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The many extracts on these pages are from copyright material. They are owned by the reference given or its owner. They are reproduced here for educational purposes and to stimulate public debate about the provision of health and aged care. I consider this to be "fair use" in the common interest. They should not be reproduced for commercial purposes. The material is selective and I have not included denials and explanations. I am not claiming that the allegations are true. The intention is to show the general thrust of corporate practices as well as the nature and extent of any allegations made. Any comments made are based on the belief that there is some substance at least to so many allegations.

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Introductory page
This corporate web site addresses the issues of corporate health care within a broad framework. A web page describing this broad context should be considered as an introduction to each page on the web site. If you have not yet read it then CLICK HERE to open it in another tab or web page.

Content of this page
This web page explore the dramatic growth of DCA Group in the ownership of Nursing Homes and of Radiology practices. The web page reviews DCA's growth and policies in the light of the US experience of similar growth companies with similar policies in health and aged care. A 2006 profit downgrade and adverse findings at a nursing home were an indication that some problems were developing. In September 2006 DCA sold itself to a group of Citigroup Venture Capitalists.

 Australian section   

DCA Group

Nursing Homes and Radiology  

  

CONTENTS

 
 
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Background

DCA group, which has two major businesses, is by far the largest corporate for-profit operator of nursing homes in Australia. Others trail behind and must emulate its practices to succeed. It leads the way in consolidating nursing home care and in turning a largely not-for-profit system serving the community into a profit generating enterprise for wealthy investors whose financial interests it must serve. It is also the largest corporate provider and consolidator of the radiology sector.

The processes, the commercial pressures, the marketplace motives and the rhetoric are remarkably similar to that in some sections of the US aged care marketplace. The pressures towards dysfunction in the for-profit marketplace are very strong. When one group develops rationalisations to justify profitable but questionable practices, competitors must follow or go under. It is too early to evaluate the impact of the share market on aged care in Australia. We can only look at what happened in the USA and speculate about the if and where of similar trends emerging in Australia.

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US examples

The obvious examples are nursing home care in the USA. The myth that aged care was inefficient and could be provided with fewer nurses and cheap untrained aids was strongly promoted by Sun Healthcare and accepted by the market, and by politicians. Those who did not do so could not compete. The potential benefits of consolidation were overstated in terms which were commercial. They gave lip service only to patient care.

At the same time one or two companies discovered that they could help hospitals make bigger profits from restricted hospital funding by the early transfer of patients to nursing homes where payments were not restricted. The patients' insurance or the Medicare system could be billed twice for the same care.

Corporate funds were directed to the employment of thousands of money making therapists who provided vast quantities of profitable therapies to these convalescent patients - much of it probably unneeded.

At the same time staff and services to the long term frail elderly were downgraded and they were whare-housed and neglected. These profitable practices spread across the industry. Profitability was accepted as an indicator of successful high quality care.

A similar situation developed at the end of the 1980s in psychiatric hospitals where a company called National Medical Enterprises (NME) was the leader in corporatising psychiatric care. NME found that by fanning community anxiety they could induce large numbers of people who had minor problems or were simply anxious to admit themselves needlessly to psychiatric hospitals. Children paid better and anxious parents were easily convinced. Children were specifically targeted. Staff were enthused by their success. Thousands were needlessly hospitalised and given unneeded intensive therapies to generate profits. Many were harmed. Others were forced to compete. NME managers were poached by competitors and the entire sector adopted these practices.

Companies like this seldom accept that they are wrong or that their successful practices are harmful. Ten years after paying a massive fine this same company, now renamed Tenet Healthcare targeted profitable Cardiology and Cardiac surgery in the same way. They marketed their busiest and most profitable hospital in Redding, California as a screening service for those at risk - an anxious group. The cardiologist whom they put in charge and whom they marketed to the pubic was inadequately trained and uncertified. He had a forceful personality not unlike that of Queensland’s notorious Dr Death (Patel). His profitability was equated with expertise and his poor training ignored.

The doctor, the hospital, and the company were all lorded for their efforts in the community and in the marketplace. Managers were proudly ecstatic as their bonuses soared. Attempts to inform corporate staff, who were blinded by their success, of what was happening were aggressively discounted claiming that those complaining were jealous competitors. Many hundreds of citizens who did not require surgery, many with normal hearts had coronary bypass grafts performed and a number died. The company has now paid US$ 400 million compensation to the victims.

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Why DCA

I hasten to state that I have not found any evidence to suggest that DCA has or intends to indulge in these or similar practices. They will not remain without major competitors for some time. Nor is this page intended to be an attack on the integrity of DCA’s leaders Purves or Vaux. I have no doubt that they are personable, genuine people and philanthropic with great faith and confidence in their mission. But the same can be said for the founders of some of the most disturbing health care companies in the USA. Their great weakness was their total faith in what they were doing and the self confidence which blinded them to evidence and other points of view. The market exerts extreme pressures. We frail humans are malleable in finding ways to meet these pressures - and then finding explanations to justify it.

DCA is for practical purposes the only major for-profit market listed corporation in aged care in Australia. I have therefore used it as the focus for my concerns about the corporatisation of aged care in Australia.

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My position

Motivated citizens have made their living and realized their lives by caring for their fellow citizens for thousands of years; and these citizens have paid for this. I am not taking issue with this "private care" although there have been black sheep who have abused the trust placed in them. My main concern is with the share market as a vehicle for the provision of health and aged care.

