Aged Care Financing Authority Role and activities to date Agenda - - PowerPoint PPT Presentation

Aged Care Financing Authority

Role and activities to date

Agenda – today

• 1. Our approach to date
• 2. Current Status and Progress to date
• 3. Our increased role going forward
• 4. What we have learned to date
• 5. What is our agenda
• 6. Where to from here
• 7. Introducing Dr Henry Cutler from KPMG

• Clarity of Mission
• Clarity of Mandate
• Multi – stakeholder focus
• Consultative
• Evidence based
• 1. Our approach to date

(1)

• 1. Our approach to date

(2)

• By necessity residential focus at this stage
• Develop initial thinking
• Release discussion paper for public comment
• Analyse feedback received
• Circulate draft among members for comment
• Finalise and submit to Minister
• Listen to feedback of sector and provide

further advice to the Government if needed.

• 2. Current Status and Progress to

date

• Reports on:
• Operational Framework
• Significant Refurbishment
• Accommodation Payments Framework
• Supplementary advice on use of the MPIR to

determine equivalency between RADs and DAPs

• Advice on estimates of impact of reforms on

sector (KPMG modelling)

• This month – first Annual Report on Funding

and Financing

• 3. Our increased role going

forward

• Change of Role
• Statutory Committee under the Age Care

Act 1997

• Additional monitoring of the impacts of:
• LLLB accommodation payment reforms on

aged care providers and residents

• changes to means testing arrangements in

home care and residential care

• transitional support arrangements

announced by Government.

• 4. What we have examined to

date

• 4.1 Industry scaling and analysis
• Funding – Industry Revenue
• Review of Industry viability
• Financing – Industry Balance Sheet
• 4.2 Review of prospective impacts of

reforms

• 4.3 Uncertainty within financing sectors –

both debt and equity

• 4.4 Growth opportunity

4.1 Industry Scaling & Analysis Residential Aged Care places

Distribution of Places 2011-12 (Care Type) – Residential Aged Care

TOTAL Care Type High care Ratio to Total Low care Ratio to Total Mixed care Ratio to Total Total Sector Provider Count 1,103 704 63.8% 64 5.8% 335 30.4% Services Count 2,777 2,058 74.1% 71 2.6% 648 23.3% Places 184,570 142,823 77.4% 2,428 1.3% 39,319 21.3%

4.1 Industry Scaling & Analysis Residential Aged Care places

Distribution of Places 2011-12 (Ownership) – Residential Aged Care

TOTAL Ownership Type Not-for- profit Ratio to Total For- profit Ratio to Total Government Ratio to Total Total Sector Provider Count 1,103 563 51.0% 420 38.1% 120 10.9% Services Count 2,777 1,650 59.4% 836 30.1% 291 10.5% Places 184,570 107,380 58.2% 66,234 35.9% 10,956 5.9%

4.1 Industry Scaling & Analysis Residential Aged Care places

Distribution of Places 2011-12 (Location) – Residential Aged Care

TOTAL Location City Ratio to Total Regional Ratio to Total City & Regional Ratio to Total Total Sector Provider Count 1,103 634 57.5% 425 38.5% 44 4.0% Services Count 2,777 1,498 53.9% 694 25.0% 585 21.1% Places 184,570 112,433 60.9% 33,807 18.3% 38,330 20.8%

4.1 Industry Scaling & Analysis Funding - Industry Revenue

• 70% -

Government Funded (ACFI)

• 5% - Accommodation Payments
• 25% - Resident Care Fees
• Lump Sum Accommodation Payments

(RADs) are financing option for Accommodation Payments that form part of Balance Sheet Asset financing.

4.1 Industry Scaling & Analysis Funding - Industry Revenue

Commonwealth and resident funding in the aged care sector during 2011-12

Ref Table Commonwealth Funding $m Resident Funding $m TOTAL $m Total Residential Care 2.2 8,738.4 3,526.1 12,264.5 Packaged Community Care 2.3 1,058.2 80.1 1,138.3 Commonwealth HACC 2.4 1,040.0

• 1,040.0

Commonwealth contribution to HACC in Victoria and Western Australia 2.4 462.0

• 462.0

TOTAL 11,298.6 3,606.2 14,904.8

4.1 Industry Scaling & Analysis Review of Industry viability

• Key focus area for ACFA’s work.
• At an aggregate level
• 70% of providers reported a profit (NPBT)
• 84% positive EBITDA in 2011-12.
• First Annual Report provided to Minister
• performance varies across the sector
• distinctions between provider type, care type

and location seem to be an influence in other cases they do not.

• performance is likely to be critically influenced

also by other factors such as management and efficiency of operations.

4.1 Industry Scaling & Analysis Financing - Industry Balance Sheet

Total Industry

• Assets

$28 billion

• Current liabilities

$12.5 billion

• Non current liabilities $5.9 billion
• Financing - 35% equity and 65% debt including….
• Accommodation bonds of $13B
• 48% of Total Assets
• 42% of residents paid a bond with an average

new bond of $260,000 approx.

4.2 Review of prospective impacts of reforms

Balance Sheet impact $m Profit and Loss impact $m High Care 3,400 93.5 Low and Extra Service

• 402.8
• 68.4

4.3 Uncertainty within the financing sectors – both debt and equity

• Impacts on bonds
• Other sources of financing
• Commercial debt
• Increased equity
• Demographics and reforms can bring

significant opportunities

• Estimated 1,850 bonds in Tier 3 across 600

aged care homes

4.4 Growth opportunities

The ageing of the population

4.4 Growth opportunities

Ratio to total assets 2014-15 to 2016-17 30-Jun-23 Ratio to total assets ($b) ?($b) ($b) Sources of funding RADs (a) 13.0 46.3% Debt (b) 5.5 19.6% Equity 9.6 34.2% Total assets 28.1 100.0% Residential Aged Care Places 187,941 260,000 replaced existing stock (a) Refundable Accommodation Deposits (b) includes commercial loans, inter-company loans, employee provisions (c) based on analysis from KPMG 30-Jun-12

Financial

• pportunity for

bankers and investors

1 July 2014 High Care RADs introduced (c)

• 5. What is on our agenda
• Cost effective ways to improve financial

reporting – consultation closes 8 July

• Report on the cost implications of changes to

the Schedule of Specified Care and Services (due 31 Dec 2013)

• Review of the supported resident ratios (due

31 Dec 2013)

• Reporting on implementation of LLLB reforms

– commencing monthly from 1 July 2014.

• Home Care

• 6. Where to from here
• Communication with industry
• Inaugural Annual Report on Funding and

Financing

• Engaging proactively with industry investors

and financiers

• Continued engagements with stakeholders

and consumers

• Industry call to action
• Listening post for regular engagement

Questions?