Aged Care Services

[scotchnice]

Hear a news report yesterday that Trade Minister Andrew Robb has signed an agreement allowing Australian Aged Care Services into China. Any educated guesses as to which companies might take the plunge?

[mullokintyre]

IVC

Mick

[scotchnice]

Thank you. Will check them out.

 

Cheers,

 

Scotchy

 

 

 

[mullokintyre]

Don't bother scotchy, it was joke. IVC specialises in Funerals.

 

Mick

[scotchnice]

Thank you..

 

 

 

 

 

[nipper]

seeing there is little interest in specific stocks, (for good reason; most are dull companies, showing positive performance and paying dividends, and with growth prospects) I'll drop this in here

The federal government's latest round of aged care allocations will fund thousands of new bed places with close to $1 billion annually, driving a wave of development across the sector. Close to 11,000 new residential places have been approved. Health Minister Sussan Ley has also approved more than 6000 home-care places, taking the total to more than 17,000 places. Recurrent funding for those places will exceed $910 million annually. Another $67 million will be given to operators in direct capital grants to upgrade facilities or improve services.

 

Major publicly listed operators such as Regis Healthcare REG and Japara Healthcare JHC were big winners from the latest round of allocations. Regis received approval for 844 new residential places, while Japara had 313 approved. Both operators floated only in the last two years and have been busy buyers as well as developers. Earlier this month Regis bought a $163million portfolio of aged care facilities from Masonic Care in Queensland.

 

Listed peer Aveo Group AOG, which runs retirement villages as well, picked up 371 new places. Estia Healthcare EHE, another recently listed operator, was granted just 12 new licences.

 

However, the lion's share share of approvals went to Bupa, which is unlisted and still the largest player in the sector. It received 925 places. Other private players such as Opal and Archer Capital-owned Allity received sizeable allocations as well.

 

Japara's chief executive, Andrew Sudholz, said the latest approvals, combined with previous allocations and licences for beds not currently operating, were more than enough to support the 906 places Japara has flagged in its development pipeline.

 

"We are pleased with the allocation that Japara Healthcare has received which will underpin the delivery of its development pipeline, providing new residential aged care places in under-bedded areas to meet the growing needs of Australia's ageing population."

[arty]

Thanks for the list, Nipper

 

I've added the foursome to my watchlist. As there is no specific thread for EHE, here is my take on it.

 

Short-term, price has broken the steepest downtrend and could well be headed up to test the previous gradient; that would lift it 10-20% above today's trading range. I'm not holding yet, but shall keep an eye on it. Maybe if it breaks and holds above $6?

[arty]

Sue just sent me an interesting Fibonacci Study over the longer-term weekly chart.

 

The A indicators on the right suggest some accumulation going on, supporting the theory that a breakout could be imminent.

Thanks Sue

[nipper]

Some others in a related part of the investment universe (more towards A-REIT end of the spectrum rather than Healthcare, and less dependent on Govt money flow -- but basically it is all about units, whether headcount or housing)

 

Ingenia Communities Group - INA - owns, manages and develops a diversified portfolio of 61 quality affordable seniors living communities across Australia. INA has three segments including Garden Villages (rental), Settlers Lifestyle (Deferred Management Fee) and Active Lifestyle Estates (Manufactured Home Estates).

 

Lifestyle Communities Limited - LIC - develops, owns and manages affordable independent living communities for working, semi-retired or retired people.

 

Generation Healthcare REIT - GHC - is a listed real estate investment trust that invests in healthcare property. The portfolio of ten properties includes hospitals, medical centres, laboratories and other purpose-built healthcare facilities.

[nipper]

it is a never ending tug-of-war for any service provider operating in the healthcare sector and in aged care especially, when a significant proportion of funding comes from the Australian Government.

 

Payments to aged-care providers will be reduced by $1.2 billion over four years to help curb a predicted blowout of $3.8bn in costs in the residential aged-care system. The move is designed to curb skyrocketing costs for nursing home residents with complex needs.Under changes revealed in the budget, the formula for deciding funding levels for patients with complex care needs will be changed, and the rate of indexÃÆâ€â„¢ÃƒÆ’ƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚­ation of payments for these ÃÆâ€â„¢ÃƒÆ’ƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚­patients will be halved.

 

"The government will achieve efficiencies of $1.2bn over four years through changes to the scoring matrix of the Aged Care Funding Instrument that determines the level of funding paid to aged-care providers,'' the budget papers say. "This aims to bring the ACFI back into the budgeted growth trend to stabilise higher than expected growth. The savings from this measure will be redirected by the government to fund health policy priorities."

 

Growth rates in spending for assistance with daily living and behavioural or cognitive issues have not been as rapid, with the complex care needs funding driving the extra cost to government....

Others estimates that changes to the complicated Aged Care Funding Instrument (ACFI), have the sector taking a further $350 million funding hit on top of the announced $1.8 billion, and there are warnings that the changes could discourage admission of high-dependency people, ultimately resulting in their displacement to hospitals. "In order for them to find their savings they've gone for the complex care component of the instrument. That's the one that deals with severe arthritis, chronic pain, stroke, and dementia. In other words, they've gone for the most high-acuity residents you can get."

 

Kerri Rivett, the chief executive of non-profit aged care group Shepparton Villages, said that around 40 per cent of her 271 residents could not afford to pay for any of their care. She said that residents that come in are sicker and sicker, and the government has now made it "near impossible" to get the maximum funding for high-needs care.

 

She worries that profit-focused providers, which comprise about 37 per cent of the industry, will become less inclined to accept the neediest people.

 

"The not-for-profits are going to end up having to look after the sickest and the most difficult," she said. "We're still going to deliver care because that's what we have to do, but the impact will be around the type of service." Allied health services such as physiotherapy and speech pathology are likely to be dispensed with first.