ECH leads the service innovation highway – selling 1200 residential care beds to concentrate on villages and community care

Rob Hankins, CEO of ECH (Adelaide), has announced they are selling out of residential aged care with 11 care centres transferring to private operator Allity (formerly Lend Lease aged care) and their one NT operations being transferred to McKenzie Aged Care Group. 1200 beds in all are moving. If valued at say $200,000 per bed, this represents circa. $200 million moving to the debt free ECH balance sheet.
Hankins says the board came to the view 10 months ago that residential aged care diluted their efforts and focus. ECH’s core strength is in the niche of housing innovation and community care innovation. They want to “bring value to a greater number of people, keeping them in the community rather than transitioning them into residential care”.
ECH has run a different course since it was established in Adelaide 50 years ago as a provider of “quality, affordable homes and support to enrich the lives of older people”. Today it has 97 retirement villages made up largely of cluster homes in suburban streets; 75 ECH villages have less than 25 people. Hankins says the cash will allow more innovation here.
An example of new care services is their “Seasiders” initiative which required $2 million to establish an oceanside building as a dementia day care centre with kitchen and activities space. After 14 months it now services 70 clients as well as providing respite to carers.
In 2012 ECH reportedly paid $63 million to purchase Masonic Homes 400 beds and 300 community care packages. Hankins says this scale. The extra beds would also make this deal more attractive to Allity.
Interestingly the sale will reduce ECH’s gross revenue by 70%. Its labour bill will drop by 68% as well - at least in the short term.