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Financial implications for retirement communities in a time of crisis






Johannesburg, 7 April 20: Protecting the elderly against COVID-19 infection is a pressing concern for everyone operating senior living communities. The greater susceptibility of seniors to the virus, as well as the many unknowns still surrounding its transmission, make prevention and proper management critical. Exactly what does this involve, and what do operators of such facilities need to know about keeping their residents safe?


According to Barry Kaganson, CEO of Auria Senior Living - which develops and manages senior living communities in South Africa - several operational measures are required to protect the elderly against COVID-19 infection within retirement village environments. “Most of these measures are expensive or potentially financially burdensome. They are also largely unbudgeted expenses. COVID-19 was upon us quickly, and measures need to be implemented with haste,” says Kaganson.


Retirement villages need to be in a strong financial position in order to be able to implement these measures, or else they need to have the finances readily available. Immediate costs include: hand sanitiser; masks; overtime pay for staff; the accommodation of staff onsite or nearby to minimise commuting (which increases risk of infection); furniture, linen, toiletries and other items for staff being accommodated; incentives and bonuses for staff to compensate them for the more stringent working conditions and higher risks; protective clothing and equipment for care workers; and extra cleaning of high-touch areas.


Auria Senior Living has already seen the cost impact first-hand. “In response to the COVID-19 crisis, we procured over 500 litres of hand sanitiser; several thousand face masks and N95 masks; protective clothing for care staff, and 400 flu vaccines. We’ve also arranged accommodation for over 100 staff members, either on site, in rented apartments or in rented guest houses close to work. These staff also require meals, toiletries etc which we have supplied.  This spend already totals millions of rands,” says Kaganson.


The professional management of retirement facilities is vital, given that the current scenario presents numerous operational challenges. Many measures need to be implemented immediately, including: additional security protocols for access control; additional nursing protocols for infection control (including enforcing social distancing); the additional cleaning required to high-touch areas (which may require additional staff and consumables); temperature monitoring, which must take place twice daily in care centres; and staff training for all of the above. Further critical factors are the ability to enforce quarantine and provide services to those in isolation, and the ability to continue providing essential services under ‘lockdown’.


Additionally, operators must be able to reassure residents regarding the situation and continue to provide them with opportunities for exercise, socialisation, intellectual stimulation and other activities whilst they are isolated within their homes or within their retirement community. Staff need to be available at all times to assist with the activities of daily living as well as with emotional and psycho-social support. Clear and regular communication to residents and staff is imperative to ensure that everyone is aware of the measures put in place, and to provide ongoing reassurance and support.


“All of these emergency measures need to be put in place in a matter of days, if not hours,” says Kaganson. “Decisions need to be made quickly and funds need to be readily available, because when supplies run short, suppliers require cash-on-delivery payments.”


This points to the importance of having a good management structure in place, together with a ‘war chest’ of funds for times such as this. It isn’t business as usual, and the ability to act quickly and be flexible could save lives. Management resources need to be made available to support staff to carry out their duties – which can be difficult in cases where certain services are outsourced.


The two most common models for retirement living are sectional title residential and life rights communities. In a sectional title estate, the body corporate is responsible for making decisions, and its agents or appointees for carrying them out. It is questionable whether a body corporate of aged residents would be able to act expeditiously. “In a life rights scenario, the operator is not only financially incentivised in the long term to deliver the best outcome for their residents, but they also have the management capacity to facilitate the steps required for the protection of residents,” says Kaganson, which makes this the preferable option.


Where the finances come from to fund these additional measures is another question. Non-profit organisations generally do not have readily available cash in the short term. Even sectional title complexes do not always have large reserves, and a situation like the outbreak of COVID-19 leaves no time to raise special levies. The best available option is to keep a slush fund for such emergencies.


“At Auria, we simply make a decision to fund such necessities out of our reserves,” says Kaganson. “These are non-budgeted items, yet they are vital for us to afford our residents the protection they need. This may put upward pressure on levies in future (across the board) as retirement villages build up reserves for such eventualities. These weren’t necessarily contemplated in the past, and essentially could represent a new risk which needs to be kept in mind,” concludes Kaganson.

Source: Mantis Communications - Kerry Simpson
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