My examination of the marketplace in health and aged care has led me to the view that the provision of health care for the profit of investors as contrasted with care for the benefit of patients and the community is unethical, morally questionable and severely dysfunctional in multiple ways. These nameless and faceless investors have no knowledge or interest in the welfare of the patients from whose care their profits come; yet they exert a profound influence. The evidence that this market driven system is inherently dysfunctional in health care is now overwhelming but is ignored.

I am in good company. Two Pulitzer Prize winning New York Times investigative journalists Barlett and Steele published their book "Critical Condition" in November 2004. The findings from their analysis of marketplace medicine are clear. Earlier a Canadian Colleen Fuller wrote "Caring for Profit" showing that Canada was following the wrong corporate path and suggesting they try another. In the UK another book "Health Policy Reform - Drving the Wrong Way" by John Lister (which I have not yet read) is reported as examining the health system in several countries and reaching similatr conclusions.

A Canadian Royal Commission chaired by Roy Romanow, a distinguished politician and jurist, invited submissions from market advocates to support the changes they advocated and from their critics to support their claims that the system was dysfunctional. The critics successfully produced evidence to make their case. Market advocates were unable to support theirs. (Download an article in pdf format reviewing the report or go to the Commissions web site for the full report)

The issues were put to the community whose views and values were clear. Romanow’s report "Building on Values: The Future of Health Care in Canada" stressed the importance of values, rather than profits as the driving force in health care. The report was welcomed by citizens but not by the Canadian marketplace or many politicians. Both have tried to discredit it.

I make no apologies for examining the corporatisation of aged care in Australia suspiciously, for focusing on DCA - or for drawing parallels with the USA. To claim that Australians are different or somehow immune to these pressures is ethnic arrogance. Vigilance and community awareness are our best protection. They have protected us in other corporatised sectors of the health system over the last 15 years.

I confess to a lack of personal experience with nursing homes but I have carefully examined what happened elsewhere. This distance can result in a lack of understanding of detail and process. On the other hand an outside perspective looking at available information from a broader point of view often sees more clearly. The story itself is told with extracts in order to bring a large amount of information together and so that others with a different experience can look at it.

 
 
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DCA story overview

Development Corporation of Australia (DCA) was the market listed investment group formed by Robert and Sandra Purves in 1985. DCA funded a broad range of businesses. It turned to health care because it was persuaded that this would be more profitable

Feb 1999 DCA's operations
DCA is a listed investment company with interests including:

In 1998 David Vaux, an experience hardened and shrewd businessman, became managing director. He accepted the appointment on condition that his plan to expand into the fragmented radiology and aged care markets was accepted and that most of the other investments were sold off. The name of the company was changed to DCA Group to refect its more direct involvement in the businesses.

Vaux was spectacularly successful and led consolidation in these two areas. He turned the company into a market darling. By the end of 2005 DCA was one of the largest radiology businesses in the world and the largest market listed aged care corporation in Australia. The radiology empire had expanded into Great Britain, Europe and the USA.

Aged care had far lower profit margins. Smaller operators not only found it difficult to generate profits but had to raise large sums in order to make the capital improvements which government now demanded. DCA believed that it would be able to generate sufficient profits through economies of scale in order to make a profit from this employee dependent sector.

David Malouf's description of successful entrepreneurs as people with "an eye for the main chance and the weakness of others" fits well here - and can refer both to the weakness of not for profit nursing homes and the main chance provided by the vulnerability of the frail elderly and their anxious but often ill informed families.

DCA took the plunge and started to expand very rapidly into this sector in 1999. By the end of 2005 DCA operated over 5000 nursing home beds and was the largest for-profit corporate provider of aged care in both Australia and New Zealand.

DCA needed a high return business to fund its expansion in aged care where the returns on investment were lower. Radiology provided this.

Apr 2001 An eye for the main chance
If ever there was a company fitting the bill of an emerging situation it was DCA Group, which is changing its focus from property investment to a pure-play health-care services model.

Under managing director Mr David Vaux, DCA is rapidly building scale in three key areas: diagnostic imaging, aged care and retirement villages.
Investment : Healthy fix for DCA Australian Financial Review April 7, 2001

Jun 2004 DCA history
DCA listed in September 1985 as Development Capital of Australia with a market capitalisation of only $8 million . Its market cap has grown to almost $700 million and will almost double again to $1.2 billion with the MIA deal.
Vaux Builds New Empire Australian Financial Review June 8, 2004

Jul 2004 Vaux's eye for the main chance
Vaux has been at DCA for six years and is the architect of its dramatic growth. He was appointed chief executive when the company was a $50-million cashbox with an eclectic range of investments and no clear direction. Vaux says he accepted the job on the condition that DCA would focus on radiology and aged care.
A commitment shared Business Review Weekly July 22, 2004
 

 
 
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DCA Leaders

ROBERT PURVES

Robert Purves and his sister, Sandra stepped into their fathers engineering business and fortune. They were wealthy philanthropists and enthusiastic environmentalists. Purves made his mark as a businessman and was the money behind DCA. While remaining chairman Purves has been low key leaving it to Vaux to drive the business.

