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MZH confronts a new future

The major institutions of the Perth Jewish community are its Shules, Carmel School and the Maurice Zeffert Home (MZH).  The latter is the second largest organisation in the community in terms of equity, turnover and number of staff.  As a provider of aged care to the community it is a critically important facility.  The MZH has 50 years of history behind it, and has delivered outstanding care to the elderly Jewish people of Perth, for a population that would span the majority of families within the community at one stage or another.

Today much frustration came to a head at an Annual General Meeting of the MZH.  Unfortunately the meeting was as bad as it could possibly have been.  There were a large number of people present, about 350 voting members and a number of non-member observers.  A number of issues were raised, briefly summarised as follows:

* Development plans – the ability of the MZH to obtain funding approval from a financial institution for project bridging finance irrespective of development approval

* Standard of Care – comments regarding the quality of residents care and the board response to residents, families, and medical professionals.

* Financial position – including the status and use of bond deposits

* Accreditation – citing of audit issues and resolution

* Staffing – removal of qualified registered nursing staff in an environment where qualified staff are hard to source, and use of agency staff in place of permanent staff. Also community development staffing costs which had overheads disproportionate to their capacity to source donor funds.

It was sad and unnecessary for the meeting to descend into a lynch mob and for politicking regarding the election of a new President to be so personally vindictive.  There was also no excuse to get nasty or disrespectful to the previous administration, people who have given tremendously of their time and efforts with the best of intentions over a long period of time.

At the same time, it is evident from the revelations at the meeting that change was needed.  This change can be positive and confidence can be rebuilt.  New capital development plans will likely need to be stalled, possibly for some years due to the external economic climate and the financial stability of the MZH itself.  When the time is right development can be funded, potentially with a greater focus on private equity.

The experience of the MZH today must be noted as a milestone moment for Perth Jewry.  The community itself is changing, but not as fast as the economy in which it operates.  Whereas philanthropy has been critical in the past, benefactors in the past have been able to step up with relative ease, and this will not necessarily be the case into the future.  Whereas Government funding has been injected into our activities in the past, this will be harder to obtain in the future.  Whereas operating costs have been containable in the past, the cost of labour and professional staff in any specialised activity area has greatly increased, and staffing Jewish community institutions in the future will be very challenging in an environment of diminishing financial resources.

No matter how good or poor the administration and management of the MZH, any team would have struggled to navigate the changing market that evolved and crept up on regular operations, in particular over the past two years.  The MZH is the first institutional victim of this change.  Put simply, the administration did not see it coming until it was too late, but the economy of scale of an aged care home for less than 100 fee paying residents is suddenly no longer economically viable on a standalone basis.  This was not the case only a short time ago.

So too, Carmel School, even with 600 fee paying students will struggle to fund its annual operating costs in the future, and shules, even with hundreds of fee paying families, will struggle to balance their budgets with costs increasing at a higher proportionate rate than member funds.  Maccabi will struggle to maintain its infrastructure without solid revenue receipts.

This is all compounded by one factor.  It is the same group of families that are paying for this.  We all have lifecycle progression that requires the use of all these key facilities for religious, educational and social services in our community.  The Jewish population of Perth is 8,000 people.  Of these about half are active community members, bringing the core population of involved families to less than one thousand households.  Let’s do the maths.  If the collective institutions of Perth Jewry cost $20 million to run each year (a fair estimate), then each family/household is paying on average at $20,000 per annum to sustain current activity levels.  Parents of Carmel School children bear the biggest burden of this equation in non-aggregate terms.

It is not that our operations are unsustainable, but the quality of community life we have must be scaled to adapt to tightening economic times, and carefully costed on the basis of long term financial sustainability and viability.

Regrettably, what occurred at the MZH AGM today is the consequence of a combination of voluntary governance of professional services without strong management.  It is symptomatic of a Jewish community institution unable to read the changing macro-environment or adapt to change.  Emotions ran overboard today, causing matters of substance to be reduced to a personality driven popularity contest.  However what we really need to acknowledge is that it is not actually about attributing blame, and it is not about venting frustration towards the people involved.  It is about good governance, and reading the signs of a volatile market.

The Not For Profit environment has become indistinguishable from the commercial environment for the delivery of social services.  This market can not be risk averse; it is a market in which calculated business risks are required.  So too, this market does not distinguish between corporate and community based operations when it comes to sourcing professional staff and competing for skilled labour.  If the Not For Profit institutions of our community wish to continue to be service providers in their own right, then our governance culture needs to change, such that our institutions can compete head to head with other private sector operatives.  The only difference to take into account is that the shareholders of our institutions are community members whose equity is placed into trust for further reinvestment.  In both environments a financial dividend must be delivered to remain solvent.  A stagnant operation will lapse overtime.

The MZH took a big step and necessary step forward today in realising the ambition of new corporate governance.  It is regretful that the circumstances surrounding this were not more amicable.  Nonetheless, with the experience of today’s AGM behind us it is time to say a sincere and appreciative thank you to the previous board members for giving of their best efforts to lead the home through a challenging time.  It is also time to say welcome to a new leadership team and to support their efforts to chart a new direction and alternative management structures delivering modernised models of aged care for the community.

Post Update:  30 October 2011

JewglePerth has been asked to ensure that the record of this article is absolutely correct, and that allegations within the comments are substantiated.  We have been advised as follows:

A lengthy meeting was held with the Medical Professionals who expressed concern and, at the conclusion of that meeting, all medical professionals at the meeting indicated that they were satisfied with explanations given.

The President did not disagree with the Audited Financial Statements nor the figures expressed in EBITDA format.  Comments related to what he anticipated would be the interpretation that the Treasurer intended to place on the figures. The opinion of the Treasurer was not the opinion of the vast majority of the Board.

Jewgle Perth provides this post and blog facility for constructive purposes, to provide a free and open forum for people to be informed and to contribute to discussions relating to matters of importance for the community.  We do not put this, or any other post up for the purpose of mud slinging or stirring controvery.  Quite the opposite, we care about the state of the Perth Jewish community and its future direction.  Discussion and dialogue are important.  Comments remain open on each post for two weeks from the date of posting.  We ask readers and participants to respect the netiquite of posting comments.  Please make your point only once.  Please focus on the issues (any personally directed insults will be moderated and removed).  Please consider whether your comment will add to the value of the discussion.  The Jewgle editorial would welcome the remaining week of discussion to be focussed on where the MZH needs to focus its energy moving forward.

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