OCA - Oceania Group - retirement villages

[ValueNZ]

Will be interesting to know, given that we all know pure rest home care is unprofitable, and this Wesley Care Centre is an operating lease providing pure care services, i.e. Oceania will be making a loss on operations, whether they are just quiting the loss, or some other reason.

Heartless it may appear to be, but right there is the ethical conflict you have as a shareholder, whether you're happy to make a loss at the Wesley Care Centre or cut the losses by not continuing the operating lease. Dig deeper into how many other properties are pure care, operating lease arrangements.

I'm not sure how I feel about this yet, as a shareholder. I'd like to know a bit more about the circumstances for this decision. I'd also like to know what arrangements OCA have to relocate their residents.

Above all else, Oceania needs to be acting in the best interest of shareholders which means cutting losses where necessary. However from a game theory perspective it seems likely that the damage to the brand will cost more to Oceania than any losses they have avoided by not continuing the lease for another six months. So in my opinion Oceania probably would have been better renewing the lease for a further six months and continued running the rest home at a loss.

[ronaldson]

Interesting article, and comments on this thread. It seems clear that in any event closure was required not later than end February 2024. The concerns articulated by/on behalf of residents would simply be deferred but still arise. And as occupancy fell incrementally during any longer wind-up period the extent of ongoing losses would magnify over the additional period. So it doesn't make sense to do that. Also the public health system is ultimately responsible for these residents, and will facilitate alternatives even if these are regarded as less convenient/suitable.

Remember Mercy Parklands closure in Ellerslie recently - same problem for those affected, but it happened and the cloud of concern has dissipated. For sure folk were not happy, but they managed just as these residents and their families will need to do. It sounds heartless but it is realistic.

I noted Oceania can only accommodate up to 30 out of 50 or so in other of its existing local facilities and obviously these are some distance away in other suburbs so the families in particular are discomforted. I feel for them but care for the elderly in this country stands on a precipice currently. If it were not for the listed RV/Care Centre operators the Government would be experiencing a massive fail!

[Maverick]

It's nice to see so many excellent posts here now there is something to chew on.

It is highly relevant to point out OCAs newly delivered EDEN has 69 caresuites and is 250 meters down the road.
It's a no brainer OCA want out of the leased facility. The old rest home ,leased model is way off what OCA is about. It will be breaking even on at best ( as per Baabaa's well laid out posts).

Then Ronaldsons post above raises good points about the ecomic realities of winding down the operation. Both $ practically and the fact its going to happen sooner or later anyway. Folk are still going to be upset either way.

As far as bad press goes , these things blow over really quickly. Does anybody remember or even care now that OCA voluntarily paid the covid subsidy back and ARV didnt?

As a shareholder I'm very pleased with the move to exit the lease arrangement now OCA's Eden is mature.
The intentional, chronic underfunding of the industry is wholly the government's fault and it's the NZ taxpayer who needs to foot the cost, not OCAs shareholders.

The only question left is the speed and ethical way it is being done. Maybe 2 months is perfectly sufficient to relocate 50 folk?
I've no idea but would be very interested to hear Just a Kiwis opinion?

[Fortunecookie]

Some good points, Ronaldson and Maverick. I was somewhat outraged, but I can now see it differently.

It is a challenge to strike a balance at all times over a transition period. Perhaps management have a good idea how it will play out and to also minimise impact. It reminds me my very own employer have a strategy to implement if a certain unlikely event happens. Perhaps OCA are no different, they have considered all possible scenarios and ready to manage it according to how it plays out.

[justakiwi]

I was thinking about this last night. My thoughts are:

1.Oceania has said they can re-house 30 of those 50 residents, elsewhere
2.That leaves 20 beds to find somewhere - we do not know how many of those beds are standard rest home level, hospital level, or dementia level beds
3.Beds only become available when someone dies, moves to a higher level of care, moves to a different location OR, when brand new beds come on line (anywhere - with any provider servicing the area)
4. The word will have already gone out, to all local providers, seeking assistance to re-locate the remaining 20 residents - some will have respite beds available, which could possibly be used, at least temporarily

I was initially concerned about the two month time-line, but the more I think about it, the more I realise it makes bugger all difference. If there are beds available, residents can go now/soon. If there are no beds available right now, hopefully there will be at least some in a week or two, or a month. I have no idea how many providers or beds are available in this location, but I imagine there are many more than where I live, so the overall "pool" of beds is going to be much greater than it would be down here. I think they have a good shot at finding beds for all 20 residents, within the two months time-frame. Dementia beds could be an issue however, if they are D3 (secure unit) beds.

My thinking would be, families and OCA will work together to find solutions, starting right now. Residents will move into beds as they become available - and I imagine the 30 residents OCA can accommodate elsewhere right now, will move very quickly. Having said that, you have to also consider the logistics of reducing the numbers in dribs and drabs - staffing becomes an issue if that drags on too long (caregivers, cleaners, cooks, housekeepers etc).

Time will tell and hopefully we will hear more soon, but my gut feeling is there is zero point hanging out beyond the two months. It would make zero difference to the availability of existing beds in the area - it is always impossible to accurately predict when beds might be free.

It is more complicated than it sounds - kind of.

It's nice to see so many excellent posts here now there is something to chew on.