May 1994 The Purves story
Engineering, investment. Robert Purves: Sydney. 36. Married, three children. Sandra Purves: Sydney. 38. Although still well-known as the son of a famous father, the late Sir Raymond Purves, who headed the engineering group Clyde Industries for many years, Robert Purves' own stature as a company director has increased in the past few years. In addition to being chairman of Clyde Industries, he is a director of the investment group Development Capital of Australia and the garden supplies company Arthur Yates. He has shareholdings in both DCA and Yates, but the bulk of his and his sister's fortune resides in their father's legacy, an 18% stake in Clyde Industries. Robert's other business interests include directorships in the meat producer T.A. Field Estates (his mother was a member of the Field family), General Reinsurance Australasia and the funds management group Regent Pacific. He is also vice-president of the World Wildlife Fund for Nature's Australian branch and a trustee of the Lizard Island Research Foundation. He and his sister are also involved, through the Raymond Purves Foundation, in making bequests to hospital foundations and medical research projects. - $55 million
UNDER $100 MILLION Business Review Weekly May 23, 1994

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DAVID VAUX

A successful sportsman, trained as a lawyer, David Vaux brought a wealth of business experience and entrepreneurial skills in aggressive takeovers to DCA. He undoubtedly had people skills. It is a measure of his adaptability that he recognised the difference between the environment in aged care and in radiology. From his public statements he seems able to apply his people skills to meet radiologists aspirations and to recognise the humanitarian role of those working in aged care. There is no doubt about Vaux’s commitment to his mission but whether company conduct ultimately matches his rhetoric remains to be seen.

We don’t know how Vaux will address pressures created in aged care by the conflicts between pressure from the business world to reduce costs, government’s constraint on funding, and nursing home’s dependence on costly and well trained staff. We can only hope that his dealings with nurses and their unions will not emulate those of his mentor Chris Corrigan on the waterfront during the 1990s confrontation. Whether the homes will maintain standards in the long term, and behave humanely remains to be seen.

There are also conflicts between market ethics, market pressures and the priorities and ethical obligations of radiologists.

As we have discovered in these web pages words are easy and self-delusion common. In the USA the conflict between mission and practical reality was resolved by morale destroying whare-housing. The elderly were processed through regimented ablutions, feeding and other required activities with fewer and fewer staff - all in the name of efficiency. Senior management maintained the illusion of care by distancing themselves from what was happening. When criticised they responded indignantly claiming to provide the best of care.

Like Ramsay (Ramsay Healthcare)and Dixon (Healthscope) Vaux’s stint with Australian Hospital care had persuaded him that when negotiating with government or insurers leverage (which included size and situation) was critical to success - a position of strength. He had probably learned from the BUPA experience that offshore holdings provided a financial buffer which allowed far more aggressive negotiation and confrontation.

Vaux is a private man and what we know about him is only what he has chosen to reveal.

Jul 2004 Vaux's story
Vaux was born in England and his family moved to Perth when he was young. He attended Hale School, completed his law degree at the University of Western Australia in 1980, and an MBA at London Business School in 1985. He moved to Sydney in 1981, mainly to play rugby union
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Moved to Sydney in 1981, employed by Freehills. Decided that business offered better opportunities than law and in 1984 left to study for an MBA. Recruited by Macquarie Bank in 1985 and worked in mergers and acquisitions for two years before joining the investment company AFP. When AFP's Australian assets emerged as Lang Corporation in 1992, he worked with Chris Corrigan at Lang until 1998. Shortly after, Vaux was appointed chief executive of the $50-million cashbox, DCA Group. Six years later - if the proposed merger with MIA goes ahead - DCA will have a market capitalisation of $1.3 billion, will be the largest provider of private radiology services in Australia and be prominent in the consolidating aged-care sector.
A commitment shared Business Review Weekly July 22, 2004

Jun 2004 Reviewing Vaux and the waterfront dispute
David Vaux spent five years as Chris Corrigan's right-hand man and executive director at Lang Corporation. He was the architect of Lang's reorganisation including the sale or listing of assets such as Freedom Furniture and Australian Hospital Care which let Lang concentrate on its Patrick stevedoring business. Patrick's contribution to revolutionising Australia's waterfront through its dispute with the Maritime Union of Australia is now well-known.
Vaux Builds New Empire Australian Financial Review June 8, 2004

Jul 2004 Business philosophy
David Vaux knows the value of teamwork and a game plan, and he has trained with some of the best in the business world.

A company's head office usually says much about its philosophy. Three years ago, the head office of the aged-care and radiology company DCA Group was above Wynyard Station in Sydney, and the music in the elevator battled against the distant rumbling of trains. Compared with that, the new office - only 100 metres away - is palatial, although it is still spartan by modern corporate standards. Nobody would ever describe DCA, or its low-key chief executive, David Vaux, as flash.
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Stockbroking analysts say Vaux is a straight-talker who has not over-promised or under-delivered. One analyst says: "There's a lot of charlatans in the health business. So far, he's always done what he says he's going to do."
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There is no doubting his expertise as a deal-maker. He is linked to some of the best-known names of business in the 1980s and 1990s, and his excellent networks straddle business and sport.
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Vaux says that while working with Corrigan, Scanlon and others he learnt the value of thinking strategically. He is interested in the opportunities offered by the scale of the health sector (nearly $70 billion this year). It is an essential service that will never stop growing and it is increasingly privatised.

