Beyond the Bust

The Maurice Zeffert Home is a Perth Jewish community icon.  There is no question that this is an exceptional community facility, and that for decades the home has been testament to the self-sufficient nature of the Perth Jewish community to deliver itself world class infrastructure that is consistantly the envy of larger communities.

There is nothing I would like to do more other than commend the Home and its administration on the exceptional care that its residents enjoy.  Notwithstanding the current administrative difficulties of the home, few would argue that the residents care is the first and formost objective of the home.  This has continued to be delivered to a high standard and has not been called into question.

However the current financial problems cannot be glossed over, and there needs to be a little honesty applied to the sad state of affairs that have led to what is now the MZH survial appeal.  Community discussion has been rampant over the past couple of weeks as large advertisements, multiple copies of glossy mailouts, and a message of crisis has been disseminated through the community. 

No doubt the Governing body of the home is between a rock and a hard place.  They have to do something, and  are in a position that leaves them damned if they do draw attention to the reality of operating losses, and damned even more if they don’t attempt to arrest the financial leakage.  They have done the right thing by launching an appeal.  They have done the right thing by disclosing their ongoing losses so publically.  Perhaps though, they have not gone one step further to demonstrate how it is that these losses will now be controlled and reduced to the point of cost recovery.

It is a sad reality that all forms of aged care, and in fact many community and not for profit organisations all over Australia will find it difficult to remain financially stable in the months and perhaps years ahead due to the economic decline.  For the past decade many organisations (and individuals) have been dining out on high investment terms.  They have increased recurring expenditure, invested in new infrastructure, but at the same time have not provisioned for a potential decline in operating revenue . The economic bubble had to burst, and has left many unprepared.  That the MZH is a victim of this is quite understandable.

What is harder to decipher though, is that during a time of economic prosperity, the MZH has sustained continued operating losses of at least $1.2 million per annum.  They claim to have posted operating losses of $7.7 million between 2004 and 2009.  The questions are many.  Why have the administration allowed this situation to be sustained for so long?  Why has further capital development work been undertaken during a period of debt accumulation?  How many additional residents can be accommodated as a result of the new special care wing, and over what period of time was it envisioned that the cost could be recovered?  Why were new grand development plans promoted last year if the ongoing day to day liquidity of the organisation was reeling from five years of expenditure blowout?

There have also been elements of the MZH management and PR that have left many people bitterly dissapointed.  For example, the home seems not to miss an opportunity to claim that it is burdened by the “extra costs” of maintaining kosher facilities.  Being kosher should be a matter of pride, but unfortunately for the MZH publicists it is a matter of reluctance, a clear message that we do this because we have to, not because we want to.

Like so many voluntary community facilities, the home is ultimately accountable to a group of volunteers.  Invariably, our community boards are groups of well intentioned and over-burdened people who step up when too few other people around them are prepared to do so.  The voluntary contributions of any community member should never be disparaged or dismissed, and should always be received with gratitude. 

But the days of volunteerism are however sadly drawing to an end.  In order for a commercial organisation with a large number of staff, be it an aged care home, school, Synagogue, sports club, charity, or community centre, to run in an accountable manner professional and technically trained people are needed in both the management and governance structures of the organisation.  They have to cut the cloth to fit the budget, and balance supply and demand in such a way as to secure the longevity of their service provision.

In the case of the MZH, no mention has been made through their communications as to what happens now.  Perhaps the appointed management of the home will be set KPI’s to either manage the facility within budget, or lose their job?  Perhaps this should have already happened?  No indications have been made as to where budget changes will now be made in order to either cut costs, increase operating revenue, or both.  No indications have been made as to whether  the Governing structure of the board will be reviewed to bring in professional expertise in the area of aged care management. 

Certainly the PR of the home needs urgent review.  It is a hypocritical message to manage a survival appeal with an excess of expenditure, including an obviously expensive photographic montage of all residents, and multiple advertisements.  Also, if there is no suggestion that the home is about to close its doors, as claimed by the advertisement then the appeal is not so much about survival as it is about sustainability. 

Retirement living is important, but is not the number one priority organisation for a Jewish community.  An aged care organisation should not represent an opportunity cost to a Jewish community by delivering costly to maintain capital assets at the expense of other critical needs.  However in the case of Perth the MZH is a rare icon to Jewish community life.   The MZH is a much loved institution which makes an important statement about what this community delivers to its members.  For this reason, if no other, the home deserves our full support at this time of need.  

I sincerely hope the appeal meets its objectives.  I also hope that at the same time, the home will use this opportunity to find a way of changing its organisational culture, management structure and governance structure to sure up a future whereby continual significant operating losses are not incurred.  This way the current financial stress would not inevitably recur. 

Our seniors have built this community including all its facilities.  It has delivered these, the MZH included, to future generations as a legacy.  The focus of the middle generation should be to make sure that affordable and well managed business operations allow our institutions to continue to operate, through both good economic times and bad.