It is highly relevant to point out OCAs newly delivered EDEN has 69 caresuites and is 250 meters down the road.
It's a no brainer OCA want out of the leased facility. The old rest home ,leased model is way off what OCA is about. It will be breaking even on at best ( as per Baabaa's well laid out posts).

Then Ronaldsons post above raises good points about the ecomic realities of winding down the operation. Both $ practically and the fact its going to happen sooner or later anyway. Folk are still going to be upset either way.

As far as bad press goes , these things blow over really quickly. Does anybody remember or even care now that OCA voluntarily paid the covid subsidy back and ARV didnt?

As a shareholder I'm very pleased with the move to exit the lease arrangement now OCA's Eden is mature.
The intentional, chronic underfunding of the industry is wholly the government's fault and it's the NZ taxpayer who needs to foot the cost, not OCAs shareholders.

The only question left is the speed and ethical way it is being done. Maybe 2 months is perfectly sufficient to relocate 50 folk?
I've no idea but would be very interested to hear Just a Kiwis opinion?

[davflaws]

Above all else, Oceania needs to be acting in the best interest of shareholders .

Nah. Shareholders are major stakeholders, but theirs are not the only interests that should be considered. The residents and their rellies have a major stake, as does the community (through the DHB and the Govt.). IMO, the directors have a duty to consider these wider responsibilities.

disc: - Through no ones fault but my own, OCA is 56% of my portfolio @ $1.30 odd.

[SailorRob]

I was thinking about this last night. My thoughts are:

1.Oceania has said they can re-house 30 of those 50 residents, elsewhere
2.That leaves 20 beds to find somewhere - we do not know how many of those beds are standard rest home level, hospital level, or dementia level beds
3.Beds only become available when someone dies, moves to a higher level of care, moves to a different location OR, when brand new beds come on line (anywhere - with any provider servicing the area)
4. The word will have already gone out, to all local providers, seeking assistance to re-locate the remaining 20 residents - some will have respite beds available, which could possibly be used, at least temporarily

I was initially concerned about the two month time-line, but the more I think about it, the more I realise it makes bugger all difference. If there are beds available, residents can go now/soon. If there are no beds available right now, hopefully there will be at least some in a week or two, or a month. I have no idea how many providers or beds are available in this location, but I imagine there are many more than where I live, so the overall "pool" of beds is going to be much greater than it would be down here. I think they have a good shot at finding beds for all 20 residents, within the two months time-frame. Dementia beds could be an issue however, if they are D3 (secure unit) beds.

My thinking would be, families and OCA will work together to find solutions, starting right now. Residents will move into beds as they become available - and I imagine the 30 residents OCA can accommodate elsewhere right now, will move very quickly. Having said that, you have to also consider the logistics of reducing the numbers in dribs and drabs - staffing becomes an issue if that drags on too long (caregivers, cleaners, cooks, housekeepers etc).

Time will tell and hopefully we will hear more soon, but my gut feeling is there is zero point hanging out beyond the two months. It would make zero difference to the availability of existing beds in the area - it is always impossible to accurately predict when beds might be free.

It is more complicated than it sounds - kind of.

Excellent information thanks.

[SailorRob]

Nah. Shareholders are major stakeholders, but theirs are not the only interests that should be considered. The residents and their rellies have a major stake, as does the community (through the DHB and the Govt.). IMO, the directors have a duty to consider these wider responsibilities.

disc: - Through no ones fault but my own, OCA is 56% of my portfolio @ $1.30 odd.

You're totally missing ValueNZ's point sport.

By acting in the best interest of shareholders you are by definition acting in the VERY best interest of your customers.

Of course the directors have duty to consider these other interests! That's how they make money.

By providing goods and services that free market participants CHOOSE to swap their own produce for using money to efficiently barter.

If they don't look after the residents and relatives then we don't have a business.

Always spend a few moments thinking beyond the first elementary level.

Shareholders interests are the ONLY interests that should be considered. This way everyone's interests are aligned, always exceptions but in general this is how our amazing world works.

If you're in business you act in your own best interest. Which is satisfying your customers better than anyone else can. Following applicable laws.

I find it stunning a lot of folk here are constantly schooled by a 17 year old.

[ValueNZ]

You're totally missing ValueNZ's point sport.

By acting in the best interest of shareholders you are by definition acting in the VERY best interest of your customers.

Of course the directors have duty to consider these other interests! That's how they make money.

By providing goods and services that free market participants CHOOSE to swap their own produce for using money to efficiently barter.

If they don't look after the residents and relatives then we don't have a business.

Always spend a few moments thinking beyond the first elementary level.

Shareholders interests are the ONLY interests that should be considered. This way everyone's interests are aligned, always exceptions but in general this is how our amazing world works.

If you're in business you act in your own best interest. Which is satisfying your customers better than anyone else can. Following applicable laws.

I find it stunning a lot of folk here are constantly schooled by a 17 year old.

Great post, exactly what I was thinking but I wouldn't have been able to explain it as well as you have.

[Curly]

I take the view that a problem is an opportunity facing the wrong way. One would hope the directors of the company will have thought through all the different outcomes and have the potential to come out with a win win for both residents and shareholders and in doing so enhance the brand. Time will tell. Media will always spin the click bait. I have faith OCA will right the ship. Seven day wonder.