With 16 facilities, including 4 acquisitions in the last year and a proposed merger with Masonic Care Tasmania, Respect is one to watch. Inside Ageing (IA) spoke with Respect’s MD Jason Binder about their string of acquisitions and how they’re managing to turn a lot of these assets around.
IA: Congratulations on your recent acquisition of Lyrebird Village in Victoria, taking your presence in Tasmania, Victoria and NSW to 16 facilities, if I’m right 4 of these have been acquired in the last year – that’s strong growth!
Respect seems to have a record of turning businesses around and a model that seems to be working if your growth trajectory is anything to go by. What’s your secret?
Jason: Not all of the growth has been through turnarounds, but 75% have been, and I’d say that’s as a consequence of being known for it, and because we can do it quickly. I think the secret to that is the internal team culture and systems we have. It’s just a normal part of the business to have providers joining us, and when they’re distressed we can help because we’ve done so many and kept the same team together – it’s just business as usual – pull out the checklists and action plans and get it done. The team are probably the most committed I’ve seen in an organisation as well.
IA: There is a lot going on at present with providers needing to meet compliance requirements, including the move to AN-ACC just recently. Is the pressure of this contributing to smaller providers choosing to be acquired? How have you found the transition to AN-ACC, especially given the scale of your business?
Jason: I’ve found more and more providers are approaching me about joining Respect due to compliance now more than anything else. It’s really difficult for smaller providers with one to five homes to be keeping up with and implementing the changes when they don’t have the team to handle that and chew gum while they’re walking. We are fortunate to have a Quality department that takes care of compliance but that includes positions like internal auditors, policy and procedures, educators, complaints and Commission liaison, and then of course someone to head that. We’re finding it’s getting much too difficult for smaller providers to be able to cover that with one or two people. Then we have the benefit of so many facilities to understand what the Commission is doing and update systems across the other facilities, whereas we’re seeing smaller providers sometimes have their first Commission visit in years and getting blindsided by the expectations.
With the AN-ACC I think it’s important to recognise this is just the start of Royal Commission change, and a lot of it was delayed due to COVID-19. We mapped out the Royal Commission changes when they were first accepted by the government and found there were 30 medium to high-impact operational changes on providers over the next three years, one of those being the AN-ACC. The reality is that changes are happening whether we want them to or not. No Government wants to be the next Government not to implement aged care reform, and the timeline the Royal Commission set is tight. I think as an industry we need to accept that and work with the Government to implement the changes, understanding it won’t always be perfect, especially with those timeframes, but doing it as best as we can together.
IA: Some of the homes that you have acquired have either been sanctioned, administrator appointed or in some cases both. One can’t help but admire your courage and appetite for such assets and I’m curious about your approach to how you turn such businesses around – both financially and from a quality perspective.
Jason: We’ve had sites under serious sanction and financially stressed – the worst we had was one home losing $800,000 a month, so when a site is distressed we come in hard and are completely open and honest with staff and the community about where the site is at and what we need to do. We run a really transparent process where we say “this is the plan to get back to good health, and this is what we need to change, but we commit there won’t be more major changes to do with the turnaround and we’re not hiding anything”. Some staff handle the change really well and get on board with the new direction and some don’t but it does draw a line in the sand and it’s not good for anyone if we rip a band-aid off slowly.
We also have strong leadership internally to be able to do that, and a team that is a real team. People who say “it’s not my job” don’t last long at Respect, or people with counterproductive work behaviours like backstabbing, office politics, big egos etc. We just address it really quickly, and unashamedly get rid of them if they can’t change their behaviour, so the team internally is really strong together, but as individuals as well. We have high-quality individuals and we don’t have manager turnover at all unless it’s instigated by us or retirement so we have kept that core turnaround expertise and competence.
IA: I did a little bit of research prior to this Q&A and can see that you have some very qualified HR people in your team. What can you tell us about your approach to attracting staff, especially given you’re spread across three states with something like 1500 staff in home care, retirement living and residential aged care.
Jason: I think management staff we can attract well because of that team, but also it’s exciting to be growing successfully and people want to be part of that. We’re also not very traditional internally and don’t take ourselves seriously. People poke fun at me all the time – it’s great. I don’t care if I’m the CEO and do this and that, and the other executives don’t either so it’s a fun environment. I love my job and I want our managers to love their job and so obviously we have performance measurements but outside of that, I want an environment where people are good to each other and where people enjoy working. It’s always been like that so we haven’t had any trouble retaining managers, and don’t have trouble recruiting them once they get a glimpse of that.
At the coalface, we’re experiencing difficulties in some locations finding care workers and Registered Nurses but we have some pilot projects underway including the PALM scheme and traineeships which we think will rectify that, and we’re happy to share that with the industry if it works.
IA: What next for Respect?
Jason: We want to diversify and focus on home care and retirement living to make them a core part of our business, and I think that’s important because markets are cyclical. We’re probably at the bottom of the residential aged care market swing now and whilst we were profitable last year and we’ve always been in the top 25% of financial performance, it’s getting tight even for us, so it would be nice to have some offset to that because the next two to three years are going to be difficult with so many changes to income and cost structures. If anyone was certain about profitability in residential aged care over the next two or three years I’d be cautious of that person’s advice. No one knows, not even the Government because there are so many changes the Government need to implement, that they just have to see what happens to profitability and adjust funding as we go. I don’t think they have any other option because if they overfund it they’d have private provider Directors driving around in Ferraris and buying mansions as they did in the early to mid-2010s.
The next two or three years in residential aged care are going to be really interesting but that’s the fun of it. Who wants to watch a movie where the same thing happens over and over again? Give me some twists and turns any day.
We’re confident no matter what the changes are we’ll respond quickly, adjust our business model, and remain in the game, so part of the strategy is to keep growing residential aged care as we have been, but we want those other divisions to catch up.
IA: Thank you