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Aged Care Services
early birds
post Posted: Sep 18 2018, 10:02 AM
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my two bobs on this things

ageing issue is like ticking bomb for most of country not just aussies.
Govt. needs private money to help them to tackle this problem
the rc is try to gives bit of knock to those whom abuse the system badly, but no way Govt will intent to destroy it---they simply can not for it. lib or lab.
it's only my view though.

i'm little biased as i hold little bit of EHE .



 
Mags
post Posted: Sep 18 2018, 09:08 AM
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In Reply To: triage's post @ Sep 17 2018, 08:16 PM

Not sure an RC is really needed. No doubt the sector is riddled with horror and corruption. But what good is airing the dirty laundry gonna do?

What happened to the old days of announcing a 6 month task force, and then a 7 point plan and some funding?

Trouble is, in western societies when your old and poor, no-one cares: That's one of my rich mates quotes, and a huge part of what drove him to chase wealth.

A few percent of the population are taking note of the Banking RC which shows average people being ripped off left right and centre: Are they really gonna care about the RC for old folk? Nah.

If it's liberals attempt to build some credibility, they fail.
If it's the lib's attempt to destroy their brand, they succeed.


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triage
post Posted: Sep 17 2018, 08:16 PM
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In Reply To: nipper's post @ Sep 17 2018, 02:43 PM

Scummo only called a royal commission on aged care because 4 corners tonight starts a two part special on the aged care sector and he wants to get ahead of the story. According to the ABC when 4 corners put out a call for anecdotes about abuse in aged care facilities they were overwhelmed with the number of responses.

The thing is a politican should never ask a question that they don't know the answer to, and I think that once the horror stories start coming out on a daily basis from the rc the government will be put on the defensive. Maybe the plan is to have the election before the rc gets underway.



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"The crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought." Rudiger Dornbush

Mozart fixes everything and Messi is a dog

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nipper
post Posted: Sep 17 2018, 02:43 PM
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The narrative is along these lines:
QUOTE
If the painful de-rating of our largest financial institution is anything to go by, investors should be wary of our listed aged care sector after the federal government announced on Sunday that it was launching a Royal Commission looking into bad practices in the sector. This could be worse than the Banking Royal Commission. Age care is arguably a more emotive subject and there’s already plenty of circumstantial evidence pointing to the need for major regulatory reforms that are likely to squeeze the profit margins of our listed players....
- everyone has a story !.. usually about grandma



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne

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nipper
post Posted: Oct 21 2017, 04:32 PM
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Listed aged care sector’s treatment of debt in question
QUOTE
If you look back at the history of failed property companies, they have one thing in common: high debt levels combined with insufficient cash flow. Typically they will rely on capital markets to fund their operations, and when those markets close, the music stops. This happened in 2007 for the REIT sector and the poor capital management was exposed.

Understandably, with interest rates beginning to rise globally, investors are now starting to get nervous. However, when we look across the sector we do see vastly improved capital management in recent years.

One sector that stands out for complex financial reporting is aged care. There are concerns that companies are potentially understating debt and overstating their cash flows.

This phenomenon comes about through what is referred to as refundable accommodation deposits. The RADs are a lump-sum payment paid upfront for entry into an aged care facility.

They can be used for multiple purposes and sit on the balance sheet as a liability, but not as pure debt. As a result they can be used as a third source of funding (alongside equity and debt) and can effectively be used to increase a company’s return on equity. The listed players (Estia, Japara and Regis) have historically used these funds plus debt to make acquisitions, adding more RADs and hence more funding to the balance sheet. In addition some of the listed players include the change in RADs in operating cashflow, which potentially overstates the cash they are earning.

If we take Estia for example, we find its debt level is $121m against $1.79bn of total assets. At first glance it appears there is nothing to be worried about (a gearing ratio of 6.7 per cent), but if we delve deeper we discover some cracks. Of the $1.79bn of assets we find just over $1bn are intangible, predominantly goodwill from acquisitions. In addition the RADs on the balance sheet are $730m; if we were to include these as debt (they do have to be repaid and the holder does receive government-mandated interest), the company has negative net tangible assets.

