RSM Australia

RSM aged care update - June 2015

The hot spots as we see them:

There is a lot happening in aged care and at RSM our priorities over the coming 6 months will be helping clients in the following areas:

Realignment of operations: in response to legislative changes from 1 July 2015 providers are increasingly asking themselves whether they should:

  • stay in residential aged care?
  • extend service offering?
  • expand our operations into new areas, most notably home care?

The Government project we have undertaken has given us some unique insights into what approaches work and in which settings. If you are grappling with these issues and would like some external, evidenced based input, then we’d love to discuss how we can work with you to chart your course into what we see as an exciting future of opportunities.

If you have heard me speak recently you will understand how both the dorcas gazelle and the pigeon are relevant to aged care, if not then give me a call and I’ll explain. 

Facilitating transactions- recognising the more competitive landscape, providers are considering various options. While there is much talk of acquisitions, the facts suggest that transactions will be challenging to complete. RSM has the connections and capacity to assist providers with:

  • acquisitions
  • significant refurbishment
  • bidding for places in the 2015 ACAR round (including capital grants)
  • undertaking mergers
  • looking to exit the industry

Assessing specific greenfield and brownfield opportunities – we are regularly approached by parties interested in exploring specific opportunities in aged care. These opportunities sometimes involve property owners looking for opportunities to work with established providers and in other situations its providers looking to consider opportunities that have been presented to them. We have developed a two stage approach to assessing specific opportunities; In stage one we undertake an opportunity assessment which assesses the supply and demand dynamics attaching to particular sites and gives you objective feedback on opportunities. Stage two is a complete financial feasibility study covering funding, value creation, return on investment and cashflow in operation.

Study into the factors influencing differential financial performance of residential aged care providers

We anticipate the department will advise us that the report on our study of the factors influencing differential financial performance of residential aged care providers will be available to the public in the near future. As part of the RSM aged care community you will receive a link to the report as soon as it is released.

Upcoming RSM aged care projects

RSM aged care business model master class
Building on ground breaking industry research conducted over 8 months for the Department of Social Services, RSM are developing a master class series to be delivered nationally via our RSM aged care team. The classes will draw on the findings of the government studies, allowing providers to assess their business models against both their peers (by financial performance) and those providers who achieve superior performance. The classes will allow providers to examine issues such as; scale, diversity, key management focus areas, asset intensity, capital management practices and many more. Attendance will be limited to ensure maximum benefit is gained and attendees will be asked to undertake some pre-attendance analysis of their operations as the class will be case study based.

To register your interest please email; [email protected]  

Permitted use - managing and maximising opportunities
As time and the new accommodation payment rules settle, we have seen some significant negative outcomes among our clients where funds are trapped because of a poor understanding of the permitted use rules.  Building on our Permitted use Assessment Tool RSM is looking to develop an industry issues paper with a view to ensuring that providers can effectively operate and manage their cash reserves in the context of the permitted use rules. One simple example of the complexity is where a provider spent $4,000,000 of retained profits on an upgrade anticipating they would replace these reserves when they received lump sum accommodation payments from new residents. Unless careful structuring is undertaken the providers may not be able to access the initial cash as replacing cash reserves is not a permitted use.