Home' Australian Ageing Agenda : AAA Jul-Aug 2012 Contents Make sure you are
in the best position.
Providers are feeling the pinch.
Nationally occupancy is at an
all-time low, the aged care
market structure is changing,
competition is increasing and
customer expectations are
Aged care providers who have
engaged Ideal to improve their
market position have:
• occupancy to 97+%
• bond pools
• flled new beds
• gained skills to ensure these
Contact ideal today to achieve
1300 179 675
can't assume they will be allowed or able to recover 'market price' for their
services and product. Residential care providers will need to think about other
income streams and utilising their resources for care into other places.
RL: If the accommodation supplement paid by the government and the
government approved accommodation payment (bond or charge) paid by resident
covered the cost of providing the infrastructure (with adequate compensation for
the investment made) AND the funds received through the ACFI covered the cost
of providing care and other services, then the need to cross-subsidise could be
removed and the industry may be viable. If the need to cross-subsidise remains,
given the capping of prices and the lack of formal control that operators can
exercise over the residential care agreement, financial sustainability is likely to
come down to an individual facility's admissions process.
AAA: WHAT REMAINS UNCERTAIN OR NEEDS TO BE
CLARIFIED AS A MATTER OF PRIORITY?
AK: Two things: Firstly the ACFI, especially the proposed application of the ACFI
to community care; and secondly, the concept of applying consumer-directed
care across all levels of community and residential care. Both areas require detail,
noting there will be a report on the latter area to determine how it could be
applied. The biggest area of concern and priority remains the form and function
of the ACFA. Without clarity and balance between providers and residents, it is
difficult to see how providers can invest with certainty.
RL: We know that the accommodation supplement for facilities built or
refurbished after 21 April 2012 will be $52.84, but what non-supported residents
can be asked to pay, both as a daily charge and a lump sum equivalent, remains
unclear. Residents will get security of tenure prior to entering into a residential
care agreement, to stop discrimination based on their capacity to pay and their
chosen method of payment (daily charge or lump sum). But how these prices
will be determined and what will happen where residents are not eligible to be
supported, yet cannot afford the new market price, is yet to be detailed.
GR: Just how it will all come together remains a mystery. Also, operators who
have in recent months committed to building new facilities need some extension of
the old model -- otherwise they may not get through it.
AAA: WHAT BUSINESS MODELS AND SERVICE OFFER-
INGS DOES THE REFORM PACKAGE SUGGEST WILL
SUCCEED IN THE FUTURE?
AK: Residential care providers that have always operated upon regular
accommodation payments from high care services are probably better placed
to survive and flourish in the reforms. But the reform package most benefits
community care, especially in clustered environments such as retirement villages
where there are efficiencies in delivering care.
RL: Business models that separate accommodation and care will do well,
for example manufactured home parks or retirement villages that deliver care
packages. These operators may be able to offer greater financial flexibility to
residents on the amount they pay for accommodation, which may have pension
and care contribution benefits. The cost of a care package for full pensioners will
still be 17.5 per cent of the pension ($8.69pd/$3,171.85pa), while part pensioners
can contribute up to an additional $5,000 and self-funded retirees up to $10,000.
While there may be additional costs, including private care, meal preparation,
cleaning and exit fees, residents will need to compare this with the cost of
residential care, where the care-contribution is up to $25,000pa.
GR: This is a hard question. I was recently with a facility client who was
extremely upset over how a new facility project, which would be his fifth, may
never become profitable on capped median bonds and no retentions.
AAA: WHAT SHOULD SMART OPERATORS BE DOING
ALREADY OR DO VERY SOON IN ORDER TO SUCCEED IN
THE NEW ENVIRONMENT?
AK: Smart operators need to think about leveraging their care skills and capacity
into alternative income streams available from extra services and increased
demand in the wider community. They also need to think about the impact of
accommodation bond reform from October 2011 and investigate alternative
methods to receive lump sum payments from ingoing contributions, such as
payments made in a retirement village.
GR: Most top operators are engaging specialist financial advice for incoming
residents. This can deliver the best possible financial outcome for the resident
and usually translates into much larger bonds than average for the facility. The
residents understand how the user-pays system is optimal for them and the
families are happy, yes happy, with the recommendations made and the estates
they receive on the passing of the resident. n
AAA | JULY -- AUGUST 2012 | 39
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