The problem comes about if the proportion of residents who pay via RADs starts to fall. If this proportion falls, these companies will experience potentially negative cash flow in what is effectively a forced reduction in debt. A large reversal in resident behaviour would cause tremendous strain. The three major players are all recent listings that came to market riding changes in legislation (the Living Longer Living Better reforms) and a thematic that investors were excited by (an ageing population). However, at the heart of these companies are low-returning assets juiced up by financial engineering. I don’t believe the sector has been fully tested as yet and worry about what happens when it is.
Guy Carson is the head of Australian value strategies at TAMIM Asset Management

- I'll go along with that



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne

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nipper
post Posted: Sep 26 2017, 01:26 AM
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QUOTE
a look at recently ­announced annual results makes for interesting reading.

Japara’s EBITDA rose 7 per cent to $60 million but its dividend reduced from 11.5c per share to 11.2c per share, with franking down to 84 per cent from 100 per cent.

At Regis profits rose 18 per cent but management guided that earnings would be flat in the year ahead.

Estia reported EBITDA of $86.5m, down from $92.7m last year, despite revenue growing 18 per cent: Total dividends fell from 25.6c a share in 2016 to 8c a share in 2017.

Japara and Regis are sitting on large debts, with debt-to-equity ratios of 96 per cent and 138 per cent respectively. When borrowing costs rise, there will almost certainly be a hit to profit.

There are five other reasons why listed aged-care operators are struggling:

1. Reduced government funding

At the midyear economic and fiscal outlook (MYEFO) in November 2015 the government announced that some aged-care providers were taking advantage of the low-care/high-care funding disparity, and putting too many people into high care to attract the higher government funding. It announced that a review of funding arrangements would save it more than $1 billion. These changes were ratified in the following year’s budget.

2. Rising costs

The cost of running a bed in an aged-care centre is typically about $200 a day. In order to make a profit, operators must charge significantly more than that. Things are tougher when they are operating at less than 100 per cent capacity. The major component of their revenue is locked in via government funding. The rest they must make up via the extra ser­vices fee and the daily accommodation payment (the interest payment on any unpaid RAD, formerly known as the bond).

3. Staff wages

As ever, running an aged-care centre is a balancing act. Too many staff affect profits, too few staff and standards of care drop and people leave. Staff are generally on enterprise bargaining agreements, so their wages are locked in.

4. Pressure on fees

The costs of aged care — particularly the initial cost of entering aged-care bed (the RAD/bond) — are a function of supply and ­demand. There are more than 2800 aged-care centres in Australia, and many of them have empty beds, so there is plenty of choice. If there are empty beds, there is significant pressure on operators to offer deals on RADs and extra services fees. The level of government funding also encourages operators to offer concessional beds to people with low means.

5. Competition from NFPs

Listed aged-care providers have plenty of competition from not-for-profit aged-care providers, which do not have the same pressure to make a return on investment. In addition, not-for-profit organisations can offer staff benefits that their for-profit counterparts cannot match, such as exemptions on Fringe Benefits Tax. This makes it harder for the listed companies to attract staff.

The aged-care sector is going through an expensive growth phase. The companies are increasingly struggling to cover their costs with sufficient margins to attract the interest of investors.

The market has brought the shares of aged-care providers back to about 15-16 times earnings, which is where they will remain until they can convince investors that large-scale growth is likely.
John Rawling is an aged-care consultant at Joseph Palmer & Sons



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne

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nipper
post Posted: Aug 14 2017, 09:57 AM
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Bupa has called on the Turnbull government to overhaul aged-care funding and introduce a market-driven system that will see Australians financially contribute to their care.

The company, in its submission to a Senate inquiry into the sector, said it recognised that in the current budgetary environment, it was not realistic to expect the government to increase funding to the industry.

