advertorial
THE REFURBISHMENT QUESTION – Dilemma or clear cut solution?
A significant percentage of aged care facilities, as high as 30 %, were built over 30 years ago. This indicates that significant capital expenditure will continue to be outlaid to upgrade facilities … the question is whether to refurbish for similar use, refurbish to repurpose …. or demolish?
This article explores some of the key issues that may be confronting aged care providers and offers some guidelines to assist them confidently navigate the often daunting refurbishment waters. The ability to make a decision, back a judgement and go for it will depend on systematic and comprehensive analysis of a number of factors. Inaction in the face of declining revenue, rising building maintenance costs and staff and resident complaints is not an option in today’ s world.
In between the busy, day to day running of their facilities, many aged care providers are considering how well their business, their buildings, their teams and structures are positioned to take advantage of the many opportunities that are emerging, particularly those that will facilitate revenue uplift from service diversification and changes to work practices.
As a first step, it is helpful to understand the reasons for embarking on the redevelopment option. Often there is no single stand out reason, rather a combination of factors.
AGE OF THE BUILDING Experience tells us however that often the refurbishment question relates to the age of the building. In 2014, research( David Sinclair, Stewart Brown, Australian Ageing Agenda, 2014) identified the effect of the age of a building on profitability of the facility. While this research is 4 years old, the profitability pattern as it relates to the age of the building would still apply and is worthy of noting here.
26 agedcareinsite. com. au
Interestingly, a facility reaches peak profitability between 5 and 10 years; declining profitability occurs from 10 – 15 years and between 15 – 20 years, profits generally rise again for a second peak( often attributed to a refurbishment in the building life cycle). A long period of decline out to the 30 year mark occurs, with repairs and maintenance costs tending to plateau around 20 – 25 years.
Understandably, the highest average RADs are achieved in facilities that are less than 5 years old, with the next highest RAD level in facilities between 5 and 10 years old.
So while the effect of the age of the building is often the catalyst, unfortunately sometimes it is not only an older building that isn’ t reaching peak profitability. Sometimes a newer building( ie less than 10 years old) enters the mix of refurbishment considerations due to many factors. Some of these might include energy inefficiencies( technological advances since the building was first built eg LED lighting), staffing challenges due to poor layout, design not fit for purpose, low resident satisfaction, market resistance, and a design no longer relevant eg care model refreshed focussing on resident’ s quality of life experience rather than procedural care based approach.
Where an existing building is being considered to be retained and refurbished, a Building Condition Report undertaken by an experienced specialist contractor, will facilitate an understanding of the condition of the built form, the materials( eg presence of asbestos), infrastructure and services. Sometimes this provides a very clear determination as to the future of the building.
EAGLE EYES The next step before proceeding is to fly high and take an eagle eye view, scanning the whole of site, buildings and business against a broader backdrop of market trends and legislative / regulatory structures. To focus on one unit or one building without considering the broader industry and site context, might deliver a short term solution but not a longer term optimal outcome. In this environmental scanning process, undertake a gap analysis that takes into consideration your competitors service offering and how you might position your organisation to achieve a unique marketing message. There may be commercial opportunities that will meet a need within your community while at the same time, providing a feeder for your core business. Most importantly, consider to what extent does your organisation support the resident’ s lived experience. By shifting your language to focus on resident experience rather than resident care( without denying the importance of provision of care) means a shift in your thinking regarding the nature of the possible refurbishment.
THE NEW BUILDING VS THE RETAINED BUILDING Sometimes a new building project on site will be the catalyst for an organisation to decide to refurbish existing buildings. A new building can mean subtle but pervasive cultural divisions between the teams in the new and older buildings where previously there had been a cohesive organisational culture. While this would not necessarily be the sole reason to refurbish an existing building, it may mean that the refurbishment process is fast tracked.
Also remember, a new building may impact on the profitability of existing stock( families and residents preferring the new). In the overall financial feasibility of your new project, analysis of the impact on existing stock and possible refurbishment may need to factored in.
An existing retained building may be repurposed concurrently( or immediately