Home' Australian Ageing Agenda : AAA Spt-Oct 2014 Contents Lessons in viability
Making the leap
Aged care organisations are considering all their options as they
attempt to navigate the new operational landscape. For almost all
this will mean huge structural and operational change. Here, two
providers tell Natasha Egan about the different paths they took,
and offer advice following their strategic decisions.
"We are planning to
get rid of it all,
we are exiting
says Rob Hankins,
chief executive officer of ECH, of the
organisation's shift to focus exclusively on
The strategic move is based on the
board's decision to find its niche in the
evolving aged care marketplace and
where, as a charity, it can add the greatest
benefit to older people, he says.
"The board said we can continue
spending a lot of resources looking after
1,200 people and detract from the 6,000
plus that we support [in the
community]. Or we can put the
resources from residential care
into community care and housing
and possibly reach out to eight,
10 or 12,000 people."
As announced in April, ECH
sold its 10 residential aged
care centres in South Australia
to Allity, which commenced
operations 30 May. In August,
ECH said Regis Aged Care would
take over its Darwin care centre.
The board came to the decision following a
series of discussions beginning in the first
half of 2013 analysing each of their three
service components -- housing, community
aged care and residential aged care --
from the perspective of impact for older
people, quality, financial sustainability, and
difference in the marketplace.
Hankins says they were confident of
service demand, quality and sustainability
in all three areas but not their point of
difference in each.
The board determined ECH's
retirement housing model of small clusters
scattered throughout the community for
the affordable end of the market offer
a niche focus. As do their community
programs for people with moderate to
fairly high levels of memory loss, who are
living with a carer and want to remain at
home as their dementia increases.
Whereas their residential offerings
were similar to other quality providers in
the same market. The board decided a
housing and community focus will benefit
the greatest number of people.
Following the decision
Hankins says the board sought
organisations of a similar mind
as ECH in terms of values
and service philosophy. They
engaged consultants to help
identify a few fitting providers,
which were also capable of a
He says criteria including
assurance residents would be
looked after throughout the
process and guarantees of
ongoing employment for staff, weighed as
equally as the price during assessment.
IMPACT ON VIABILITY
Selling the residential business allows
ECH to invest the money into research
and development, which in the short term
means a capital injection to build more
housing, he says.
"The pros are we have some funds now
that we can invest into creating a greater
number of but also various models of
housing with services that are fully
adaptable to enable ageing in place."
Hankins says long term, the board
may choose not to recover the full cost
of the investment but keep it as a sunk
cost as part of its benevolence to provide
affordable housing to people at the lower
end of the wealth spectrum.
Keep it private
Progressing the board's strategic decision
in a confidential way to ensure that
residents and staff would not be affected
by idle speculation was a challenge they
worked very hard at, says Hankins, adding
he believes they were successful.
Pick your partners well
He says if you're going down a path of a
strategic change or collaboration, know,
understand and pick your advisors and
the parties you want to work with well.
"Your philosophies and your values need
to align, otherwise it is hard work."
Don't tell the lawyers
Hankins suggests parties directly involved
do all the negotiation and the finalisation
themselves rather than through lawyers.
"Lawyers are always there to protect
their party's interest and that is
understandable. But sometimes the
parties need to take a calculated thought-
through risk approach to working to get
a solution, and maybe wave some of the
risk mitigation that legal provisions might
come into, to achieve an outcome."
The magnitude of a transaction should
never be underestimated, Hankins says. "It
always takes longer and it is always more
complicated than you expect. But if you
believe in something and you're passionate
about it, the time and the investment is
worth it." n
Going niche SERVICE SNAPSHOT: ECH
✓ Housing and community programs: more than 6,000 clients
✓ Residential care (before divesting): 1,200 beds
✓ Retirement living housing: 1,650 units across 97 different locations, 75 of which have less
than 20 dwellings on a site, with half of those having less than 10.
✓ Target housing market: the low to middle income and asset population
36 | SEPTEMBER -- OCTOBER 2014 | AAA
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