OCA - Oceania Group - retirement villages

[BlackPeter]

As previously warned, with this company residents come first, second, third, fourth and fifth and then its management and staff and then shareholders come a long and distant last.

There are plenty of experts who will tell you that the key to outstanding profits is outstanding customer service.

Obviously any company first needs to make sure it stays profitable, but after that - I can't think about any successful and sustainable company which put shareholders before customers. Can you?

Good to see OCA looking after their clients, the profits will look after themselves.

And look at it that way - who in their right mind would after reading your post still buy into a Sum village where share holders seem to come first? As a client I would want the best service I can get and go into a village where clients come first ...

Reminder: need to sell those SUM shares ...

[Beagle]

There are plenty of experts who will tell you that the key to outstanding profits is outstanding customer service.Yeah, what's return on investment?, you'd be forgiven for thinking most of senior management have never heard of that

Obviously any company first needs to make sure it stays profitable, but after that - I can't think about any successful and sustainable company which put shareholders before customers. Can you? The list is very long that understand that there is no point in serving customers when the process loses you money, its a company not a charity !

Good to see OCA looking after their clients, the profits will look after themselves. Yeap, that is OCA's mantra and its not working very well

And look at it that way - who in their right mind would after reading your post still buy into a Sum village where share holders seem to come first? As a client I would want the best service I can get and go into a village where clients come first … 97% resident satisfaction survey's prove you can run a highly successful company that's growing earnings strongly and still have very happy residents.

Reminder: need to sell those SUM shares … Go for it ! Your capital is clearly wasted in a fast growing successful company lol

Do you work for OCA lol. You seem to have their company culture very well embedded in your thinking

[justakiwi]

Which is exactly as it should be (although I would argue that staff should be their next priority, ahead of management).

As previously warned, with this company residents come first, second, third, fourth and fifth and then its management and staff and then shareholders come a long and distant last.

[Beagle]

I don't think you guys get it that OCA HAS to change its business model because the old one isn't working. Plenty of charities, (yes ones that don't need to make a profit), have gone broke or stopped late stage care operations because they cannot afford to run at a substantial loss. The core problem for shareholders is that the old care model that relies on Govt funding still represents the vast bulk of their business model and this is a huge handbrake on profit growth...it really is this simple, you either choose a company with a massive handbrake on its growth going forward or one that doesn't. I can't make it any simpler than that.
Claims that OCA residents are happier than SUM others has no basis in fact or independent survey.

[justakiwi]

Nobody is saying OCA residents are happier than SUM others. I have no idea if they are or not. What do know, as I’ve said before, is​ that the future of elderly care in NZ will need to be focussed on exactly that - care. If companies forget that, and become focussed on independent living, they will be ill prepared for what the future brings. I can’t put a time frame on it, but at some point down the track, the number one need will be rest home, hospital and dementia level care. Independent living options will not be the primary need. I get that businesses need to make money. But one would seriously hope that any retirement village/care business, would not have started up only for the money. I would hope their motivation was much more than that, and I would like to think that people who invest in these businesses are also not motivated by money alone. Sadly, I am starting to believe this is not the case.

I don't think you guys get it that OCA HAS to change its business model because the old one isn't working. Plenty of charities, (yes ones that don't need to make a profit), have gone broke or stopped late stage care operations because they cannot afford to run at a substantial loss. The core problem for shareholders is that the old care model that relies on Govt funding still represents the vast bulk of their business model and this is a huge handbrake on profit growth...it really is this simple, you either choose a company with a massive handbrake on its growth going forward or one that doesn't. I can't make it any simpler than that.
Claims that OCA residents are happier than SUM others has no basis in fact or independent survey.

[BlackPeter]

I don't think you guys get it that OCA HAS to change its business model because the old one isn't working. Plenty of charities, (yes ones that don't need to make a profit), have gone broke or stopped late stage care operations because they cannot afford to run at a substantial loss. The core problem for shareholders is that the old care model that relies on Govt funding still represents the vast bulk of their business model and this is a huge handbrake on profit growth...it really is this simple, you either choose a company with a massive handbrake on its growth going forward or one that doesn't. I can't make it any simpler than that.
Claims that OCA residents are happier than SUM others has no basis in fact or independent survey.

You made your point. I am sure some will agree and some will disagree (well, I do).

Personally - while we both agree that companies need to be profitable, we might see different priorities. You seem to think share holder money comes first and customer care might follow, I would put it the other way around. Obviously - money needs to be used to good purpose and effect - wasting it is no good no matter on which priority level it sits.

And who knows, maybe this even turns out to be similar to the hen and egg discussion (which comes first)?

