If the increased funding from the government fails to fully reflect the pay equity changes, then those small operators will be in trouble. With recent residential real estate price inflation, perhaps the government will be relying even more on private payers to pay for care costs (they also scrapped the planned big increase in the asset threshhold.) In addition they may be relying on the big operators such as OCA to cross-subsidise the care beds from their profits from the sale of ORAs.
"The Westpac report found private companies such as Ryman are expected to provide "around 40 per cent of the rest home beds needed over the next 10 years.
"These beds are "almost always" part of a larger village like Bob Scott. These facilities find it easier to make money. As the report puts it, they have the "scale and alternative revenue streams to remain profitable". (my highlight) https://www.stuff.co.nz/business/ind...red-population
I think we're headed for a real calamity in this sector in terms of bed availability. Nurses will want pay relativity, then cleaners, then administration staff and so on. Where does this logically end ? In my view it ends with a substantial bed shortage because a heck of a lot of smaller operators will have to shut the doors !
It may come to a situation where if relatives of elderly folks want the best care for their needy one they have no alternative but to purchase an occupation right agreement. In this regard the listed operators all appear to be well positioned and I am hoping my Mum coming up 88 year next month keeps her marbles and I don't have to go through a six year dementia fiasco like I did with my Dad.
Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.”
Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine
Saw an Oceania tv ad today... very smart, subtle, heart warming, and overall well done I thought. My grandad even said he likes it - and that is when you know it must be good.
Good to see IPO funds being spent well
Disclosure: my grandad [typically] hates 11 out of 10 TV ads
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