Estia details management rejig amid funding concerns

The aged care services group is tracking at a slightly lower occupancy rate, as its strategic review continues.

CEO Norah Barlow re-confirmed Estia would refrain from future acquisitions and focus on maximising its portfolio. Picture: Aaron Francis/The Australian.

Embattled aged care services group Estia Health has detailed a management restructure amid a fall in occupancy rates and concerns around the impact of government funding cuts.

Newly appointed chief executive Norah Barlow updated investors on the company’s strategic review at today’s annual general meeting in Melbourne, outlining challenges ahead.

She said the company was tracking a slightly lower occupancy rate so far in fiscal 2017, compared to last year.

“This (lower) average reflects the fact that some of our homes, in the main the newly acquired homes, have experienced a drop in occupancy, which we are working to correct,” she said.

“This reduction in occupancy over the portfolio was a factor in revising our fiscal 2017 guidance.”

The company’s strategic review is ongoing but Mrs Barlow said today an early outcome of the review was a regeneration of the management team.

The changes include a restructure of the quality roles in the company, with the creation of a head of quality role and quality managers and clinical educators in each state.

Mrs Barlow said the company was confident that its new management structure, which she said was a return to a more traditional regional based model, put the right people with the rights skills in the right positions.

Estia has also introduced a new chief policy and regulatory officer role.

“The future government direction in aged care is undergoing some change, and we need to be sure that we are always aware of what these changes are, and indeed that we are in a position to bring matters that impact on us to the attention of the regulators,” Mrs Barlow said.

The chief executive added that the overall health of the business was “sound” despite the challenges confronted this year, although a warning was issued on the impact of government policy.

The company has urged certainty from Canberra as it bunkers down for a turbulent period with cuts to federal government funding introduced.

“I would say that all of us, including the many vulnerable people who need aged care, would benefit from certainty in government funding policy for these valuable services. I would hope we would get this in the foreseeable future,” she said.

“The changes in government funding recently announced will have a significant adverse impact on earnings in fiscal 2018 and 2019, if we don’t put strategies in place to mitigate this.”

Mrs Barlow said a range of initiatives had so far been put in place in a bid to dampen the potential financial hit.

The Australian-listed company, which has been the target of short sellers, reaffirmed its fiscal 2017 forecasts, which it had previously downgraded. By 3.20pm (AEDT), Estia shares were up 3.1 per cent at $2.95, with a sharp reversal out of red numbers seen following the update.

Chairman Pat Grier said the board and management were disappointed the company had fallen short of expectations in recent times.

“We are refocusing our efforts on organic growth and ensuring greater oversight of our operational activities,” he said.

“We are in the early stages of the strategic review but we are moving swiftly to address a range of important issues in the Estia Health business.”

Mrs Barlow re-confirmed that the company would refrain from future acquisitions and focus on maximising its portfolio and pulling costs out of the business.