[Beagle]

Nobody is saying OCA residents are happier than SUM others. I have no idea if they are or not. What do know, as I’ve said before, is​ that the future of elderly care in NZ will need to be focussed on exactly that - care. If companies forget that, and become focussed on independent living, they will be ill prepared for what the future brings. I can’t put a time frame on it, but at some point down the track, the number one need will be rest home, hospital and dementia level care. Independent living options will not be the primary need. I get that businesses need to make money. But one would seriously hope that any retirement village/care business, would not have started up only for the money. I would hope their motivation was much more than that, and I would like to think that people who invest in these businesses are also not motivated by money alone. Sadly, I am starting to believe this is not the case.

All of which SUM provide. Dr Andrew Wong Director of SUM has been managing director of Mercy Ascot Hospitals and Healthcare holdings for over a decade. I have spoken with him after the last annual meeting and I am very impressed. Dr Marie Bismark Director of SUM is the chair of SUM's clinical governance committee. She holds degrees in law, medicine, bioethics and public health and has completed a Harkness fellowship in heathcare policy at Harvard University. Marie Bismark works as a psychiatry registrar with Melbourne Health and as an associate professor at Melbourne university. The rest of SUM's board bring a good depth of other business skills and is nicely balanced 50/50 male-female.

The CEO and CFO both have extensive financial skills. Julian was formerly an investment banker and Scott Scoullar recent won the CFO of the year award.

SUM's core ethos is "If its not good enough for my MUM its not good enough for our residents". RYM have the same ethos. Both companies have demonstrated very successfully that you can run a highly profitable and strongly growing company as well as providing first class standards of care for residents. How is this possible ?

1. Their business is not massively handicapped by concentrating on very late stage care and concentrating on an old care model that's significantly underfunded.
2. Management run an efficient tightly disciplined operation that minimises waste and overstaffing wherever possible and understand that they are not a charity and there is no point in providing services at a significant loss.

I don't mix my philanthropic activities with my investment activities. That doesn't make me a bad person, it gives me very clear focus on what I am trying to achieve.
I have no reservations whatsoever that SUM are not doing a first class job providing a very good standard of living for their residents.
A "little birdie" tells me SUM have been making some very good high level "care hires" just lately and they haven't finished yet and these senior staff come from, guess where ?...yes, OCA.

SUM are transparent with their customer satisfaction survey's and 97% is a very good score in my opinion. Do OCA conduct any customer satisfaction survey's to provide some evidence that their philanthropic services lead to more highly satisfied residents ? Some of OCA's villages were originally not for profit Presbyterian Support service facilities and I strongly suspect the not for profit culture runs pretty deep with the company...which is fine for people who wish to mix their charitable and investing activities.

[justakiwi]

1. Their business is not massively handicapped by concentrating on very late stage care and concentrating on an old care model that's significantly underfunded.

So are you saying, when residents get to the point where they need “late stage care” SUM, washes their hands of them and expects their families to move them elsewhere until they die? That is not continuum of care. That is putting “late stage care” into the too hard/too expensive basket. Would you not want your Mum or Dad to be able to be cared for right through if necessary - from independent living, to rest home level, to hospital or dementia level care - all within the same facility (their home)?

2. Management run an efficient tightly disciplined operation that minimises waste and overstaffing wherever possible and understand that they are not a charity and there is no point in providing services at a significant loss.

I challenge you to show me one rest home facility in NZ (or probably anywhere actually) that is over staffed. Unless you are referring to paper pushers, in which case you may be right. But if you are talking about hands on staff, like me, no facility is over staffed. We are all well and truly understaffed, and under paid. It is a world wide issue and I suspect that SUM is no different.

[Beagle]

Stick with OCA if you like it and good luck. Not my job to spoon feed anyone on what SUM does and they certainly don't need my defence on the excellent standard of their facitlities and advanced care they provide. Read there last couple of annual reports for goodness sake before you make any more statements like the one above. The credentials of their board are second to none and they are committed to providing first class care that's got to be good enough "FOR THEIR OWN MUM" Workers have seen significant increases in their wage rates in recent years.

I've done my bit to highlight the differences between OCA's business model and others and to explain why I see OCA continuing to underperform the sector in the foreseeable future. Some people will appreciate me taking the time and others not so much, it is what it is. Good luck to holders.

[winner69]

One of the most impressive and seductive presentations I’ve seen is one CBL did a couple of years ago. It impressively outlined how their business worked, how their business model makes money and the accounting treatment of some items.

It really was an impressive and seductive presentations

Every time I see an Oceania presentation certain parts of it remind me of that CBL presentation.