Estia risks funding cuts over Melbourne aged care home COVID-19 outbreaks

COVID-19 outbreaks at two of Estia’s nursing homes in Melbourne risk costing it its commonwealth subsidies.

The Estia Health aged care facility at in Melbourne has been at the centre of a major outbreak in the city. Picture: Getty Images

Listed aged care provider Estia risks having its commonwealth funding revoked after it was served a “notice to agree” from the Aged Care Quality and Safety Commission following coronavirus outbreaks at two of its nursing homes in Melbourne, which have been linked to 130 infections.

Under the notice, Estia has been hit with a raft of restrictions, including being barred from admitting residents at nursing homes in Heidelberg West and Ardeer and reporting weekly to the aged care commission.

If it doesn’t comply, it risks having its federal funding withdrawn.

The development comes as Victoria’s coronavirus cases show no signs of reaching a peak, with 554 new infections recorded on Monday. The recent outbreaks have infected nursing homes across the city, killing seven aged residents on Sunday.

Estia confirmed on Monday that it was served the notice to agree (NTA), which sets out actions a provider is required to undertake and the time frames for those actions, to ensure it remains compliant.

Already Estia has secured $5.8m from the federal government to help cover the extra costs of caring for its highly vulnerable residents during the pandemic. But two weeks ago the company said COVID-19 had infected 13 of its residents.

Eighty two COVID-19 infections have now been linked to its outbreak at Heidelberg West and a further 48 in Ardeer.

“The company confirms it has been issued with notices to agree from the Aged Care Quality and Safety Commission in relation to the COVID-19 outbreaks at its homes in Heidelberg West and Ardeer,” Estia said in an ASX announcement on Monday

“The company also confirms that it implemented the requirements within the notices, as agreed with the Aged Care Quality and Safety Commission, relating to the monitoring and management of the COVID-19 outbreaks at its Heidelberg West and Ardeer homes in Melbourne.”

Estia’s share price plummeted 4.4 per cent to $1.51 at noon on Monday, compared with a flat broader share market. Investors of other aged care providers were closely watching developments, with Japara and Regis shedding 2 per cent and 1.4 per cent respectively.

Under the requirements set down in the NTA, Estia must not admit new residents into the two homes until the Victorian Public Health Unit has declared them COVID-19 free. It must also appoint an independent adviser immediately to assist with ensuring the health and wellbeing of residents; and provide daily and weekly reports to the Aged Care and Quality Commission on managing the outbreak.

The NTA comes two weeks after the company issued a series of ASX notices – the first one saying that only two of its staff in Melbourne had tested COVID-19 positive but no residents were affected. That quickly changed to say that 13 elderly residents had tested positive.

Estia also announced a writedown of up to $148m.

“At this stage it is not possible to quantify the full financial impact on the Company arising from the rapidly evolving COVID-19 situation in Victoria,” Estia said on Monday.

The NSW Nurses and Midwives Association cautioned at the start of the pandemic about the virus spreading into aged-care homes, given the sector’s highly vulnerable resident population and lack of nursing and trained infection control staff.

As COVID-19 continues to quickly spread across Melbourne, concerns have been mounting about the city’s vulnerable aged care population, particularly given the sector’s reliance on casual employees.

Estia said that the two staff that initially tested positive for COVID-19 worked across three of its nursing homes. But it was quick to highlight that both those employees didn’t work while showing symptoms of the illness.

However, health authorities across the world are facing a battle given the number of asymptomatic COVID-19 spreaders, which makes the virus much harder to fight.

“At both homes, we continue to work closely with the Victorian Public Health Unit, the Commonwealth Department of Health as well as the Aged Care Quality and Safety Commission to manage and monitor residents’ and employees’ health, safety and wellbeing, including following guidelines and directions on restrictions on employees; hospital transfers of residents on a case-by-case basis; and the process for ongoing regular testing.

“This is a very challenging time for our residents and their families. We have added extra support so that families are regularly updated about their loved ones, including those residents that have been transferred to hospital. We are providing daily updates to family members on their comfort and condition; and families can access a dedicated support line for the home.”

Estia expects to release its FY20 full year results on August 18.