How to jack up the price of nursing home bonds and look scientific about it

Article published 28 July 2021

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HAVE you ever wondered how nursing homes set bonds? Nursing home bonds these days are called Refundable Accommodation Deposits, or RADs.

The way in which a RAD is set is not regulated.

Typically, people wanting to move into a nursing home own and occupy their home.

Typically, being in their eighties, their life savings have been used to fund their retirement. Their house is their only asset of commercial value.

Typically, nursing homes, which are obliged to advertise the asking prices for their rooms, will base these asking prices on home values in the area they serve.

There is a marketing consultancy which claims to have worked out that nursing homes are getting their RAD pricing wrong a lot of the time, underpricing and overpricing RADs

This consultancy says it has developed complex artificial intelligence algorithms to set RAD charges that are fair, accurate and evidence based.

According to this consultant, in NSW, more than 2,000 scanned aged care rooms in the state revealed 19 per cent are under- priced between $30,044 and $760,518, while 20 per cent are over-priced between $30,227 and $773,285..

The first question that comes to mind is: would this consultant make the results produced by its complex artificial intelligence algorithms available to consumers so that it could help them not to overpay?

Yes, says this consultant, because nursing homes utilising the RAD-Equation can respond effectively to questions by clients about the amounts and clients can be satisfied the charges are fair and transparent.

Really?  If nursing homes can get away with overpricing, does anyone really think they will quit doing so because the computer says no?

Remember, nursing homes must advertise their RAD prices on their website. These prices are asking prices. You can negotiate and shop around like you would when buying a house, a TV or a fridge.

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