His interest in health was pricked with Lang's purchase of a stake in Australian Hospital Care (AHC). AHC was one of the early groups to become serious about consolidating individual or small groups of private hospitals into large businesses.

Vaux says: "I sat on the board for five years, we floated it and sold out after it listed. It was a very profitable investment for us, and it also gave me an insight into the health business.

"It was pretty clear that running hospitals is a difficult business because you are often the price taker. If you are going to be in that business, you have to be large enough to negotiate from a position of strength."
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Running DCA has changed Vaux's view about management. He still believes there is no substitute for a detailed strategic plan and good fundamental research that involves more than sitting in front of a computer. But he talks a lot about the importance of human input to business success and about the commitment of the staff to patients.
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"But more and more it seems to me that the human side determines whether you are going to succeed or not. You have to be able to attract the clever, motivated managers who share the passion for the business. Having a shared set of values, where everyone knows the direction you're going, is critical to the business succeeding.

"I spend a lot of time travelling, talking to the doctors, the nurses and support staff - a key part of the job, to make sure they understand the goals. People are always keen to talk to the boss, and I find you get pretty good feedback on how things are really working if you listen."
A commitment shared Business Review Weekly July 22, 2004
 

 
 
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DCA Policies and Objectives

An aging population and the many services it requires has become the honey pot for greedy corporate bears. DCA had already invested in retirement villages.

During 1996 and 1997 the new coalition Australian government restructured aged care to turn it into a marketplace. A backlash from the community had forced it to back away from some of its plans, and a lack of profitability from struggling nursing homes was discouraging. Not for profits, small individually owned homes and private corporations like Moran Healthcare dominated. The market circled but did not rush to invest. DCA was the first to take the plunge in 1999 but when it did it raced to secure a commanding position.

Radiology was a profitable but capital intensive business that in 2000 had not yet been consolidated.

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Divestment

Vaux had long had health and aged care ambitions and a condition he insisted on when he was made managing director was that the company allow him to create an aged care and radiology giant, and divest most of its other businesses. This was done gradually over the years and the proceeds were used to grow the health care businesses. By mid 2001 DCA had sold its metal, hotel and property businesses to raise capital for its focus on aged care.

Aug 2000 Sells Metal products and hotel businesses
David Vaux, DCA's Managing Director, commented: "After successfully selling our holdings in Touraust and Exparnet for a net profit after tax of $9m and realised $20m in cash, DCA's focus is now on high growth healthcare, eldercare and lifestyle businesses.
Development Capital Of Australia Limited (DVC.AX) DCA Expands with Healthcare Acquisition. Australian Stock Exchange Company Announcements August 9, 2000

Apr 2001 Sells out of property
Another issue on the horizon is the divestment of its 22 per cent stake in listed property group Delfin and a 33 per cent stake in the unlisted LWP Property Group. The company hopes to recoup between $30-$40 million from the divestment program.
Investment : Healthy fix for DCA Australian Financial Review April 7, 2001

May 2001 Selling to fund acquisitions
Managing director David Vaux says the proceeds (from sale of Deflin) will reduce debt and fund DCA's aggressive acquisition program - - - - -
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DCA has been offloading investments unrelated to health and aged care and Delfin is the last to go.

It previously exited a metal manufacturing group and a hotel management business.

"We have decided to focus on health and eldercare and the Delfin stake didn't really fit with that," Mr Vaux said.
Delfin stake sale to cut debt, fund expansion. Adelaide Advertiser May 14, 2001

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Aged Care and Radiology

Aged care and radiology are among the last of the health care sectors to be wrested from individual operators and consolidated into large corporations in the name of efficiency and cost effectiveness. This is seen to be desirable and an opportunity for huge profits.

There are two measures of corporate economic success, profitability and growth. Service to the community and standards of care are economic considerations only when they impact adversely on profits or growth. As is well illustrated in the USA cost reduction threatens care and all too often service and standards are compromised.

To maintain service and standards either those receiving the services, the professional staff who act for them, or government agencies must have sufficient leverage to impact on profitability. In aged care most residents have little leverage. Government is driving the consolidation so is disinclined to confront issues which undermine policy. Nursing staffs are employees who can be silenced. Doctors play a relatively minor role in nursing homes when compared with hospitals. Aged care is very vulnerable.

In radiology doctors have less direct contact with and responsibility for patients and usually don’t make the final decisions. They are closer to the corporation.

DCA entered aged care in 1999 and radiology in 2000. It became a holding company and changed its official name to "DCA Group" and its ASX code to "DVC". Both sectors grew dramatically.

Jun 2005 The economics of growth
DVC is the largest listed provider of aged care generating 17% EBITA margins where many are losing money. Management expect to derive cost synergies from acquisitions and is investing in management resources to enable further growth.
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DVC has taken the first mover advantage to build a portfolio of over 3,200 beds at reasonable prices. Their scale of operations located across the country means further acquisitions are bolted on to a framework for economies of scale. The Hogan report has prompted many independent providers to ask more for their operations in anticipation of further deregulation. Higher bed prices means return on invested capital become harder to achieve. DVC is not over paying for assets but inactivity hampers growth. DVC has a lot of acquisitions to digest and we continue to monitor management ability to derive improvements from recent acquisitions.
DCA GROUP (DVC) $3.68 : Aged Care and Medical Imaging Your Money Weekly June 9, 2005

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Balancing profitability and growth

Radiology is a high profit enterprise. Nursing homes are currently generating little profit but demanding investment in refurbishment and staffing to meet new physical and regulatory standards. Nursing homes generate only 22% of DCA’s profit stream. It is likely to remain low until sufficient dominance of the sector is attained to leverage payments.

