Aged Care
Facilities: Divestment Process
Frequently Asked Questions
Updated 1 March 2004
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GENERAL
1. Why has the decision to sell aged care services been taken? And how?
Principally, the decision is based upon a refocusing of The Salvation
Army’s mission, namely, to the financially and socially disadvantaged
people in our community. The matter of ongoing financial viability was
also a significant factor, as was the imperative to find capital well in
excess of $100M to upgrade facilities before 2008. However, the
financial and capital imperatives served mainly to provide a context in
which The Salvation Army’s leadership made a decision based
fundamentally on mission.
2. What is the financial situation of the aged care portfolio? Is this
the key driver of the decision to sell?
The Aged Care network has been recording significant consolidated
losses in the last three years. Because of sensitive commercial
considerations, it is appropriate to retain confidentiality as to the
exact financial position. However, as per Q1., the financial situation
of the Aged Care network was not the key driver, as important as it is.
3. Which centres will be sold / retained?
All Aged Care facilities /retirement villages within the Southern
Territory, but excluding James Barker House, Barrington Lodge, Linsell
Lodge and Seaforth Gardens, will be included in the divestment
portfolio. Also included are the day therapy centres at Darwin, Inala,
Hollywood, Hillcrest and Healthlink, and the Day Centre in Geelong. Not
included are the Community Aged Care Packages in Levenbank or the
Extended Aged Care in the Home packages in Darwin. Please note this
decision relates only to the Southern Territory.
4. Will the centres being sold be redeveloped?
That is obviously a question for new owners/providers, but it is
expected that many of the facilities will be purchased with a view to
significant redevelopment for their existing purpose. The strategic
planning of potential owners will be one of several selection/assessment
criteria within the competitive tender process.
4a. How will the management be changed for the
centres being retained? Will it remain with Territorial Headquarters (THQ)
or revert to the Divisions?
Options for ongoing management are yet to be
decided. There are a range of options which include being managed through
THQ, being brought within the Social Programme Department or managed
through Divisional Headquarters.
5. What will happen to the proceeds from the sale?
The net proceeds from the sale will be allocated for the core social
programmes of The Salvation Army, including those Aged Care Facilities
being retained for the financially and socially disadvantaged.
6. What does ‘care for the marginalised / disadvantaged’ mean in aged
care? What does ‘refocus’ mean?
The Salvation Army is wanting to retain residential low care
facilities for the homeless and the marginalised within the community.
Specifically, the target population is what the Commonwealth legislation
refers to as the Financially and Socially Disadvantaged. This is a
sector of the population which is much narrower than, for example, all
of those who qualify as “Concessional” residents. To refocus, means to
divest our residential facilities which are, broadly speaking, catering
for mainstream residents and only retain or further develop those
facilities which specifically cater for the marginalised.
6a. Will the Aged Care Unit continue to apply for
Community Care Packages from the Commonwealth Government?
The Salvation Army is interested in further
expanding Community Aged Care Packages and, where appropriate, EACH
Packages, where they target the financially disadvantaged and marginalised
within the community.
6b. What will happen to the socially and
financially disadvantaged residents currently within The Salvation Army’s
facilities?
There will be no change to their current
residential arrangements. They, as with all our residents, will continue
to reside in their Residential Aged Care Facility if they so desire.
7. How will future accommodation needs of Salvation Army Officers be
met? Immediate, longer term?
This is actually a separate question which The Salvation Army is
currently considering in the overall context, not just in relation to
our current Aged Care facilities. At the moment, the vast majority of
our retired Salvation Army officers are living in independent
accommodation provided by The Salvation Army, in the community.
Consideration is being given to negotiating separate contracts with the
new owners of Salvation Army independent living units whereby a “first
right of refusal” might be given to The Salvation Army when units become
available. The Salvation Army would “buy/lease” that unit if it had
retired officers seeking accommodation in that particular area/facility.
Retired Salvation Army officers who require low/high care would need to
be assessed, as at present, through the Commonwealth Aged Care
Assessment Team process, and would not be treated any differently to
other members of the public seeking residence in a hostel or nursing
home.
8. How will this decision affect The Salvation Army reputation?
The Salvation Army has sought to conduct itself professionally
throughout the strategic review process, and now through engaging with
Burns Bridge/KPMG to manage the divestment/transaction phase, we believe
that we will be able to attain the best possible outcomes for residents
and staff alike. Other key features of the transaction which we believe
will work to preserve The Salvation Army’s reputation are our commitment
to protect the tenure of residents and maximise employment of staff, and
the capacity of the funds released through the sale to assist the
marginalised.