“We therefore believe the Productivity Commission’s recommendation to move to market-driven aged-care funding, where people who can afford it contribute to the cost of their personal care, while those who cannot afford it continue to be heavily subsidised, should be seriously considered as part of a much-needed national conversation on ageing and aged care,” the company said.

“While we acknowledge it is often not a simple process to reform funding, Australians expect and deserve high-quality aged care ... and urgent funding reform is required if we want to ensure Australians can continue to access high-quality aged care.”

The submission highlighted that Council of The Ageing (COTA) research had found that consumers did not mind being asked to pay more if they could afford it, but they wanted more choice and a better-quality system.

Bupa warned that recent changes to residential aged-care funding, particularly to the aged-care funding instrument, were threatening the sustainability of the sector and its capacity to provide high-quality care to residents, including those with complex care needs



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne

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nipper
post Posted: Mar 29 2017, 02:23 PM
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In Reply To: balance's post @ Mar 29 2017, 02:15 PM

too true, balance; unfortunately, too true in the points you raise. the complexity, and having to make an 'informed decision' at a point in time, when uncertainties abound, makes for confusion, and then some. Contact points and the 'expertise' of those in call centres is an added joke, of the worst kind.



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne

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balance
post Posted: Mar 29 2017, 02:15 PM
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In Reply To: nipper's post @ Mar 28 2017, 03:33 PM

The payment of interest on the unpaid RAD rather than paying the RAD lump sum does not work well in our experience.


Given the interest rate is (was?) over 6% and the pensioner bank accounts were paying about 3% (less now I think) a resident is going out backwards at greater rate if he/she invests safely rather paying the RAD up front.

Keeping the cash in the bank is then considered an asset and fees go up and pension goes down (if on one)

If anyone or anyone's parents are looking to go into care in the near future, do your research, get pro advice, as the govt departments are $#@! hopelessly inept and as a rule do not understand their own rules.

It is a minefield and little mistakes can cost a lot of money. Find a way to legally hide your money, spend it or give it away > 5years out from entering care or pension age.



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nipper
post Posted: Mar 28 2017, 03:33 PM
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Crunch time for aged-care payments
QUOTE
A key change is happening inside the aged-care sector: simply, more and more people are tiring of ­offering interest-free loans to aged-care companies. Instead, they are opting for a new payment mechanism that just might help them keep the family home.

Here's how it works. If entering a retirement home, then after being assessed by the government on your assets and income, you may have to pay a fee for nursing home accommodation costs.

Since 2014, new residents have the choice to either pay an ongoing rental style fee called a ''daily accommodation payment'' or otherwise opt to make a one-off lump-sum payment called a ''refundable accommodation deposit'', also known as ''the RAD''.

Before July 1, 2014, the aged-care provider had more control in being able to dictate terms on accommodation payments. Flexibility with the new rules potentially allow residents to keep the family home when moving into aged care as they are not forced to pay a lump-sum amount for accommodation as they were in the past.

If they opt for the ongoing accommodation payment to the aged-care provider, the resident could look to rent out the family home,which would generate income to help cover the nursing home fees.

We recently had a very good insight into the area from the results of ASX-listed aged-care provider Estia Health: Estia's management under new CEO Norah Barlow suggests an average stay for a resident in one of its facilities is 2.3 years and that the average RAD charged is $377,000. Estia reported that over the six months from July to December 2016, the number of residents who paid RADs fell from 2256 to 1860 while the number of rental style payments increased from 514 residents to 690.

This indicates more people are opting to pay an ongoing accommodation fee rather than have a large lump-sum locked up by the aged-care provider at zero per cent interest. The implications are that aged-care providers will need to manage cash flow carefully moving forward so that they can meet the increasing number of residents shifting over to the rental style payment from the RAD.

It is a common misconception that the lump sum provided to the aged-care provider is set aside and wholly invested before being repaid upon the resident's exit. In reality, the lump-sum payment is absorbed by the aged-care provider and used for general operations and to fund construction of new places...........
http://www.theaustralian.com.au/business/w...886d992c51cb671

"consolidated revenue" = black hole



--------------------
"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
 


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