It is relatively easy to see how Estia is going to improve its performance. Actual occupancy in November was 92.8%, down from an average of 94.4% last financial year. The market average is 95% and 97% is possible. That extra 2% almost goes straight to the bottom line in profit.

With 5,782 beds across 68 aged care homes, 2% equals 105 beds.

They are going to take the following actions to build the occupancy:

• re-engage with the top five referrers as a key priority
• immediate focus on 14 underperforming aged care homes
• establish a specialised occupancy team
• launch a respite initiative to mitigate seasonal downturns
• overhaul the enquiry managements system

The percentage of clients paying a RAD on entry is declining – down to 45% of paying customers (40% are concessional residents). However the average incoming RAD is $371,000 and the average outgoing RAD payment is $299,000. Estia is ahead.

Accordingly DAPs now deliver $21,400 EBITDA per resident in cash.

And the word is that the back-office is the biggest problem at Estia, being all the legacy systems they have inherited as a result of rapid acquisitions, which has made reporting and control difficult. They now have the stability to get their house in order over the next 24 months.

Subscribe to our weekly newsletter

The Donaldson Sisters present important topics and perspectives on the table for open discussion – topics that don’t often get raised in the mainstream media and voices and perspectives less frequently heard. Subscribe to their newsletter here.