The current profitability of aged care by itself cannot generate the profit stream needed to secure sufficient funds, from the markets or bankers, for the planned growth in aged care. By combining radiology and aged care, the profits from radiology are used to raise funds for expansion in nursing homes. This has been so successful that the company has almost doubled its target of 500 new nursing home beds a year and within 7 years operated 5000.

The company increases its value through growth. Shareholders love this but ultimately the company will have to deliver a profitable return on the investment in nursing homes. It remains to be seen whether they can accomplish this without compromising on care and morality. A few analysts have reservations. US nursing home chains made vast sums by compromised care and aggressively working the funding system. Unlike pathology and to a lesser extent radiology, the primary costs of nursing home care are nurses and the benefits of consolidation and the supposed efficiencies it provides are very limited. Nursing needs depend on the patient load and nursing does not cost less when the industry is consolidated. But nurses and their representatives have much less leverage and so more difficulty in maintaining staffing and standards.

Oct 2002 Using radiology profits to grow aged care
What the restructure does do is enable DVC to access all I-Med's cashflows - - - - . DVC has indicated it will use these I-Med cashflows - - - to fund expansion in aged care.

The residential aged care market has revenues of $6bn but is highly fragmented; DVC sees its role as to lead the consolidation of the industry. The company already owns 1,603 bed licences at 21 facilities in four States and the ACT.
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Growth is planned through acquisition, developing new facilities and extending existing facilities, with a target of an additional 500 beds per year. The company is currently evaluating acquisitions which would bring another 1,000 beds.
DCA GROUP LTD (DVC) $1.78. Your Money Weekly October 10, 2002

Jul 2005 Growing in New Zealand
DCA's aged care operations currently account for around 22 per cent of its overall business. Mr Vaux said DCA was already considering further acquisitions in New Zealand.
DCA scoops up NZ aged care provider for $300 mln Australian Associated Press Financial News Wire July 11, 2005

That DCA so rapidly became one of the largest radiology groups in the world was at least partly because DCA seized the opportunities which presented. The growth in profitable radiology enabled DCA to generate a larger income stream and so raise more money from the banks and the marketplace. They enthusiastically obliged and DCA expanded more rapidly in aged care exceeding its targets.

Oct 2005 Radiology and aged care - dynamics
DVC derives 80% of its earnings from its IMED division, which acquired Medical Imaging Australia (MIA). IMED is the largest radiology provider in Australia and is busy consolidating the acquisition to derive a best of breed operating system. Greater scale enables IMED to invest in new technology to optimise productivity. IMED uses digital equipment to enable a radiologist on one side of Australia to review images from a patient on the other side.
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DVC is expanding its foot print in the aged care industry. The aged care market needs and expects government regulatory action to create an incentive for industry to invest capital. DVC is a low cost operator that makes profitable margins in a generally unprofitable industry. DVC continues to enhance returns by acquisitions to create efficiencies through increased scale.
DCA GROUP (DVC) $3.82 : Aged Care and Medical Imaging Your Money Weekly October 27, 2005

 

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Getting Staff on Side

Like other health care corporations DCA set store on aligning managers, doctors and other employees financial interests with those of the company. This creates a conflict when the interests of the patients whom the employees serve are in conflict with the corporate profit mission. A legal way to do this is to ensure that employees are shareholders, and to offer senior management share options.

Mar 2003 Staff are shareholders
We now employ over 2,500 professional and support staff, most of whom are also shareholders in DCA through our various share ownership plans
Development Capital Of Australia Limited (DVC.AX) Half Year Result - DCA on track to achieve ... Australian Stock Exchange Company Announcements March 6, 2003

Oct 2003 Radiologists and equity
- - - - - - the business model of encouraging radiologists to own equity in the group is a good move as small business operators always want to participate in the success of the company.
DCA GROUP LIMITED (DVC) $2.17 - Radiology & Aged Care Your Money Weekly October 2, 2003

Sep 2005 A great reward
Those 76 ¢ shares of yesteryear were worth $3.97 yesterday.

One of the pieces of paper that DCA has on issue are options that expire at the end of this month. Holders are required to pay $2.35 to exercise them.

As it happens, some directors have accumulated large holdings of the options and it is those holdings that have led to some recent dealing in both the shares and the options.
Options play gives DCA holders a good diagnosis The Age September 17, 2005

Staff training programs should improve standards of care but in some instances they have been used to train staff in market practices which resulted in serious harm. All Tenet/NME staff were required to attend corporate training sessions which emphasised dysfunctional commercial practices These resulted in the enthusiastic adoption of successful money making practices which included the needless admission of many hundreds if not thousands of profitable but vulnerable normal children to psychiatric hospitals for long periods of time. I am not suggesting that this is what DCA’s courses do.

Also of interest is the deliberate recruitment of nurses from poor countries whose desperate need for trained staff for their citizens is far greater than ours. This is seen as a positive activity. The immorality of this is seldom questioned. The Royal Commission into Healthcare in Canada challenged the morality of this practice in a report that re-emphasised the importance of values and morality in health care.

