Living Longer. Living Better.
ACFA ‘s final recommendations after further feedback
Since the publication date of 12 October 2012, a small number of responses were received from both Approved Providers and an industry peak. The information below represents the latest advice provided by ACFA to the Minister on 21 November 2012.
Issues raised
Downsizing
One issue raised was how the 40% of beds requirement would apply in the context of downsizing, where a provider may in fact reduce the number of beds in their services as a result of refurbishment rather than increase them.This raises the question of how best to deal with ‘downsizers’ where the provider is investing in improving the quality of accommodation including to improve space and privacy for residents and in particular whether the 40% should be based on the pre-refurbishment or post-refurbishment number of beds in these cases.
New wings
In another example, a provider reports planning to spend a significant amount to add 30 beds to an existing 110 bed facility by building a new wing, while decommissioning some existing bedrooms and toilets. This provider would also fail the 40% criterion c) of the proposed definition of significant refurbishment.The Authority feels some amendment to the recommended definition of significant refurbishment is warranted to account for both the providers who downsize and or build new wings.
Rationale
The 40% requirement could be seen as restrictive when applied in the context of the building of new rooms (commonly new wings), especially taking into consideration the significantly larger costs involved in building new wings (relative to refurbishing old wings) and that this type of investment in new rooms should be encouraged. Lowering the requirement to 25% for new builds should facilitate a greater number of these cases qualifying. It would not preclude cases where the additional rooms are less than 25% - however, in those cases the provider would be required to also do work to the old wings in order to meet the 40% rule and qualify - this can be justified on the basis that encouraging this work to the older wing as well would be a broadly desirable outcome.By avoiding the need for a discretion, greater clarity and certainty is achieved. Going forward, once the 'bar' has been set at this level, providers can be expected to appropriately adjust their plans to ensure they meet the requirements in any event (mitigating the need for a discretion).
'Refurbishment' would then be interpreted as covering both changes to old rooms and the addition of new rooms (wings). The other requirements of ACFA's recommendations would continue to apply requiring the refurbishment (be it to the old rooms or through the addition of new) to benefit supported residents, for the work to be capitalised, for the percentage of beds available to supported residents to not reduce and for the minimum monetary test to be met (40% times $25,000 would remain the test for both old room refurbishments and new wings - so in a 100 bed facility a new wing of 25 beds can now qualify provided 40 x $25,000 = $1,000,000 is spent, which can be expected to be the case for 25 new rooms, and the other paragraphs of the definition are met).
The new wing could not just be for non supported residents as the other requirements of the definition still need to be met (this being the main concern expressed by members).
Applying the 40% test to pre or post refurbishment numbers (whichever is the lower) better caters for downsizing cases (eg: 4 beds converted to 2 beds rooms) where the post refurbishment number is lower.
Recommendations
The recommended change affects both criterion c) and the example of minimum monetary value.Paragraph (c) [Criterion c] of the definition be amended as follows:
| Current Wording | the refurbishment involves a significant refurbishment to a minimum of 40% of the beds in the facility" |
|---|---|
| Proposed Wording |
ii) the refurbishment involves a physical extension to the size of the facility increasing the number of beds in the facility by at least 25% For the purposes of i) the 40% will be calculated by using the pre-refurbishment or post-refurbishment number of beds, whichever is the lower. |
| Current Wording | The prescribed minimum monetary value would be determined by calculating: 40% of the total beds in the facility and multiplying that number by $25,000. For example, for a 100 bed facility the prescribed minimum monetary value would 40% x 100 x $25,000 = $1,000,000. |
|---|---|
| Proposed Wording | The prescribed minimum monetary value would be determined by calculating: 40% of the total beds in the facility and multiplying that number by $25,000. For example, for a 100 bed facility the prescribed minimum monetary value would 40% x 100 x $25,000 = $1,000,000. This same aggregate level calculation based on 40% of total beds (the lower of pre or post refurbishment numbers) would apply irrespective of whether the refurbishment involves changes to existing rooms or an extension involving the building of new rooms. |
Attachment A
‘A refurbishment is a ‘significant refurbishment’ if it meets the following criteria:
a. the refurbishment includes alterations, updates, upgrades or other improvement that mean that the aged care home after refurbishment is significantly different either in form, quality or functionality than before refurbishment, the refurbishment predominantly provides benefit to residents and provides significant benefits to supported residents;
b. the costs of the refurbishment would be capitalised consistent with Australian Accounting Standards– that is, they are either capitalised as structural improvements where they are integral to the structure or depreciated if they relate to fixtures, fittings or anything removable intact1;
c. i) the refurbishment involves a significant refurbishment to a minimum of 40% of the beds in the facility; or
ii) the refurbishment involves a physical extension to the size of the facility increasing the number of beds in the facility by at least 25%
For the purposes of i) the 40% will be calculated by using the pre-refurbishment or post-refurbishment number of beds, whichever is the lower.
e. the refurbishment is of (or greater than) a prescribed minimum monetary value.
The prescribed minimum monetary value would be determined by calculating: 40% of the total beds in the facility and multiplying that number by $25,000. For example, for a 100 bed facility the prescribed minimum monetary value would 40% x 100 x $25,000 = $1,000,000.
This same aggregate level calculation based on 40% of total beds (the lower of pre or post refurbishment numbers) would apply irrespective of whether the refurbishment involves changes to existing rooms or an extension involving the building of new rooms.
1 - Routine repairs, the maintenance of premises (such as painting, plumbing, electrical work or gardening) and the replacement of furniture are not refurbishments and would be expected to be funded through the operational budget of the service.
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