Home' Australian Ageing Agenda : AAA Nov-Dec 2014 Contents Almost 60 per cent of aged
care residents who have
entered care since July's
radical changes to pricing
structures have chosen a
refundable accommodation deposit (RAD)
over a daily charge.
And while there had been fears
providers who had relied on bonds under
the old system might see a destablising
flight to rental-style daily accommodation
payments (DAP), that hasn't been seen in
figures to date.
Industry analysts Mirus Australia has
compiled prices for RADs and DAPs listed
on the My Aged Care website and analysed
figures in its own data warehouse, which
captures about a quarter of industry beds.
That data shows 59 per cent of new
residents are choosing to pay RADs, says
Mirus managing direct James Price.
A further 35 per cent of residents are
choosing DAPs and about 6 per cent have
taken up a combination of the two payments.
That's despite the My Aged Care
website showing an average RAD asking
price for a single room with a private
ensuite of $413,625.
Price cautions the reforms are still
being bedded down, and says it will take
until the end of the financial year before
providers understand the comparative
impact of a RAD over a DAP.
"At this point facilities are still dipping
their toe in the water and working out
how much people will pay," he tells
Australian Ageing Agenda.
The picture you see on the My Aged
Care website today in terms of prices isn't
necessarily how it is going to translate in
the market over time, he says.
"It's still early days and providers will
continually be evaluating their position as
more RADs and DAPs come through."
Mirus figures show the lowest asking
price for a RAD in Australia is just
$100,000, while the highest is $2.6 million.
In NSW, the most common RAD is set
at $550,000 --- the maximum amount that
can be set without seeking government
approval. In South Australia it is $400,000;
in Tasmania $395,000. In Victoria and
Queensland it is $350,000 and just
$300,000 in WA.
RSM Bird Cameron director Bruce
Bailey says providers are feeling more
confident now the changes are in place.
"We have not had a Henny Penny
event," he says. "The sky has not fallen in."
But he warns providers are still feeling
their way in the new system, as they
address the financial situations of new
residents, liquidity and potential market
value of homes.
"It is very early, it is a new system and
there's not a lot of knowledge," Bailey says.
Stewart Brown director David Sinclair
says he expects new transparency
around prices will lead to repositioning as
providers see what competitors are doing.
"When people were initially putting
their prices up some providers just put
up the $550,000 and thought they would
negotiate downwards," Sinclair says.
"But the problem is nowhere on the
My Aged Care website does it say clients
can negotiate downwards, so if your
competitor down the road has gone
up at $330,000, in a side-by-side
comparison you might not even get the
chance to negotiate."
Ansell Strategic managing director Cam
Ansell says he has already spoken to one
provider who has had that problem, listing
RADs at $550,000 when a facility nearby
listed rooms at varying price points.
"It is dangerous just putting down the
max and assuming people will know they
can negotiate backwards," Ansell says.
"I've asked my clients to move to
stratifying the prices. There's also a lot
of refurbishment going on and I'd really
like to see people stratify their pricing
not around a physical room but the
characteristics of a room.
"That way if you upgrade, renovate,
change furniture, as it takes on the
characteristics of a premium room or a
With providers and consumers getting
used to the 1 July changes, analysts are
determining the new lay of the land in aged
care finances. Ruth Callaghan reports.
the new order Numbers at a glance
• Analysis shows 60 per cent of new
residents since 1 July have chosen
• Lowest asking price for a RAD is just
$100,000; the highest is $2.6 million
• Most common RADs vary from
$550,000 in NSW to $400,000 in
South Australia and $300,000 in WA.
SOURCE: Mirus Australia
24 | NOVEMBER -- DECEMBER 2014 | AAA
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