Inside our rest homes: Financial problems lead to termination of contract

Brien Cree, managing director of Radius Care. Photo / Sarah Ivey

A rest home company which was overcharging some residents is about to have its district health board contract terminated.

Ideal Nurses, the operator of the Seaview Retirement Park near Whangarei Harbour, was deemed by the Northland DHB to be struggling under poor financial management and this was considered a risk for residents.

Radius Care, New Zealand's fifth-largest aged residential care operator, sold the business to Ideal in 2011.

The DHB in August appointed Radius as a temporary manager until the contract with Ideal ends next Friday.

Radius is understood to be considering buying the business back.

The 35-bed home was only half-full earlier this month and a number of staff had been made redundant.

Neil Beney, the DHB's manager for the health of older people, said the care provided at the home was of a very high standard and it was expected the change of provider "should be fairly seamless for residents".

"They were very well-staffed, probably above the industry norms, which is why we have never had any concerns about the quality of care.

"The redundancies ... are well within the range we would expect, so we don't have any concerns around that."

The DHB's concerns centred on poor financial management, cash-flow problems and the potential risk that these posed to residents, Mr Beney said. Some suppliers of food and medicines had threatened to cease deliveries to Seaview.

Ideal's marketing manager, Yves Flores, said this threat had receded after "we managed to pay some of the money".

Mr Flores said the over-charging of private-paying permanent residents did not involve a substantial amount of money and he was unable to say whether it would be repaid. It occurred by mistake when an Ideal employee charged some residents the full 15 per cent GST rather than the rate of around 12 per cent meant to be levied on permanent residents paying their own fees at Seaview.

This would have equated to around $3 each day per resident.

The Nurses Organisation said there had been problems with the KiwiSaver and student loan payments of Seaview employees.

Mr Flores said two staff in succession had "messed up" employees' pay, including overpayments of several thousand dollars that had not been recovered.

Radius Care's managing director, Brien Cree, said, when asked if his company wanted to buy the Seaview business, "It's not our choice. We are put there by the DHB on their behalf."