When consumers are looking for an aged care home, what are they looking for? What questions are they asking?
It’s very easy to assume it is all about price. But price has never been a reliable guide to value.
Economic modelling for competitive advantage
RAD pricing should correspond to the average cost of equivalent real estate local to the facility. After that it is all about value, represented by physical and intangible assets.
Economic modelling plays an integral part in finding the value of facilities; it helps providers understand where their facility is in the current market and how to adapt to the future with confidence.
Recently Ellis Jones announced a new market economic analysis model developed by expert qualified researchers, including market econometricians. The model helps providers understand the market better to enhance facility and portfolio performance and how to capitalise to move forward in a changing environment.
What have we learnt?
Along the journey to building a more robust system, the researchers discovered several trends in aged care industry that highlight the need for providers to look at what they are doing and consider where they are headed.
- Residential aged care facilities are gradually being occupied by residents with higher care needs. In 2012-13, 74% of all aged care places were occupied by residents with high care needs.
- Providers are seeing on average, shorter and more intensive periods of residential care.
- Providers are combining services to offer continuum of care for customers as they downsize and their care needs grow.
- Providers can take advantage of capital offsets and accommodation charges well below median house prices.
What does this mean?
Being aware of the wider market in which they operate means providers can effectively match their offer to local needs.
Having identified local factors contributing to a facility’s success, providers are better informed when it comes to deciding on investments, mergers and acquisitions, responding to competitive threats, pricing services and when determining the appropriate mix of accommodation, health and entertainment options.
Price is important, but we know that at the moment as a whole, the industry is reassessing assets. It is in a time of change and increasing competition and price becomes less important.
Providers need analysis that will help them the most. They need to know their value.
Be better informed and ready to meet growing competition at the local and sector level.