Jul 2005 Nurses from poor countries
DCA will also use this experience to expand and develop its aged care management training school. Guardian (recently acquired New Zealand company) developed a successful overseas nurse recruitment program. Guardian sourced qualified nurses from the Philippines, Zambia and India to address the chronic short fall in qualified staff. DCA will learn from this program and look to import qualified nurses into Australia.
DCA GROUP (DVC) $3.95 : Aged Care and Medical Imaging Your Money Weekly July 14, 2005

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Cherry Picking

One way of making more money out of aged care is to target those patients who can pay more. This can be seen as a form of cherry picking. Nursing homes in the USA targeted better paying private and Medicare residents, avoiding low paying Medicaid recipients who typically graduated to not-for-profit providers. Private money typically ran out after a year and Medicare payments were short term. When these patients reverted to Medicaid funding, care did too. Some companies found a pretext to dump these patients back on their families.

As in the USA any reservations about policies which make nursing homes more profitable by targeting wealthy seniors are drowned out by DCA’s marketplace success. It must be good if it is profitable! One can certainly argue that those who have funds are entitled to purchase additional comforts, not provided by government. Encouraging them to do so for the profitability of investors who have no interest in their welfare adds another dimension to the debate. Many have limited resources and anxious families can be unscrupulously bled in order to boost profitability.

Jul 2004 Not really a service for the wealthy
The reality of aged care, though, is very different from investment banking. It is not always a happy or uplifting area in which to work or run a business: people are old, sick, suffering from various dementias or other difficult problems. Many have very little in the way of financial resources or family support.
A commitment shared Business Review Weekly July 22, 2004

In radiology DCA has also made more money by adopting a policy called "shift to the right" which seems to be a similar strategy.

 
 
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Management style

Some idea of Vaux’s style is revealed in the section about him above and his policies in radiology and aged care are addressed later. The following extract after DCA had acquired the much larger MIA is also revealing. We should not doubt his commitment to "quality" but what will he do if and when he finds that quality and profit cannot coexist. Quality is an ill-defined concept. Some have found it expedient to equate profitability with quality.

Jul 2004 Management style
Unsurprisingly, Vaux has little use for expensive consulting services. However, MIA's recently appointed chief executive, Paul Mirabelle, was previously with Boston Consulting Group. Radiologists at MIA have noted wryly that numerous BCG consultants have spent long periods in the company since Mirabelle moved into the job late last year.

With an eye on the long term, Vaux is very aware of the importance of maintaining DCA's reputation as a quality provider of aged-care and diagnostic imaging services. "We aren't interested in short cuts; the aim is to build a sustainable company."
A commitment shared Business Review Weekly July 22, 2004

 
 
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Progress

DCA’s entry into the radiology and aged care marketplace has been spectacularly successful appealing to those for whom profitability is important as well as those whose prime interest is growth. Company promotions and analysts advice do not target those whose interest in investing in aged care is to further a humanitarian agenda. So far Vaux has repeatedly proved his critics to be wrong.

Nov 2000 Refocusing
The 1999/2000 year was a very busy one for DCA built around the Company refocusing to become a holding company for healthcare, eldercare and lifestyle businesses"
Development Capital Of Australia Limited (DVC.AX) Chairman`s Address to Shareholders at AGM. Australian Stock Exchange Company Announcements November 6, 2000

Apr 2002 Market performance
Few health-care companies can boast a doubling in share price over the past year, with sentiment towards the sector near an all-time low.
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By contrast, retirement home and radiology operator DCA Group is up 108 per cent over the past 52 weeks
DCA Stands Out In Ailing Health Sector Australian Financial Review April 29, 2002

Jun 2002 The market rides triumpnant
Aged healthcare centres are big business if you're the only serious player in town. DCA Group plans to take full advantage while the rest of the struggling healthcare sector only mutters about making a move into the market.
DCA marches on Sydney Morning Herald June 27 2002

Sep 2003 Best performing stock
Aged care and diagnostics group DCA was the best performing stock in the ASX 200 yesterday after the group beat prospectus forecasts.
Glowing DCA Tops Forecasts With $14.5m The Sydney Morning Herald September 5, 2003

Apr 2004 Shares go up and up
The share price of the DCA Group, a company involved in diagnostic imaging and aged health care, has more than doubled since January 2, 2001, when it closed at $1.07. On Thursday, it closed at $2.57.
Smart investors chase the grey dollar Sunday Telegraph April 11, 2004

Jul 2004 Some have reservations
Although some brokers and institutions regard Vaux as the latest wunderkind, a few sceptics in rival aged-care and radiology groups say that his practical challenges are enormous.

Top of the list is sorting out MIA's continuing underperformance, integrating the MIA business with DCA's radiology division (I-Med) as well as extracting decent returns from aged care.
A commitment shared Business Review Weekly July 22, 2004

Jun 2005 Most analysts praise DCA
One of the standouts in this field is DCA Group, which has established itself as a dominant private player in two major sub-sections of the health-care market: diagnostic imaging, where it is the largest operator in Australia; and residential aged care, where it is the No. 2 private operator with 37 facilities operating roughly 3000 beds.