9. What involvement does the Government need to have / have they had?
The Commonwealth Dept of Health and Ageing has legislated authority
and responsibility to approve any potential new owners of aged care
facilities. As such, it will be fully involved in the process, and no
contract of sale can be finalised until the Commonwealth is fully
satisfied that residents’ care and safety is not being compromised. The
Salvation Army has kept the Department of Health and Ageing
appropriately advised, at senior national and state level, and has met
with the Federal Minister for the Aged, the Hon Julie Bishop, to fully
discuss our future plans.
10. Individuals and community groups have contributed to these centres
because they were owned by The Salvation Army. What happens to their
contribution?
The Salvation Army values greatly the contribution of the broader
community over the time we have been involved in Aged Care. These
contributions have already enhanced the quality of life for residents at
our various facilities. They will also, in a very real way, contribute
to the sale price which will, in turn, enable The Salvation Army to
continue its work within the community.
11. What will happen to bequests made to The Salvation Army Aged Care
services?
There is a body of law which governs what happens to bequests in the
event that there are changes which impact on the subject of a bequest.
All bequests will be applied in accordance with that law and will need
to be addressed on a case by case basis.
12. What will happen to the non-aged care services which operate out of
the same centres?
This is still a matter for discussion/negotiation with prospective
buyers. It affects only Kardinia, at present, and the sale/transaction
process gives the buyer an opportunity to purchase either the current
site, or a greenfield site, or both.
TRANSACTION PROCESS
13. What is the process for selling? What happens next?
The process for the sale of the business will be a commercial
transaction managed by a team from Burns Bridge and KPMG.
The key stages of the divestment process are public announcement of
the intention to sell the business and release of an Information
Memorandum in response to expressions of interest. A formal bid process
will follow including management of a selection process and negotiation
phase; and finally execution of contracts with the successful
purchaser(s).
14. What is the timeline for the process – key milestones?
Expected dates for key transaction milestones are as follows:
- Public announcement – Wed 11 Feb
- Release of Information memorandum – March 2004
- Bid period – April to May 04
- Negotiation and settlement – June to July 04
15. When will the business finally be sold?
The final execution of contracts is planned to occur during July.
Beyond this there will be a period of transition as the new owner
becomes familiar with and assumes the operations of the business.
16. What happens in the transition from The Salvation Army to
purchaser? Is it handover one day to the next? Will there be a period of
joint management?
It is likely that a transition period will be negotiated with the
successful purchaser(s).
16a. Aged Care operations are complex, as is the
process of transferring bed licences in a sale process. Will this pose
difficulties in transition in relation to the proposed timeframes for the
transaction?
The transaction timeline includes sufficient
periods for resident and staff consultation and allows for appropriate
regulatory matters to be considered including the transfer of bed
licences.
17. What is the worst case scenario in relation to the business sale
process?
The decision has been made to sell the specified aged care centres
and it is The Salvation Army’s strong intention to complete this sale.
We are therefore undertaking a rigorous process to achieve the most
optimistic outcome we believe possible. This is a staged process. At
each stage, The Salvation Army has the opportunity to evaluate its
position regarding the value of the particular sale proposition. However
the direction we are pursuing is to exit from the provision of aged care
services in the nominated facilities, but continuing our involvement
through residential and community-based aged care services targeting the
financially and socially disadvantaged,
17a. Is The Salvation Army open to retaining any
of the facilities included in the divestment portfolio?
No. The decision has been made to sell the
specified aged care centres and it is The Salvation Army’s strong
intention to complete this sale. We are therefore undertaking a rigorous
process to achieve the most optimistic outcome we believe possible. This
is a staged process. At each stage, The Salvation Army has the opportunity
to evaluate its position regarding the value of the particular sale
proposition. However the direction we are pursuing is to exit from the
provision of aged care services in the nominated facilities, but
continuing our involvement through residential and community-based aged
care services targeting the financially and socially disadvantaged.
17b. Is the transaction likely to be seen by the
market as a “fire sale”?
No. “Fire Sale” denotes an urgency where The
Salvation Army would be prepared to take any price for the portfolio. The
process underway is designed to maximise the “competitive tension” in the
market to secure the best price for The Salvation Army’s business as a
whole or for various “parcels” of facilities. The Burns Bridge/KPMG team
has an extensive list of interested buyers, and the market is showing
significant interest in consolidation of ownership. Considerable planning
has been undertaken for this process and a principle focus is on
maximising the transaction value.
