Service Integrated HousingVillage Service Overlay and Funding ModelInteractive Workshop

“Service Integrated Housing”

What is a SIH Program?• A planned provision of care services to accommodation clients.• Increased care in a variety of situations (as required).

Why has this come about?• Government reforms• Market demand for “ageing-in-place”

What settings will it occur in?• Co-located aged care and retirement villages• Stand-alone retirement villages• Satellite retirement villages

“Service Integrated Housing”

What are the components of SIH?• Day-to-day delivery of care and other services

o The types of activities/participants involved will depend on the needs of residents

What are the RESIDENT benefits of SIH?• Improved emotional, social, cognitive, physical and sensory

wellbeing • Builds a stronger sense of community and engagement• Provides a true ageing-in-place continuum

Program Service Types

• Domestic services, housekeeping and cleaning

• Personal care, bathing, dressing and grooming

• Meal assistance and preparation

• Nutritional planning• Medication monitoring• Transport and assistance to

appointments • Wellness and exercising

programs

• Visiting friends and relatives

• Pet care (e.g. dog walking) • Shopping and bill paying

assistance • Social outings including

support and assistance at family functions

• Care coordination • Special occasion care

“Service Integrated Housing”

SIH represents a

fundamental shiftfrom

an accommodation model to

a CARE model

“Service Integrated Housing”

What are the differences?

Accommodation Model• Sales proposition = “independence”, “lifestyle”• No underlying provision for future care needs as residents age• Future care may need to be outsourced (e.g. fee for service)• Likelihood for earlier resident relocation due to higher care needs

Care Model• Sales proposition = “care”, “wellbeing”• Aligned with mission objectives and organisational philosophy• Resident care needs are met throughout the ageing process• Cost of care delivery for resident front and back ended

“Service Integrated Housing”

What are the OPERATOR benefits?

Care Model• In-house program provides “control” of service delivery• Builds a strong bond with the residents• Justification for Deferred Management Fees• Bridges gap between ILUs and residential aged care• Financially viable business case

Service Integrated Housing (“SIH”)

Two delivery examples

1) On-site care• Live on site carer• After hours carer support from

other sites or call centre• Forego 1 unit• Uplift in entry prices/DMF• Suited to medium to large villages

Service Integrated Housing (“SIH”)

Two delivery examples

2) “Hub & spoke” model• Live off site• Care delivered from central hub• Uplift in prices/DMF• Caters for smaller satellite sites

with limited community facilities

Service Integrated Housing (“SIH”)

Benefitsa) Resident access to care is not totally reliant on

government fundingb) No limit/regulation to growth of care delivery

Costsc) Administration, staffing and delivery managementd) Consumablese) Upfront negative cash flowf) Length of stay risk

Financial Benefit

Co-located RACF, ALUs, ILUsa) 8-12% uplift in ILU entry contributionsb) Improved sales ratesc) Economies of scale

Service Integrated Housing a) Potential increase in sales ratesb) Entry contributions between 5-10% higherc) DMF percentages > 50% with higher front end weightingd) Justification for capital gain retentione) Shorter length of stay

Financial Risks

Capital Cost

a) Minimum 2-3 FTE carers

b) Potential unit give-up

c) Administration and management

d) OH & S and other related costs

e) Capital budget to cover start up and ramp up period

A “Typical” Pricing Model

Development Build Cost $300,000

Base assumptions

Loans Loan Value $300,000 zero dev. profit

Average Length of Stay 6 years

Operating Expenses

Operating Margin Nil expenses = charges

Major Refurbishment 3.5% of unit value occurs on resaleRates CPI 3.0% p.a.

Loan Appreciation 3.0% p.a.

