Aged care accommodation pricing options and the profitability of aged care facilities

Abstract

Purpose: This study investigates the relationship between aged care accommodation pricing options (refundable accommodation deposits (RADs), daily accommodation payment (DAPs) and concessional) and the profitability of aged care facilities. Design/methodology/approach: Data are obtained from 33 aged care facilities across New South Wales in Australia. This study uses multivariate regression for analyses. Findings: The estimation results suggest that higher level of RADs has a negative and significant relationship with profitability of aged care facilities. The authors also find that concessional pricing option is positively associated with higher profitability. Originality/value: These findings may benefit aged care operators by reviewing their strategies and portfolios to enhance their financial performance. The results are also useful to the Australian Government to further explore how the removal of RADs may transform the aged care sector's profitability.