18. What is the expected price?
It is not possible to publicly specify a price due to the
confidential nature of the competitive process that will be undertaken,
however we are confident that the public tender process will enable us
to extract the best offers for the business.
19. How will the market be communicated to?
The market will be notified through the media in the first instance.
A brief expression of interest document will be provided to interested
parties following the public announcement. Shortlisted potential
purchasers will be sent an Information Memorandum and invited to make an
offer.
20. Will the properties remain Aged Care facilities after being sold?
The Salvation Army intends to sell the aged care business on an “as
is, where is” basis, i.e. as a continuing aged care business. Preference
will be given to offers for the entire business, followed by offers for
selected parts of the business.
21. What will happen to the AIP’s (Provisional Allocations)?
Provisional Allocations are provisionally allocated bed licences
which have a date by which they must be operational. Southern Territory
currently has 134 of these across the properties to be sold which are
not yet operational. The purchaser will be required to re-apply for
these places, however with the confidence that the need for beds in the
area has previously been identified and that plans for the new beds are
well progressed. The Salvation Army will continue to seek extensions to
these provisional allocations and work with the Purchaser with the aim
of making these AIPs operational.
22. What will happen to the new properties The Salvation Army has
purchased?
The additional ‘greenfield’ sites which were purchased with the
intention of redeveloping or expanding aged care centres will be
included in the portfolio to be sold. This applies specifically to the
properties purchased for Kardinia and Levenbank. In addition there are 5
sites which have adjoining residential properties which will also be
included in the portfolio to be sold. This applies specifically to
Kardinia, Weeroona, Edenfield, Sunset Lodge and Levenbank.
COMMUNICATION PROCESS
23. What is the communication plan for staff, residents, The Salvation
Army community, general public… other groups?
The Salvation Army representatives will be visiting all aged care
facilities on 11/12 February to address staff and residents/families
meetings. Written correspondence to all staff and residents/families
will complement the meeting announcements. There will be public
statements released through The Salvation Army’s Public Relations
department, which will handle all consequent queries about the
transaction/divestment process. Written communications will proceed to
all relevant government departments and relevant peak bodies, and
written communication and meetings will take place with relevant unions.
A 1800 telephone listing (1800 818 408) has been established to handle
ongoing questions, in conjunction with local group managers/managers
dealing with queries in person.
24. What role do you expect Managers to play?
It is expected that Managers who are briefed on 10 February will play
a significant ongoing role in first-hand communications with staff and
residents/families. They will be responsible on 11/12 February for
distributing the written communiqués to staff and residents/families,
and for subsequently informing local government as appropriate. Upon
advice from Graham Sapwell at Territory Headquarter, they may also be
involved in state-based meetings with local union representatives. John
Dalziel, Territory Headquarters, will manage communication with the
media, and Managers, staff and Officers are required to refer any local
media queries directly to him.
25. How do we handle enquiries?
By reference to this FAQ document, and by reference to the 1800 818
408 number. Enquires from the media should be directed to John Dalziel,
while any business/transaction enquiries are to be referred to Burns
Bridge or KPMG offices. Staff and residents will be encouraged to take
any questions to their local Group Manager.
BUYERS
26. What sort of buyers do we expect to be interested?
We expect interest to come from a broad range of organisations within
the business and not-for-profit community. The purchaser must be or
become an approved provider of Aged Care, according to Commonwealth
Government requirements.
27. How is the process of finding buyers being managed?
The process of dealing with buyers is being managed by the Burns
Bridge / KPMG team. This will include identifying potentially interested
purchasers and making proactive contact with them as well as undertaking
broader marketing through appropriate media.
28. Does The Salvation Army have any criteria for potential purchasers?
It is a requirement that the purchasers be or become an approved Aged
Care provider, be financially viable and have a long term interest in
providing aged care services. Preference will be given to purchasers who
maximise the opportunity for retention of existing staff. It is also
important to The Salvation Army that purchasers are subject to the same
contractual obligations regarding provision of resident accommodation,
as currently apply to The Salvation Army.
29. Is there much interest?
It is expected that there will be substantial interest in acquiring a
portfolio the size of The Salvation Army’s business.
29a. What is the market attractiveness for
selling an aged care business?
