If you hold a senior position in an approved provider then you will have already felt the winds of change that we anticipate will blow for many years to come as the sector moves inexorably from a welfare entitlement base to a user pays supported by government safety net. This update contains our thoughts and insights on a number of key areas that are being impacted at this time. We trust you find it helpful and stimulating. We welcome your feedback and questions on the issues we raise.
Recently we provided a strategic update to the board of a mid-tier provider operating residential care, home care and ILU’s. This highlighted a number of key matters for boards to consider.
This link will provide food for thought on whether to specialise in one of the above or to provide all three services. If your organisation is considering updating your strategic plan then RSM can provide interesting thought provoking and relevant input and assist in the development of a winning strategic plan.
Maximising revenue opportunity
According to deptartment statistics, the majority of residential providers have not taken advantage of the higher accommodation supplement payable to providers who have completed a complying significant refurbishment. At a time when government payments are being reduced and profitability is being challenged this provides a significant opportunity to increase overall financial performance. Providers can generate returns in the order of 25% on the capital invested in the refurbishment. This is a significant improvement on the return obtainable from investing your lump sums in most other permitted use assets. If you would like to know more about the significant refurbishment then consider the following offer from RSM.
Implications of CDC
The Aged Care Amendment (Increasing Consumer Choice) Bill 2016 has recently been introduced into parliament. RSM has provided an in depth analysis on aspects of the Bill for publication in the autumn issue of Fusion. We are all too familiar with the mantra of empowering consumers to have more choice. However for those consumers who are assessed as needing care and who are not prioritized won’t benefit from increased choice. As access will still be restricted we anticipate a situation in home care akin to the waiting lists in the public health system. Our article provides some suggestions on how operators might respond to the changes the Bill will create.
Building your brand
At RSM we believe in the power of brand and see brand becoming more important in aged care. The CDC changes mean that providers will need to position themselves in the minds of potential customers and relative to other service providers. Similarly we see that over time the power of brand will benefit the major providers of residential care. While the impact of brand will take time we encourage all providers to consider how their brand is working. In the work we did for ACFA in 2015 we found that 65% of the highest performing providers had undated their branding within the last three years. If you are looking into branding than this piece by a colleague may be of interest to you.
RSM's Aged Care Sustainability Review 2016
We are just putting the finishing touches on the first edition of the Aged Care Sustainability Review. The review provides insight on: market dynamics, financial dynamics and our analysis of other factors currently in play in the industry. It includes longitudinal trends emerging in the provision of residential aged care and the impact of the regulatory reforms.
As a connection of RSM you will automatically receive a copy of the review when it is published later this month.
Last year we assisted a number of providers with their ACAR applications we will shortly launch our ACAR preparation service and encourage providers to commence early this year to maximise your chances of success. We have recently been mandated to sell a number of Approved Places and will shortly be inviting expressions of interest in these. We are also working with a number of providers assisting them to either expand their operations by acquiring existing facilities from other operators and operators who are looking to divest operations. If you are interested in either acquiring or divesting then we welcome the opportunity to talk with you on how we can assist.
Bruce Bailey and the RSM aged care team