Hi guys, I thought I would take a look at this stock...out of...

Hi guys,

I thought I would take a look at this stock...out of curiosity as I work as a health professional in aged care. I was particularly interested to see how the recent changes to the Aged Care Funding Instrument (ACFI) had impacted on an aged care provider stock such as this. The share price performance of this is as expected.

TBH I would be very careful about staying in a stick such as this long term. ATM the government is spending a fortune on aged care. It's costs have blown out considerably and it is looking to claw back funding over the longer term. It can't afford the current outlay of funds now and projected costs with the current ACFI arrangement over the longer term.

There are more changes due to come in on January 1, which will effect the profitability of aged care providers - much more so than now. This is because the recent changes that have gone through that effect how the providers can make a claim for government funding via the ACFI for each individual resident can essentially be tweaked in other areas within each claim so as to minimise any potential reduction in funding (technical details of this beyond the scope of this post due to time). This tweaking and therefore minimisation of funding loss will not be possible with scheduled Jan 1 2017 changes to the ACFI. The Jan 1 changes are much more significant than those now. I have spoken to various ACFI managers whose job it is to process these claims. They advise me that looking longer term, we will likely head towards more of a user pays system rather than the government funding the bulk of the costs for each resident - this makes sense to me, as the government is unable to afford it's current and projected outlay in this sector and is therefore looking to significantly reduce its funding requirements here.
Therefore longer term, I don't foresee aged care providers as beeing as profitable and therefore as lucrative an investment choice as what they are now or have been.

From an ethical perspective I don't like aged care as investment choice - essentially the situation now is that only part of government funding (as little as possible) actually gets spent on the care of residents/ provision of services, while the remainder gets diverted as profit to owners/ shareholders. Having worked in both for profit and not for profit aged care providers, the difference in quality of care for residents has consistently been lower in the for profit sector - eg. less equipment for residents, lower numbers of personal carers working on site, poorer quality food/ diet, more mistakes made in care duties, etc.

My advice is really give this some thought as to whether this is a sector you ought to be involved with from both a short to longer term profitability perspective and also an ethical one.

Appologies if you find this unsettling/ not what you wanted to hear.....GL.