There is heightened interest in the industry
currently, particularly from a regulatory and funding perspective. Recent
reports including the Myer 2020 Report and, reportedly, the Hogan Review
(soon to be released by the Commonwealth Government) present an industry
consolidating and aggregating assets. Public intentions are creating an
environment where operators are considering expanding to maximise
economies of scale or exiting the industry. In our favour also is the size
of the portfolio and number of bed licences complemented by the
significant number of ILU’s for retirees. Timing is also relevant; with
current “competitive tensions”, now is an opportune time to enter the
market.
29b. If The Salvation Army has been unable to
operate these centres viably, how will a new owner achieve viability
without reducing care standards or services?
Quality of care within Residential Aged Care
Facilities is overseen by the Aged Care Standards and Accreditation
Agency. Standards are highly regulated and audited to ensure all operators
meet an adequate standard of care for their residents. Particular to The
Salvation Army’s centres, there is currently a high proportion of
residents who are deemed to be “concessional”, that is, they are not
required to pay a bond when they enter a low care facility. While not
affecting existing residents at all, it is possible that a new owner’s
admissions policy will reflect a different concessional/non-concessional
profile (notwithstanding they will be required to meet Commonwealth
concessional ratios) and thereby create an opportunity for greater revenue
and viability.
30. Will it be a church/charitable group?
It is possible that the purchaser will be another not-for-profit
group; however, this is not a condition of the sale. We are open to
offers from all genuine parties.
STAFF
31. Will I keep my job at the time of the sale?
With the planned sale, we will be asking the new owners to offer
staff their same role with recognition of continuous employment with The
Salvation Army.
32. If I am offered a role with the new owner, will my entitlements
rollover?
It is our desire that current employment arrangements will continue
after any sale.
33. What will happen to my hours?
It is our desire that current employment arrangements will continue
after any sale.
34. What will happen to salary packaging?
It is possible that salary packaging may continue, however there is
no guarantee because the continuation of salary packaging depends upon
the purchaser.
35. Will my superannuation be paid into my current fund?
It is our desire that current employment arrangements will continue
after any sale. It is expected that employees will continue with their
current superannuation arrangements with their preferred recognized
industry fund, however this will depend on the particular fund.
36. What will happen with volunteers?
As continues to be the case, volunteers will be free to determine on
a case-by-case basis whether they wish to continue to provide services
to a particular facility and its residents. The scope of such roles will
also be dependent upon the intentions of the potential purchaser, which
are yet to be determined.
37. Will I get redundancy pay as a result of the sale?
It is unlikely that redundancy payments will be offered to employees
who are made an offer by a purchaser. This is because it is expected
that the new owners will offer ongoing employment with continuing
benefits to existing staff.
37a. Will existing staff not offered a position
by the purchaser receive a redundancy payment?
If staff are not offered a position with the new
owner, The Salvation Army will make every effort to find alternative
employment for them within The Salvation Army. Where staff are not offered
employment with the new owner and The Salvation Army is unable to find
alternative employment, staff will be entitled to redundancy payments.
Redundancy entitlements are detailed in relevant awards or enterprise
bargaining agreements (EBA). In addition, staff will be paid any annual
leave accrual. Long service leave will be paid out where staff meet the
minimum requirements for continuous service detailed in state legislation
of relevant award or EBA.
38. Can I apply for other roles in The Salvation Army or the Aged Care
facilities being retained by The Salvation Army?
Prior to the change of ownership of each Aged Care Centre, you may
apply for vacancies which might occur in The Salvation Army. With any
vacancy, appointments will be based on merit. If you are successful in
your application, you will be appointed with continuity of employment.
39. Have the relevant unions been advised?
Relevant unions will be advised of the changes to the Territorial
Aged Care Network.
40. What support will be available to me during this time?
The Salvation Army has contracted various providers to provide
Employees with an assistance Program during this period. The programs
will provide employees with a counselling service that is totally free,
voluntary and above all, entirely confidential. Please contact your HR
Manager for details.
41. What will be expected of staff in the interim?
We will look to staff to continue to provide high quality care to
residents during this period. Although this is a time of uncertainty for
everyone it is important for residents and their families for the Aged
Care Unit to operate on a “business as usual” basis.
42. How will we manage if staff resign after the announcement? Will we
be permitted to recruit new staff?
If staff do resign, managers will continue with current processes and
approval arrangements in relation to the recruitment of new staff and
replacement roles.
43. How will I find out about the progress of the sale process?
There will be ongoing briefing sessions to keep you informed of
progress. In addition, a 1800 phone number has been established (1800
818 408). You can phone this number at any time to have any question you
might have answered. Many questions may be specific to an individual,
but questions of general interest will be answered and distributed to
all staff in Aged Care. Information can also be accessed through your
manager or your HR Manager.
