Higher RAD Applications Are Changing. Has Your Accommodation Strategy?

Recent changes to IHACPA's Higher RAD application process are relevant for providers planning refurbishment, redevelopment or new residential aged care accommodation.

The application has become more streamlined. Some of the historic operational information previously requested, including specific occupancy, supported resident and RAD history requirements, has been removed. Greater emphasis is now placed on demonstrating the quality, condition, features and overall value of the accommodation being offered to consumers.

What remains less clear is how IHACPA will assess the evidence supporting the proposed price.

A well-supported submission may reduce the need for further information. Where the evidence does not clearly support the proposed price, providers may face further questions, additional work and delays.

Don't wait until the works are finished

If you are refurbishing rooms, upgrading common areas or external spaces, undertaking a substantial renovation, or developing a new home, accommodation pricing should be considered before the project is complete.

IHACPA provides for conditional approval where construction or refurbishment is still underway. An application requires supporting evidence such as architectural renders, design documentation and schedules of proposed fit-out, fixtures and amenities.

Providers can therefore seek to establish their proposed accommodation groups and Higher RAD position during the capital works.

If the pricing and approval process only starts once the works are finished, there may be a gap between completing the investment and being positioned to realise its intended accommodation value. We typically receive finalised approvals within 90 days of application. 

Approval does not necessarily mean optimisation

More providers are investing in their internal capability and preparing Higher RAD applications themselves.

The application itself is only part of the task. The proposed price needs to be right before the application is prepared.

Internal teams know their facilities well, but Higher RAD pricing can easily become anchored to what competitors charge, a percentage of the local property price, or an uplift considered unlikely to attract challenge.

The result may be an application that is difficult to support and requires further information. A quick approval doesn't tell you if the price was too conservative in the first place.

Establish the opportunity before deciding what to apply for

We are seeing providers come to us at different stages.

Some have already prepared their Higher RAD submission and want an independent review of the proposed pricing, evidence and application pack before it goes to IHACPA.

Others are coming to us before refurbishment or construction begins to understand the potential accommodation pricing uplift before finalising their capital strategy.

Before applying, consider:

• Current pricing: What is the current pricing position and potential uplift?
• Capital works: How may the proposed works change the value and positioning of the accommodation?
• Approval: Is Higher RAD approval likely to be required?
• Evidence: What should be captured during design and construction?
• Timing: When should the application commence so pricing and project timelines are aligned?

This work can then inform what is spent, how accommodation groups are configured and what RAD is ultimately sought.

The important decision may not be how to complete a Higher RAD application, but what price should be applied for in the first place.

For providers considering capital works, that question is worth answering early. The potential accommodation value can then inform the investment, rather than being assessed once the investment has already been made.

Does your current RAD position reflect the value of your accommodation?

If you are refurbishing, renovating, developing a new home or reviewing your existing accommodation pricing, contact us to discuss your position.

See our Accommodation Strategy services

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