Estia operates 68 properties, which will increase to 72 following a takeover announced last month. It is one of two listed providers with facilities in South Australia, Victoria, NSW and Queensland. The largest provider, Opal HealthCare, manages 90 residential communities.
At first glance, the sector looks ripe for takeovers. It’s bound to happen, but given the post-royal commission regulatory uncertainty, Bilton isn’t holding its breath. He certainly doesn’t expect acquisitions to be a major source of growth in the next five years. The four homes Estia plans to buy are the company’s first acquisition in six years.
“We certainly can’t say, ‘That’s exactly what regulators are doing [landscape will look like] and what the results will be for us.’ We’re probably nine to 12 months away from knowing where the final boards of post-royal commission reform will end up,” says Bilton.
minimum care time
A new independent pricing authority for hospitals and aged care has yet to provide cost and pricing recommendations to the federal government, and from October, aged care homes must provide a minimum number of hours of care.
Then there is the issue of the industry’s high turnover and the direction of wages for thousands of low-wage workers, the vast majority of whom are women.
This month, the Fair Work Commission granted an interim 15 percent increase to older caregivers, who earn about $22 an hour. Some providers called the increase offensive after the Health Services Union requested a 25 percent increase, but Bilton’s response is measured.
“It’s an interim decision. [The FWC] It remains to be seen whether 15 percent is correct or higher,” he says. “They need to find out if it applies to administrative and non-care workers too. I’m a bit reluctant when I react to an interim finding.”
However, he argues that any pay rise must be granted to both non-care workers and direct care workers.
What does he say to those who argue that granting significant pay rises to aged care workers will further fuel inflation?
“I ask them to survive week in week out on an elderly care wage. These people are holy. Most people working in this sector could be paid more or do something else. They are drawn to the purpose of what we do.
“That’s why the Royal Commission is so hurt and part of the criticism from COVID. We don’t always get it right. But the overwhelming feedback from our families is positive.”
Bilton is also unwilling to comment on Labor’s plan to introduce multi-employer bargaining to help raise wages. The vast majority of Estia employees are party to corporate agreements that exceed bonus rates, so Bilton believes Estia will remain largely unaffected.
With so much uncertainty in the industry, Bilton anticipates that mergers and acquisitions, which have been much talked about — but little done — over the past 15 years, will be fairly fragmented over the next five years. After that, the outlook might be different.
Bilton, 44, grew up on Sydney’s Northern Beaches, the result of a second marriage between both parents.
When his parents started their lives over again, Bilton spent the first five years in a one-bedroom apartment. He describes his father, who was 50 when he was born, as “old school”.
There were days when I would come into work and think, ‘I wish I could turn my car around and find something else to do.’
— Sean Billon
Bilton continues: “He was a different generation. He came from a simpler time [where] you worked really hard He instilled in me those old-school values. The day I finished school he had pulled out the ledger. I paid for board and he kept accounts. [He would say]: ‘Your mom got your dry cleaning, so I put that on the sheet.’”
Bilton went straight from school to university (majoring in economics at the University of New South Wales) and worked part-time as an assistant bank clerk. From there he went to his first job at the service company PwC and a little later at AMP Capital.
After much of the mining and rural assets were sold, AMP turned its attention to nursing homes. The Investment Manager owned 40 homes and was in the process of repurchasing the lease to operate them with the goal of becoming an owner and operator.
Bilton was asked to work on the transaction and was seconded to what is now Opal Healthcare in 2010.
By then, Bilton, who still lives on the northern beaches with his wife and two young daughters, had caught the virus and has been in the industry ever since.
“I became more and more involved with the sector and understood it better and it coincided with a point where I was [thinking about] that determination and doing something that makes a difference.”
So has the industry recovered from the bruises of COVID-19 and the Royal Commission?
“You take something out of the freezer and it starts to thaw. We are in this very first initial phase.”
Bilton describes the pandemic as “terrible”.
In 2020, before vaccines and antivirals were available, more than a third of COVID cases in care recipients ended in death. That year, of the 866 deaths recorded across Australia, 770 occurred in Victoria, with 60 per cent of the deaths occurring in patients over the age of 85.
Nursing homes have really been in the spotlight.
In mid-July 2020, Bilton spent the weekend with friends in Port Stephens on the NSW central coast. A call came in on Saturday afternoon from the government informing the CEO that every shift at one of its Melbourne facilities had to be filled with people who had not been on site for the previous two weeks.
The rule went into effect at 7am the next morning and would last for two weeks. The home worked in three shifts a day, each employing about 20 people. Bilton, who was chief operating officer at the time, had to quickly find a lot of additional staff.
He spent the weekend trying to organize workers on the phone, calling in property managers to manage a home they’d never been to before with an entire emergency crew.
“That was the absolute worst part,” Bilton recalls. “There were certainly days when I would come into work and think, ‘I wish I could turn my car around and find something else to do.’ But I don’t think anyone in our organization saw that.”
A potential area of growth for the company is providing healthcare services such as rehabilitation, physical therapy and dialysis to the wider community, rather than just serving residents.
A home in Blakehurst, south Sydney, has a spa that is open to the general public and could expand to other facilities.
“We’re really trying to integrate with the broader healthcare system so people can have a more episodic relationship with us rather than living in an inpatient aged care setting.
“It’s a bit like the health insurance company’s push to keep people out of the hospital and provide services at home. This is an opportunity for us to play.
“We’re right in the middle. These services are not necessarily provided at home, but in a residential aged care facility. It can be a lot cheaper than going to the hospital.”
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