Home' Australian Ageing Agenda : AAA Spt-Oct 2014 Contents organisations to provide further enhanced
services to the community," he says.
While some view an amalgamation as
one organisation winning over the other,
"If the amalgamation is done with a
proper process, it is not a takeover. I
don't believe it is because it is by mutual
agreement, it is by a good stepped-
process," he says.
At the highest strategic level, he
says the reason for undertaking an
amalgamation or merger comes back to
the following three key questions:
• How do we ensure that current and
future residents or clients in our
communities can access the service?
• How do we ensure the organisation is
viable, sustainable and profitable and
able to fund its future?
• How do we continue to ensure or
contribute to the economic, community
and regional development of our town,
If this questioning leads to an
amalgamation or merger, a name change
and transfer of ownership could leave
some in the community with a sense of
loss, Goldsworthy says, but he argues it
is not a real loss.
As in the aforementioned regional
provider's case, he highlights that the
vision, mission, purpose, intent, services,
and employment continue after an
amalgamation or merger, where they
might otherwise have disappeared. n
what you need to get right
IF RESIDENTIAL AGED care providers
maximise the income they are entitled
to, achieve high occupancy and get the
capital intensity right, they should be
sitting somewhere above average, says
Bruce Bailey, director, accounting firm
RSM Bird Cameron.
Bailey says ensure the accommodation
pitch is right and aim for 94 per cent
occupancy and above. As the amount of
capital you put in determines the return,
you have to get the capital cost of the
facility right, he says.
"If you have good revenue, good
occupancy and if you spend $400,000
per room and another provider spent
$200,000 per room then they are going to
get a better return on the same amount of
income that's coming in. So you have to
get the right capital intensity in it."
At the moment, the quickest way to
get more money is to do substantial
refurbishment because of the supplement
available, Bailey says. "The extra
supplement works out as 27 per cent
return on your investment minimum if
you just meet the minimum standards
required. That's a fantastic return in
If the business is looking unviable,
Bailey says while anyone
can have a form slump, if
an operator has lost the
desire to win then it's time
to get out of the game.
"If you have been trending down for three
or four years and things are getting worse
then you need a fundamental change at
If someone has been leading a declining
operation you have to question whether
they are the right person to turn it around,
he says. "If they were, they would have
done it already because they would have
seen it and reacted." n
PARTNERING WITH AN organisation is
one of the strategies organisations will
look at to ensure their competitiveness in
this new marketplace, says Patrick Herd,
principal consultant with Community
A partnership is when two organisations
come together for a project or service area
but keep their identities separate elsewhere.
Organisations do it for a mutual benefit, such
as a wider scope of services, a combined
strength that can help the sustainability
of both organisations and for efficiencies
through combining of resources, he says.
A good partner is someone who is
strong and rich in areas including expertise,
experience, systems, practices, processes,
staff development and technology, says Herd.
"You are always looking for that
organisation that can add value to what you
are currently doing whether it is in service
provision, good system practice, training;
whatever those elements are that potentially
you may be lacking."
Likewise, an organisation needs to
know what it offers in return, Herd says,
but it should have its house in order first.
Once organisations start talking and as
discussions progress, potential partners
start to exchange a lot of detail, he says.
"You don't want a whole lot of skeletons
being shown out in your closet. You want
to make sure you get that tidied up, so that
you're very open and transparent."
Once the process is underway, Herd
says it is important for each organisation
to document as soon
as possible their
understanding of each
other to solidify what the
partnership will and won't
do. "I have seen a number that have gone
sour because people's understanding,
expectations and assumptions can differ
greatly from verbal conversations."
It is also important to watch out for
organisations where the intent is not
obvious, or they are presenting themselves
as something they are not, he says, because
quite often that is driven by financial,
leadership or compliance problems.
Herd's final piece of advice is that partners
should plan their futures together and not
assume they are on the same path. n
The zone of mutual benefit:
32 | SEPTEMBER -- OCTOBER 2014 | AAA
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