Analysts say one of the firm's chief attractions is its ability to generate higher growth than the industry norm. In 2005-06, some tip DCA to deliver above-trend revenue growth, owing to a combination of market-share gains and improving co-payment fee structures. Merrill Lynch health-care analyst Michael Carmody says DCA is cheap.

"In a market being negatively impacted by regular earnings downgrades, we see DCA's defensive characteristics as being a key positive for the stock," he says. "The consistent margin expansion implied in our DCA forecasts incorporates the positive earnings impact we expect DCA's technology strategy to deliver over the medium term."
Taking the pulse of health care Australian Financial Review June 8, 2005

Aug 2005 Profitability
"The merger of I-MED and MIA has been very successful and operating margins have improved significantly," managing director David Vaux said.
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""Our aged care business has also grown substantially with profit increasing by 21pc," he said.
DCA Group FY net profit $17.43m, div 4c Ralph Wragg Australian Business News August 25, 2005

Elsewhere I have used the US experience to describe the divide in perceptions between the market and citizens. I listed some red flags - characteristics of a companies at risk of misusing patients or indulging in fraud. Most of the worst US companies applied strict market principles and were spectacularly successful in generating profits from care and/or fraud. It is not surprising that measures of success are prominent among these characteristics.

Very rapid growth is a matter of particular concern in regard to DCA. Several US companies (eg Sun Healthcare) grew dramatically over only a few years. To support this they required a massive profit stream. They raped the services provided to the elderly and exploited every weakness in the funding system in order to secure it. When the government finally stepped in to stop what was happening these companies entered Chapter 11 bankruptcy. Government was unable to penalise them adequately because of the impact on the frail elderly and the consequences if the companies went out of business. Instead they were helped to trade out of bankruptcy.

A less savoury money making strategy has been to sell a model of care which is not economically viable to investors then sell out before it all goes wrong. Analysts once waxed lyrical about General Practitioner corporations and many citizens were conned into investing. Only one of those companies made money. Stockholders in the others lost heavily. It should have been obvious that the business model was not viable and had already failed in the USA.

A lack of profitability can be obscured in the complex accounting arrangements surrounding growth as it was in HealthSouth and General Practice in the USA. The giant financiers such as Citigroup advised and assisted companies like Enron and WorldCom to do so. The original owners can sell their shares and collect their profit before the company collapses.

It is possible that the original investors may be as deceived by the apparent potential of their model as those who invest, and there is no means of showing that they were not. When these are highly skilled and experienced businessmen then their naiveté should raise eyebrows.

At the present time we have no grounds for suspecting that Purves and Vaux are not as committed to building a long term profitable aged care service as they claim to be, but investors should be aware of the experience of others. The extract below is of concern.

Jul 2005 Getting information
But the broker said DCA was a company that was continually changing, making it difficult to asses the businesses on a steady basis.

Credit Suisse First Boston said there was little aged-care investment opportunities in Australia unless there were some fundamental changes to the way the industry was funded.
Flux leaves DCA on neutral BIG PRICE MOVERS The West Australian July 12, 2005

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Share Value Plunges in 2006

The business prospects from nursing homes are seen as uncertain and the market is jittery. The business depends very largely on goverrnment payment. When profits can't be made companies have no choice but to turn to government for funding. In May 2006 DCA predicted a profit downgrade precipitating a rush to offload shares pushing the share price down over 20%.

The company blamed this on competition in radiology from public hospitals. It seems unlikely that public hospital activities in the private sector would have a significant inpact and some analysts have questioned this explanation suggesting there may be something more fundamental.

It remains to be seen whether this sudden change is due to a jittery market's response to a minor hiccup in profitability or whether it is the start of a major slide. The company's business model is problematical and has yet to prove itself. The worry is that these pressures will cause the company to cut costs and we will see more examples of failures in care at its nursing homes.

May 2006
Shares in the aged-care and imaging company plummeted more than 22 per cent on Friday following the profit downgrade it issued after Thursday's market close.

The stock touched a two-year low as investors wiped more than $400 million from DCA's market capitalisation. It closed down 72¢, or 19 per cent, at $3.08. Before the slump DCA shares were trading at about 38 times earnings.
DCA wants beds but takes a bath Australian Financial Review May 13, 2006

May 2006
INVESTORS wiped more than $340 million from the market value of DCA Group on Friday as the diagnostics and aged-care company blamed a fall in its earnings forecast on public hospitals poaching its patients.

Analysts accept the loss of private patients is one reason for the earnings downgrade, but believe the company is also suffering from substantial increases in salaries for radiographers and radiologists in the past year.
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He (Vaux) denied he was shifting the blame for the company's downgrade to a factor outside his control, saying the loss of patients was the primary reason for a 3 to 5 per cent fall in revenue.
DCA backers out as wages go up, patient figures down The Sydney Morning Herald May 13, 2006
Shares in DCA fell 24.22 per cent in the three trading days after the profit downgrade announcement and broker Merrill Lynch dropped its rating to "neutral" from "buy", trimming its estimated revenue growth to 4 per cent from 6 per cent. Yesterday, the share price closed at $2.85, down 3.39 per cent or 10¢, on Wednesday's close.
DCA won't take setbacks lying down Australian Financial Review May 19, 2006
The largest to downgrade its earnings guidance was DCA Group. It had more than $400 million wiped from its market capitalisation as investors rushed for the exit door.
Forecasts flounder on consumer doubt Australian Financial Review May 20, 2006

Because most of the money comes from government these nursing home companies must get government to increase payments if they are to restore profitability. It is probably not a coincidence that at the same time DCA was urging government to increase payment and let them charge residents more. This is what the government wanted to do in 1997 but a public backlash prevented it.

