Government funding and listed aged-care provider share prices

In the week beginning 5th September 2016, the share price of the three listed aged care providers, Estia, Japara and Regis suffered cuts of up to 20 per cent in their share prices.
We reported in August that a number of providers – we assume the listed ones – had tried to add supplemental accommodation charges, calling them names such as ‘capital refurbishment fees’ or ‘asset replacement contributions’ to offset the reduction in funding from the federal government which started in July 2016.

The Department of Health dashed the hopes of these providers last week when it “clarified” the additional fees that providers could charge. It stated that providers could not charge fees above the maximum amount worked out under the Act for services that are part of the normal operation of an aged care home. Fees for ‘other services’ can only be charged if the resident receives a direct benefit. Providers can charge “extra service fees” for higher standards of food, accommodation and hotel-type services but not for care.

The Department’s announcement was the catalyst for the share price falls in the listed aged care providers last week

See https://agedcare.health.gov.au, and reports in The Australian, Australian Financial Review 10-11 September 2016

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