care centres are up for sale after the parent company of the two businesses was placed in administration, months after the company was given a sanction relating to non-compliance.

The administration goes against the trend of a booming aged care sector, with aged care enjoying significant gains due to the ageing population.

Nepean Hospitals was placed in administration in February, with Stephen Dixon and Andrew Hewitt of Grant Thornton appointed. The business operates two aged care centres: one 46-bed operation in Bendigo, Victoria, and another 125-bed facility in Mount Martha, Victoria.

While the business was placed in administration in February, it was handed a sanction by the federal Department of Health and Ageing over non-compliance issues.

Specifically, the sanction notice available on the department’s website states the company failed to comply with Prudential Standards relating to the business, particularly records standards which require the business to keep a register in relation to accommodation bonds.

The business was also cited to have failed in its responsibility to comply with a rule which mandates providing care recipients with information in relation to bonds.

The term “bond” refers to the formation of a financial agreement with a new resident.

A department spokesperson told SmartCompany that, while not referring specifically to the administration of Nepean Hospitals, a sanction usually prohibits a facility from accepting any government compensation for new residents.

On the Nepean Hospitals sanction notice, it says the company is prohibited from charging new accommodation bonds.

While the business is free to continue doing so legally, it will not receive government compensation for any new bonds. Few aged care facilities have enough cash to do so without government assistance.

The sanction was imposed on October 12, 2012, and was set to last until June 11, 2013.

Both administrators were contacted by SmartCompany this morning, but neither was available prior to publication. The two businesses are now up for sale.

Entrepreneurs in the aged care sector are seeing significant opportunity. Last December, the Victorian Croft family won huge gains after its business, Innovative Care, was purchased by Bupa in a deal worth over $100 million.