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

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

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 Care Type TOTAL High Ratio to Low Ratio to Mixed Ratio to care Total care Total care 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% 184,570 Places 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 Ownership Type TOTAL Not-for- Ratio to For- Ratio to Ratio to Government profit Total profit Total 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% 184,570 Places 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 Location TOTAL Ratio to Ratio to City & Ratio to City Regional Total Total Regional 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% 184,570 Places 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 Commonwealth Resident Funding TOTAL Table Funding $m $m $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 2.4 462.0 - 462.0 to HACC in Victoria and Western Australia 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 Profit and Loss impact impact $m $m High Care 3,400 93.5 Low and Extra -402.8 -68.4 Service

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 30-Jun-23 30-Jun-12 2014-15 Financial to Ratio to Ratio to opportunity for ($b) 2016-17 ($b) total assets total assets ?($b) bankers and Sources of funding investors 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 1 July 2014 High (c) based on analysis from KPMG 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?