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.

Citation

Fahey, A., Gholipour, H.F., Yam, S. and Razali, M.N. (2023), "Aged care accommodation pricing options and the profitability of aged care facilities", Property Management, Vol. 41 No. 4, pp. 544-553. https://doi.org/10.1108/PM-10-2022-0080