44. If I am in a facility being retained will I have continuous
employment?
It is expected that staff will remain at the Aged Care facilities
being retained by The Salvation Army.
45. What will happen to existing Officers’ whose appointments are
within the Aged Care?
It is planned that Salvation Army Officers will remain at their
respective Aged Care centres until ownership is transferred. The
question of these Officers remaining for any further transition period
will be discussed with the new owner(s).
46. If I work across a Group Function, what will happen if some
facilities are sold and others are retained by The Salvation Army?
The options for each person in a Group Function will become clearer
as the sale progresses and will be handled on an individual basis.
47. Will my employment be secure prior to the sale?
It will be business as usual in the lead up to the sale. Accordingly,
staff could be terminated for the usual reasons (eg. misconduct) or as
part of the The Salvation Army’s ongoing operational reviews.
RESIDENTS
48. Will we be asked to leave this facility as part of the sale?
No. The security of your tenure is not under threat. We are only
prepared to negotiate with the future owners on the basis that the
facilities will be bought on an “as is, where is” basis, i.e. an ongoing
aged care business. It is intended that your current resident’s
agreement will apply under the new ownership.
49. Will my costs go up?
There are restrictions in resident’s agreements as well as applicable
legislation on increases to costs. It is proposed that resident
agreements bind the purchaser and therefore that restrictions in those
agreements on fee increases will continue to apply after the sale.
50. Will the conditions of my tenure / agreement change as a result of
the sale?
No. The conditions of sale will include the transfer of existing
residents’ agreement. As a result, it is proposed that any new owner be
bound by your resident agreement. Any subsequent changes to that
agreement can only occur with your approval.
51. How will residents / families be told about this decision?
Residents/family meetings have been scheduled for Wednesday, 11
February, during which a member of Territory Headquarters or Divisional
Headquarters will be present to give information and answer questions.
Further, a letter will be distributed that day to all residents, and
families where appropriate and necessary. Further, it is expected that
managers will facilitate further meetings after these initial meetings,
that there will be regular written communiqués to all stakeholders
during the transition process and that there will be a 1800 questions
line established at Territory Headquarters to answer queries from staff,
residents and families as well as the general public / business
community (1800 818 408).
52. Will The Salvation Army have any ongoing involvement at the sold
centres?
It is expected that The Salvation Army will continue to provide
pastoral or chaplaincy services for an interim period, which is yet to
be determined. Thereafter, we will be looking to provide an ongoing
pastoral care role through the means of Corps-based community care
workers, corps officers and suchlike. We envisage this could mean the
leading of regular chapel services and the like. In particular, at some
of the facilities (eg Inala) we are looking to have on ongoing “right of
entry”, to continue to lead regular Sunday meetings/services.
53. Will my Salvation Army development loan be repaid?
Yes, if the individual or couple concerned request repayment.
54. Will my bonds be repaid?
The purchaser will be subject to the same liability to repay bonds as
The Salvation Army. All bonds under the Aged Care Act are subject to the
legislative prudential protections under that Act.
55. Will this centre retain its name?
This is a question for the new owners. The Salvation Army is giving
that opportunity.
56. Will there be chapel/chaplaincy services?
As per Q52 re The Salvation Army involvement, we will continue to
offer our services to run chapel services and similar.
56a. Will any existing ancillary services be
reduced for existing residents after the sale, such as on-site pharmacies,
coffee shops and such like?
We are hopeful that a new purchaser will continue
these services but cannot guarantee what services a new purchaser will
provide. We will put the strongest possible case during negotiations for
this to occur.
57. What if I do not wish to live in a facility run by the new owner?
Residents will have the same rights as they do now to seek to live in
a different retirement village or Aged Care facility. It is a matter of
personal choice and arrangement.
57a. What will happen to those people currently
on the waiting list?
All waiting lists will be offered to the
acquiring owner. We cannot guarantee what new owners will do; however, it
is highly probable, given the need for providers to maintain high
occupancy of aged care facilities and retirement villages, that a new
owner will be extremely keen to contact everyone on the waiting list as a
matter of operational process.
58. Will I have input into who buys the business? Or how the centre
gets run in the future?
No, the final decision as to future ownership rests with The
Salvation Army’s executive leadership. It is not possible to answer for
future owners however it is considered likely that they will have
reference to resident input into policy and programme.
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For more information,
please contact:
John Dalziel, Communications Director
The Salvation Army
Phone: (03) 9896 6007
Mobile: 0417 537 950
Email:
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