A “Typical” Pricing Model

DMF StructuresBase

Entry Price $300,000

Yearly Charge 3% over 10 years

DMF calculated on Exit price

Max DMF 30%

Total Charge(based on 6-year stay) 18%

Cap Gain to Resident 100%

Additional Expense nil

-1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30(400,000)

(200,000)

-

200,000

400,000

600,000

800,000

1,000,000

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

474,244

Base (30%) - 6 years

Year of Operations

Net

Cas

h Po

sition

A “Typical” Pricing Model

IRR 16.3%

Base Vs Base + Carer

DMF StructuresBase Base + Carer

Entry Price $300,000 $300,000

Yearly Charge 3% over 10 years 3% over 10 years

DMF calculated on Exit price Exit price

Max DMF 30% 30%

Total Charge(based on 6-year stay) 18% 18%

Cap Gain to Resident 100% 100%

Additional Expense nil $7,500 p.a.Carer cost

per unit

-1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30(400,000)

(200,000)

-

200,000

400,000

600,000

800,000

1,000,000

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

474,244

180,228

Base (30%) - 6 years Base (30%) + Carer - 6 years

Year of Operations

Net

Cas

h Po

sition

Base Vs Base + Carer

IRR 16.3% IRR 8.8%

DiminishedReturns

Base Vs + Carer Scenarios

Base Base + Carer ↑ 5% + Carer ↑ 10% + Carer

Entry Price $300,000 $300,000 $315,000 $330,000

Yearly Charge 3% over 10 years 3% over 10 years 5% over 5 years,then 3% for 5 years

7% over 5 years,then 3% for 5 years

DMF calculated on Exit price Exit price Exit price Exit price

Max DMF 30% 30% 40% 50%

Total Charge(based on 6-year stay) 18% 18% 28% 38%

Cap Gain to Resident 100% 100% 100% 100%

Additional Expense nil $7,500 p.a. $7,500 p.a. $7,500 p.a.

DMF Structures

-1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30(400,000)

(200,000)

-

200,000

400,000

600,000

800,000

1,000,000

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

180,228

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

495,583

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

837,285

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

474,244

Base (30%) - 6 years Base (30%) + Carer - 6 years ↑ 5% (40%) + Carer - 6 years ↑ 10% (50%) + Carer - 6 years

Year of Operations

Net

Cas

h Po

sition

Base Vs + Carer Scenarios

IRR 16.3% IRR 8.8% IRR 16.4% IRR 22.4%

Similar returns Improved returns

Impact of Length of Stay

Base ↑ 5% + Carer

Entry Price $300,000 $315,000

Yearly Charge 3% over 10 years 5% over 5 years,then 3% for 5 years

DMF calculated on Exit price Exit price

Max DMF 30% 40%

Total Charge(based on 6-year stay) 18% 28%

Cap Gain to Resident 100% 100%

Additional Expense nil $7,500 p.a.

DMF Structures

-1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30(400,000)

(300,000)

(200,000)

(100,000)

-

100,000

200,000

300,000

400,000

500,000

600,000

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

454,123

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

474,244

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

423,508

Base (30%) - 3 years Base (30%) - 6 years Base (30%) - 9 years

Year of Operations

Net

Cas

h Po

sition

Length of Stay on Base

IRR 17.8% IRR 16.3% IRR 15.0%

Marginal change

-1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30(400,000)

(300,000)

(200,000)

(100,000)

-

100,000

200,000

300,000

400,000

500,000

600,000

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

515,698

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

495,583

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

330,365

↑ 5% (40%) + Carer - 3 years ↑ 5% (40%) + Carer - 6 years ↑ 5% (40%) + Carer - 9 years

Year of Operations

Net

Cas

h Po

sition

Length of Stay on ↑ 5% (40%)

IRR 19.9% IRR 16.4% IRR 13.0%

Larger impact

Service Integrated Housing (“SIH”)

Business case considerations• Staffing requirements

o Qualifications/skills, non-English languages, ongoing training

• Hourly rates need to be market tested – weekend/overnight rates

• Staffing/service productivity statement

• Benefits of any brokerage services

• Capital cost and ramp upo potential “cost of carry” during start-up phase

Changes in Thinking

Summary

Committed to providing care and wellbeing services into retirement accommodation

Live-in or rostered carer

Hub & spoke model – satellite villages

Increased front and back-end payments

Questions/Discussion

?

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