From memory even at the end of OCA's 6-7 year business transformation program, about 3 years from being finished, they still have ~ 30% of their beds in basic level MOH partially funded care. Is that a handbrake on future growth...you be the judge.
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But but but....
OCA are the extra care specialists and are building premium suites for residents with high needs. And there are plenty of high net worth elderly willing to pay a premium price for a premium suite, and more per week as an ongoing service fee which will more than wipe out any funding gap between staff wages and lesser health funding increases. Did I not read that projected sequence of events regarding care funding on this very thread many moons ago?
SNOOPY
Yeah and over the years their business transformation program has certainly begun to reap some rewards...ostensibly all of which have been gobbled up with higher costs. MAV assures us that will change in the future though. Clearly I am skeptical although I continue with a modest stake. The forward PE is not expensive and they are thankfully, at long last building more independent living apartments (which is where the real money is), in the next couple of years so provided one takes an extremely "dogged" approach to holding they should do okay. More than okay relative to other retirement village companies though ?...that I don't know...only time will tell.
Great, lets not worry about huge wage relativity claims in the past and give everyone a 5.8% pay increase. What could possibly go wrong...[/QUOTE]
Don’t want to fill this thread with what people feel they should get paid, but general consensus is nurses and teachers should get a higher pay increase than 1.38%. We need to show them their fair value in comparison to minimum wage, which will only continue to increase.
Maybe if minimum wage only went up rate of inflation, or a minimum wage freeze, nurses might understand. Until then, we can all expect many more strikes coming and not only nurses.
We can all thank Cindy for helping everyone, including those that don’t need it for wasted money that could go to nurses, doctors, teachers.
Yes. Plus, as I have talked about in the past:
1) The government currently doesn’t (as far as I’m aware) provide any residential aged care service
2) There is a dementia crisis looming - people are already having to be placed outside of their usual geographic location, for D3 and D6 level dementia placements as there is a huge shortage of beds
3) The need for residential hospital level care is increasing and will continue to do so - for the general elderly population not just for those with financial means to afford it
4) Yes, there may be a push towards more home based care/support to enable people to stay at home for longer but that will mean that people will be significantly older, with higher care/health needs when they need to move into residential care
The government of the day - whichever party that might be - will continue to subsidise this care, at whatever level is needed, and will have to pay whatever providers need to provide a standard care service. There is no alternative. So I don’t believe there is any need to be majorly concerned about “rising care costs.” Yes, costs will rise (and not just wages) but the government will meet this cost. Because they literally have no other way to provide this care. Rest homes like the one I work at will no longer exist in 10-15 years. The vast majority of residents will come into residential care in their late 80’s at the earliest - many not until they hit their nineties. Most will need hospital level care from Day 1.
Not really sure why you do this, like when you own it you love it to death here and never bring up any of your negatives, but when you don't own it you poo on it relentlessly with an endless litany of risks. Sometimes you do it even if you haven't owned it. It's not just this one, and it's not just here either.
What motivates you to behave like this, or do you just not consider how you come across on a forum like this?
Just wrote a lengthy reply only to lose it all when my battery died. Too tired to start over. Maybe tomorrow.
Thanks for your critique mate. I like to think that my analysis helps some people and I've certainly received a LOT of requests to come back when I was in Siberia without which I may not have come back. I call it as I see it and I certainly don't get it right all the time and we certainly get a bit more clarity with OCA every time they report. I think we've all been on a journey of discovery with this one especially with their opaque reporting. Its good to have a robust debate. I still own 50,000 shares, hardly an inconsequential stake but certainly well down on what I recently owned. You've totally mis-read the situation thinking I don't own any at this point. Without good debate this place can be like a morgue. Would you prefer a hollow echo chamber where all shareholders do is pump each others tires ? Who got their FY20 underlying profit estimate closest to the mark ?
Who got their 1H FY21 underlying profit estimate closest to the mark against some wildly optimistic other estimates by well known posters? Maybe I know the company a lot better than you think ? Not everyone likes my posting style...it is what it is...I simply try and add value by trying to as accurately as possible, predict the future. If you don't see any value in that mate feel free to ignore my posts. About 10 whole posts on Hot Copper about ATM...so what ? What special insights do you add to this thread ?
JustaKiwi - I have no issue with staff pay rates per se and in fact what i observed when my mother was in late stage care was how nice, professional and extremely hard working the nurses and caregivers were. Very impressive and they certainly earn their money ! If you go back through some of Earl's commentary you'll pick up the clear theme that MOH funding is consistently not keeping up with the rate of increases in the cost of late stage care and for example last year's 3% funding round increase was woefully inadequate to meet the previously agreed annual increases in caregiver and nurses settlements that the MOH already knew about. To be clear, the MOH are deliberately underfunding late stage care and this is a progressive problem that's been getting worse and worse for years and is why many small operators are literally going broke. This issue is what I euphemistically refer too as the handbrake on this company's growth and its an issue that's not going away anytime soon.
The Government/DHBs award contracts to Care Homes, set the Maximum Contributions (paid for by either the patients themselves or the Government itself) and fund additional hospital-level care. In effect Rest Homes are a government service operated by independent contractors. I imagine that if the Maximum Contributions and additional DHB support do not keep up with costs, the independent contractors will eventually not apply for or renew contracts to enable them to provide Rest Home service.