Last week, Fronditha Care released its latest annual report, highlighting the organisation’s milestones for 2019 – 2020 but also recorded a $6.5 million deficit.

Despite having come out relatively unscathed from COVID-19 in terms of loss of lives, the organisation’s finances have taken a blow as is the case of 64 per cent of Australian aged care providers that have recorded deficits for the last financial year. While there has been a loss in funds, the administration points to “significant investments to safeguard our elders” and this paid off at Fronditha which recorded cases but managed to suppress an outbreak as noted in other nursing homes.

Fronditha’s management points to depreciation as a cause for the loss with the value of the not-for-profit group’s assets having decreased in line with the economic environment created in Victoria by the pandemic.

Michael Malakonas, the CEO of the organisation, who took over the management of the group in October 2019, said profits of previous years had been channeled towards the expansion of the organisation’s services.

“We don’t have shareholders and each member of our Board of Directors is a volunteer. The current Board is made up of professionals with substantial experience in various sectors such as physical and mental health, finance and law. Acting in good faith with the Executive team, we continue to offer services to the most vulnerable members of our community,” Mr Malakonas said.

“Since 2017, the Board and Executive teams proceeded with a series of investments to expand Fronditha Care. Consequently, we have recorded a deficit that has not affected our operations. We rebuilt our residential care home in Clayton, where we now care for up to 150 elders. We delivered our community centre in Mulgrave that under different circumstances, would have had thousands of community members and community organisations visit. We purchased our Support Hub premises to bring our corporate staff under one roof to facilitate better communication and collaboration. And let’s not forget the new 92-bed Thalpori care home in St Albans, which will be completed in 2021, and will increase our capacity in the western suburbs by 30 beds. Currently, this project is 50 per cent complete.
“Along with other infrastructure investments, our capital works have cost us more than $30 million, financed by previous surpluses. We haven’t resorted to borrowing, and the government does not provide funding for the construction of new residential care homes. It’s a staggering amount that was required to put us in good stead to meet the already increasing needs of our community. It is noteworthy that with the completion of our new residential care home in Clayton in June 2019 and the addition of 49 beds, this residence is now full with a waiting list.”

READ MORE: My Life in Lockdown: Fronditha Care CEO Michael Malakonas

Bearing in mind the considerable investments made and the philanthropic nature of Fronditha Care, Mr Malakonas said the focus was on “identifying needs to support more people” hence “it would not make sense” if it had made a surplus in the current period. This line is nothing new, says the CEO. “This is what we have been doing since 1983, when we opened our first residential care home, in our attempt to support more elders with the respect and dignity they deserve,” Mr. Malakonas told Neos Kosmos.

The Annual Report highlights that in the past financial year alone, 25 per cent more elders opted for Fronditha Care services. The demand for Home Care services increased by 39 per cent, and now the organisation serves more than 1100 elders each week through its suite of services.  More than 680 people work for the organisation with 80 per cent being permanent staff members. According to the annual employee survey, 90 per cent of staff are happy to work for Fronditha Care.
Another contributing factor to the deficit was the pandemic and the subsequent measures that Fronditha Care took to protect its people.

“Fronditha Care started preparing for potential enterprise risks like a pandemic since January. Along with the Board, we developed an Enterprise Risk Management capacity, which enabled us to implement appropriate policies to protect our family. The development of this capacity has received recognition by aged care industry peak bodies, with the DHHS requesting our assistance during the pandemic due to our knowledge and expertise,” Mr Malakonas said.

“I want to be clear that we have not hesitated to make the necessary expenditure to protect our people during the pandemic. Only in the last five months of the previous financial year, we spent close to $1 million on COVID-19 related expenses. And this does not only encompass Personal Protective Equipment (PPE).

“We made the difficult decision to move into voluntary lockdown in all of our residential care homes, with visitation not permitted. We diverted more resources to our residential care homes, for staffing and increasing the amount of shifts. We enhanced lifestyle and activity programs, with more carers supporting our residents 24/7. We also bought equipment to facilitate communication between our residents and their families. At the same time, admissions were limited due to COVID-19 and the increasing attention on the issues facing residential aged care homes at the time.”

Despite loss of funds, Mr Malakonas points to the successes which Fronditha noted over the last year. “Let’s not forget that more than 800 people died from COVID-19 in Victoria. We also recorded cases at Fronditha Care, but we suppressed any outbreak because of the immediate implementation of our outbreak management plan, which we had developed prior to any outbreak. Our Board recommended the use of masks before this became a DHHS directive, and we generally followed a rigorous approach. This virus though, is unpredictable and we don’t know what each day may bring but thus far, our significant investments to safeguard our elders has paid off. On the scale of life versus profit, Fronditha Care has always tipped the scales on the side of life. Let me reiterate, we are a not-for-profit philanthropic organisation. We are for people, not profit.”

There were 12 audits conducted by state and federal government bodies to assess Fronditha Care’s COVID-19 preparedness and services over the last financial year and the group consistently met all outcomes. Auditor Grant Thornton, a group with an international presence and reputation for being thorough, conducted financial audits.

As families of other aged care providers complained of “secrecy”, Fronditha Care has been acknowledged for its open communication with families and the media. According to an internal consumer survey, 86 per cent of residents’ families and representatives, approved of the measures implemented to protect elders.

Professor Eugenia Pedagogos

Mr Malakonas clarified that the organisation has sought to preserve the relationship of trust that it has built over a number of years with the community. Despite the setbacks caused by the pandemic, Mr Malakonas is optimistic regarding the group’s future and says it will continue to grow its services to meet the community’s needs.

“The $6.5 million deficit is manageable. As our President, Prof. Eugenia Pedagogos, stated in the annual report, appropriate strategies have been implemented for us to anticipate a return to profitability in the next two year period. Our return to surplus is also dependent on help from the community. Donations and bequests can help us bounce back faster and enable us to make necessary investments. The more donations we receive, the more support we can provide.
Fronditha Care will continue to be a robust organisation that will provide residential and community care services for many more decades to come.”

Fronditha Care’s AGM will be held on 26 November. The organisation’s members will have the opportunity to pose questions regarding FY2019-2020 and participate in the elections for the Board of Directors. We update you in due course of the outcome. Fronditha Care’s financial statements are available at https://frondithacare.org.au/financialstatements