Health and Aged Care

The future demand for Australian health including pharmaceutical and aged care services is underpinned by an ageing population who are living longer but with complex care needs. Many operators, for various reasons, are not in a position to capitalise on the long term growth potential within the industry.

Issues

Immediate challenges facing existing operators include:

  • uncertainty as to how future infrastructure commitments will be funded, given the difficulties of raising new equity and/or debt funding
  • changes to Personal Property Securities Act 2009 has possible implications for lenders to pharmacies
  • uncertainty associated with how accommodation expenses will be funded in the future. Potentially having to refund millions of dollars in accommodation bonds is a very real prospect
  • increasing competition for pharmaceutical retailers with the prevalence of large discount warehouses
  • reliance on government funding, where increases do not match the increasing costs of expenses
  • attracting and retaining skilled staff
  • poor governance and processes
  • implications of and compliance with the Living Longer, Living Better reforms.

Questions that should be asked

Organisations facing these issues should consider the following questions:

  • Should we expand or reduce our service offering or exit the industry completely?
  • Are our cost structures sustainable to compete against larger competitors?
  • Should existing accommodation bonds need to be repaid, how will this be achieved?
  • Is our business model and capital structure prepared for the proposed regulatory changes?
  • Is our business up-to-date with the recent changes to rules governing the relocation of Pharmacy Approval Numbers?
  • Are we investing sufficient funds into capital expenditure and growth capital?
  • Is there scope to maximize revenue and reduce costs?
  • Are we adopting the Australian Standard 8000-2003 for corporate governance?
  • Do we have the necessary skills to accommodate the changes under the Living Longer, Living Better reforms?

Our expertise

Our dedicated health and aged care team comprises of experienced professionals with international backgrounds in corporate advisory, real estate, valuations and restructuring. We work with private, government and not-for-profit organisations that have a health and aged care focus, and are attuned to managing the many, and often sensitive, stakeholder interests. Examples of our experience include:

  • advice on the sale of a number of leading Australian aged care providers, across residential aged care, retirement villages and community care space
  • financial performance and pre-lend reviews of health including pharmaceutical and aged care providers. Our industry specialisation enables us to identify key risks and opportunities, and provide financiers with effective recommendations to mitigate risk and improve the financial and operational stability of their customers
  • hands-on experience at both an operational and governance level
  • experience managing and resolving the complex issues confronting pharmacies, including recent regulatory changes that have had a significant impact on the industry
  • operational experience in managing residential aged care facilities and Aboriginal healthcare centres in financial stress. By stabilising and improving the operations and financial management of these facilities and centres, we seek to preserve jobs and ensure the continuation of services to the community.
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