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Aged Care Advisory Network (ACAN)
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ACAN Aged Care Advisory Network This network has been formed to better serve the industry and is comprised of leading professionals across many disciplines.
ACAN Aged Care Advisory Network This network has been formed to better serve the industry and is comprised of leading professionals across many disciplines.

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Peter Jones, NAB,  was part of a 4 person paneI and did not specifically present. The topic was "Price, Finance and the Authority - issue for today and for tomorrow" and from my part I was to provide insight as to how the reforms may change the way Banks lend going forward to fund future developments to keep up with demand. 

Both the ACFA and operators are concerned if there is an increase in the proportion of periodic paying residents (DAP's), the traditional first way out (repayment from lump sum bonds) may be compromised resulting in bank's diverting capital to other industries. 

I had two specific questions to answer. 

1. What may change going forward to fund new buildings?         

Response:
The percentage of lump sum bonds available for debt reduction may be lower that will necessitate the banks providing longer loan terms to accommodate an increase requirement on cash flow to repay debt.
Only with the passage of time will we be able to formulate resident behaviours as to the payment method for accommodation. Until then, cash flow, more specifically net operating profit, is the only repayment source that has certainty.

So what I suggested operators do as a sensitivity is:
Understand what the net cash flow will be for the new RACF based on a fully traded up position;
Work out what level of debt the net cash flow can repay P&I over say 3, 5 and 7 years;
Take the 7 year term loan amount (suggesting this is worst case) and subtract it from the total construction loan they are seeking;
Understand how many bonds (based on average bonds) it would take to repay the difference;
Now, if they are building a 100 bed facility and they only require 30 bonds to repay the difference, you would think a ratio of minimum 30% bonded beds would be achievable.

2. Is there capital available to build 10,000 beds proposed/required for the next 12 - 24 months? 
      
Response: 
The short answer was yes and how I rationalised this was: 
Assume a single bed with ensuite costs $200,000;
That's $2b split amongst 5 States (NSW, Vic, QLD, SA and WA) equals $400m per State;
Assuming 4 major bank's in each State;
Equates to $100m per major bank per State.
The issue is not whether or not there will be a restriction on funding, but understanding the industry has high barriers to entry, really only the existing operators are going to build new RACFs and if it is taking longer to repay debt (for the above mentioned reasons), it will take longer before the operators see debt levels reduce to a comfortable level before they build again. Another scenario that may hinder new buildings is lets say the operator's existing RACFs has large bond liabilities attached to them, they would more than likely now look to bolster cash reserves via retained profits as a contingency to fund refunds where otherwise this equity would have been set aside to invest in another developments. 

Contact Peter on: 
Peter Jones 
Partner 
Aged Care | nabHealth | National Australia Bank Limited 
Level 20, 255 George Street, Sydney, NSW, 2000 
Office: +61 2 9237 1242  |  Fax: 1300 226 315  |  Mobile: 0409 666 590  |  peter.w.jones@nab.com.au 
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It's a problem nobody likes to talk about, but it's costing the world billions of dollars a year. An Australian company has developed a digital solution it's hoping will capture a global market and put it up with the likes of other local success stories such as Cochlear and CSL.
That big problem is incontinence in the elderly.  

http://content.bitsontherun.com/previews/cgskHPMU-nj1oCHTs

#simavita  +SIM Simavita 
ABC The Business/Simavita
ABC The Business/Simavita
content.bitsontherun.com
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Fine tuning the cost of residential care

The Government has recently confirmed the appointment of the Aged Care Pricing Commissioner and indicated it wants a process for setting accommodation payments that has less red tape, is transparent, open and fair.  One of the major steps is raising the level above which accommodation payments will require approval by the Aged Care Pricing Commissioner to $550,000.

On 20 November, the Assistant Minister for Social Services, Senator Mitch Fifield, issued a media release setting out the Government’s reform agenda in this area. 

In relation to the process for setting accommodation payment prices, the media release says:

The process to be used will be simpler;
The previous government’s requirements to follow a prescriptive process which had to be documented and detailed by reference to a list of factors (eg lights, flooring and views)  is to be scrapped.  This presumably is a reference  to the draft Fees and Payments Principles 2013 issued in late July 2013;
The process to be used will be transparent and open;
Providers will be required to publish all accommodation prices and information about their facility on the My Aged Care website, their own website and in documentation provided to prospective residents;
To protect consumers from unjustifiably high prices, any refundable deposits greater than $550,000 or daily payment equivalent will need to be approved by the Aged Care Pricing Commissioner.  This threshold will be reviewed after 12 months and means only about 5% of proposed accommodation prices in facilities will require approval.

Prices that begin on 1 July 2014 will be published from 19 May 2014, giving consumers notice of prices and payment options. 

- See more at: http://www.gadens.com.au/publications/Pages/Fine-tuning-the-cost-of-residential-care.aspx#sthash.GcCKZnJm.dpuf
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Sue Mann using Community Care Benchmarking for Strategic Planning.  SMNCC has built robust internal processes to drive efficiency and ensure quality of services which are certified to the ISO9001 standard and are governed by a Continuous Improvement Committee which is responsible for high-level decision making, strategic planning and quality assurance. The need to benchmark our performance to the industry for both internal and external reporting purposes led SMNCC to investigate ways of comparing ourselves against others in the community care industry. In response to this identified need, SMNCC signed up with QPS 2 years ago.  

Click here for the full article: http://qpsbenchmarking.com/page/288/news/qps-benchmarking---community-care-news/articles/sue-mann-using-community-care-benchmarking-for-strategic-planning/
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Will the Dementia Supplement funding run out soon?

How important are these numbers to your #agedcare  organisation?

http://www.mirusaustralia.com/headlines/blog/
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Hi Everyone, 

This PR opp came across my desk and I thought it may be a great opportunity for one or all of you to be featured in the SMH, the Age and the Brisbane Times.

It was due yesterday and I have asked for an extension, so if you are interested, please do it today - email them to shona@socialface.com.au and I will submit them for you.

SCENARIOS

1. Woman aged 85, owns own home, $100,000 in other assets, going into a high care assisted facility.
2. Man aged 78, only asset is $25,000 in cash, going into a low care facility.
3. Couple, aged 65 and 70, going into low care facility, own own home, have super of $800,000. The 65 year old still wants to work part-time.

What the writer is  looking for is what this will cost under the new rules - either by paying a bond, using an ongoing payment, or a combination of both.


Thanks.
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As well as striving to make its Aged Care designs attractive living places for the residents, Jackson Teece seeks to optimise operational functionality for the provider.

Before we start designing any building layouts, we work with the client’s key stakeholders in workshops to elicit the preferred functional relationships.  
 
The outcome from the workshops is series of ‘bubble diagrams’ which are used to drive the architectural designs. They are also retained as key reference guides, used in checking the validity of designs – we refer back to them at milestone reviews to make sure essential relationships haven’t been lost during development of the design concepts.

Click Here to find out more: www.jacksonteece.com

Telephone +61 2 9290 2722
Facsimile +61 2 9290 1150
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When a person enters a Commonwealth subsidised residential care facility, there are a number of fees and charges that they may have to pay. 

These include a basic daily care fee (also known as the standard resident contribution), an accommodation bond or accommodation charge, and a potential income tested fee. 

If'd you like to see how ACAN Member BondMax can simply for you, please click here: http://www.agedcareconnect.com.au/accommodation_bonds.php
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The Simavita wifi system is saving up to 30% on the bottom line, saving staffing time and more:

Watch the video here: http://www.abc.net.au/news/2013-11-07/the-wi-fi-solution-to-an-unmentionable-problem/5077712
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