Improving Age Care Health by Increasing EBIT Insights. Budget Time (Again) | We must be getting older

That time of the year is fast approaching on us. Yes budgets, as I hear you beginning to moan and groan "again?". Yes, time has sped past us all while we have been focusing on the 1,001 things we have been working on during the year and that is even before we consider all the surprises that have been placed upon us.

In order to get your creative budget thoughts flowing I am providing an example of one of our budgeting models allowing for top-down, bottom-up, middle-out, driver based budgeting and planning.

Budgeting and forecasting provides us all the opportunity to develop models to allow us to obtain a greater insight and understanding of the levers of our business and their impact on profitability, cash flow and balance sheet structures.

Budgeting and forecasting is a strategic tool if done correctly and this is by also incorporating competitor and industry benchmarks into your models. These will provide you with more insights on how you compare in your industry and against your competitors across different metrics as well as using these metrics as drivers. These will provide you with the insights to identify where you have additional opportunities in your organization and across your market segments for additional performance by incorporating these benchmarks and market share dynamics into your operating model.

I am sharing one of our model’s main menu below that incorporates the above contents using the aged care industry as an example.


The above aged care model includes the functionality to evaluate and analyze different scenarios and their performance when compared to top line/executive targets and exploring different operating/delivery models including their performance when compared to industry benchmarks and competitor performance. These include:

  • Revenue and operating support services per revenue dollar with acquisitions and increasing revenue per occupied bed per day.

  • Operating model changes and their impacts on EBITDA, NPAT, balance sheet structure and cash flow impacts.

  • Net Refundable Accommodation Deposit (RAD) impacts.

  • Most effective capital expenditure (CAPEX) deployment to increase aged healthcare business growth and operational efficiencies while increasing residents’ satisfaction levels.

  • Aged care facility development pipeline financial sustainability across different scenarios including Monte Carlo analysis.

  • Number of additional places and increasing aged care occupancy rates and their sensitivity to pricing changes.


Key business operational drivers to increase aged care EBITDA include:

  • Government revenue per occupied bed day & care funding.

  • Contributions by significantly refurbished facilities.

  • Revenue per occupied bed day sensitivity.

  • Other income from Daily Accommodation Payment (DAP),

  • Club memberships and other additional services fees.

  • What-if scenario on staffing levels.


Additionally some of the key aged care statistics to be monitored include:

  • Number of facilities.

  • Total places.

  • Total operational places.

  • Total rooms.

  • Total single bed rooms.

  • Percentage of operational places in a single bed room.

  • Percentage of rooms that are single bed rooms.

  • Average facility size (number of operational places).

  • Facilities approved as significantly refurbished.


Arthur Dimitropoulos is an Executive Director at Rundas Capital, providing advisory and consulting services focussed on improving corporate performance and providing NED services.


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Melbourne, VIC 3000

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