May 2006
THE chief executive of Australia's biggest commercial aged-care provider is lobbying the Federal Government for an overhaul of aged-care funding.

Amity Group chief David Armstrong will today unveil his plan at a National Aged Care Industry Council forum in Canberra on the future of aged and community care in Australia.

The plan involves lifting the maximum that amount aged-care providers can charge self-funded retirees for accommodation from $16.63 a day to $40 a day, with the price depending on the features of the facility.
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Mr Armstrong said the fee increase was necessary to allow aged-care operators to comply with the Government's 2008 certification standards, which require that their buildings meet stricter safety and privacy measures for residents.
Aged-care chief calls on government for funding overhaul The Age May 15, 2006

May 2006
The listed group works in a closely regulated sector and sources 60 per cent of its diagnostic imaging revenue and nearly 75 per cent of its aged-care revenue from governments.

The fortunes of operators in the sector shadow government policy, and margins are notoriously tight.

Now DCA, widely considered the most efficient and best-performing company in the sector, is feeling the squeeze.
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Research analysts are scathing about the cap on charges to residents.

They say it has eroded margins in the sector and encouraged inefficiencies and poor standards of care by paying equal subsidies to all aged-care providers, regardless of their performance.

Analysts hope margins have dipped so low that reform of the system is inevitable.

"General market consensus is it is inevitable that the market has to be opened up with more subsidies or greater user-pays systems and that will reverse the margin erosion," Macquarie Research's Marcus Wilson says.
DCA won't take setbacks lying down Australian Financial Review May 19, 2006

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STOP PRESS Sept 2006 and Mar 2007
Citigroup Companies Buy DCA

September 2006:- After some rumours that DCA was trying to sell itself DCA announced that Citigroup's venture capital subsidiaries CVC Asia Pacific and CVC Capital Partners had made an offer. DCA has advised acceptance. The company will then be delisted from the share market and be operated privately. The takeover requires regulatory approval from a number of regulatory bodies and will require shareholder acceptance in November 2006.

The concern here is Citigroup's probity. Citigroup has been at the centre of multiple large scandals including the deception of trusting small investors which its analysts and brokers had a duty to advise. It has recently paid out about $10 billion to settle court actions related to its involvement in the Enron and Worldcom frauds.

It is relevant that NSW spent 18 months carrying out a thorough probity review when the same group of venture capitalists bought Mayne hospitals in 2003. They found the group wanting and only granted licenses with restraining conditions.

Nursing homes are far more vulnerable than hospitals and it will be interesting to see how aged care regulators will handle this problem. Will they stop the sale in order to protect the elderly or will they find some formula which will allow them to support the market.

March 2007:- Objections were lodged with the regulators. After a 4 months delay when the matter was off the front pages a reply from the department of aging indicated that under the legislation they were not required to evaluate multinational's buying Australian nursing home companies. It is revealing that the government had created the loophole so that multinationals could bypass our regulations and would not suffer the probity problems US hospital corporations had run foul of in state licensing regulations. The public statements, revelations about the minister's character, and a review of recent and earlier correspondence provide a facinating insight into the way the country is run behind the public facade. In March 2007 I wrote another page about it.

Click Here to go to the "Citigroup Buys DCA" web page

 
 
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The Nursing Home Business

Staffing

Aged care is a person intensive activity and the standard of care is heavily dependant on the quantity and standard of nursing, the ambience of the home, and the motivation of all staff.

Running Nursing homes for profit is a business where the costs of matching increased occupancy with adequate staffing markedly reduces profitability. Finding and keeping suitably skilled and motivated staff has been and still is a problem for all nursing homes. Nursing home staff are already amongst the more underpaid employees in society. The potential for rationalising costs through changes in staffing without also compromising care is small but the market is unable to accept this. To a corporate cynic simply making working conditions unpalatable and not recruiting too energetically is an easy way to keep staffing low, costs down and profits up. A way to rationalise it is at hand, there is no way of knowing it is happening, and no one can challenge the excuses, because the nursing shortage is real.

Oct 2003 Achilles heel
However, aged care is the achilles heal for DVC with rising nursing costs hamstringing margins. Margins have already stated to showing signs of weakness with the EBIT margin falling from 17.5% to 16.5% in 2003. Rising nursing costs, which represent 50% of divisional revenues, will continue to place pressure on margins.
DCA GROUP LIMITED (DVC) $2.17 - Radiology & Aged Care Your Money Weekly October 2, 2003

Aug 2005 Impact nursing costs
DCA's aged-care business performed well with revenues up 26 per cent, but operating margins were crimped by a 2 per cent rise in remuneration costs.

This was due to nursing wages increasing at a higher rate than federal government funding.
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"In the next three to five years we think there will be fewer players and expect to become the largest provider," he said.
DCA gets lift from a scan for synergy The Australian August 26, 2005

In the USA the blind belief that nursing care was inefficient and that efficient systems would permit large cost reductions by reducing both the number and the expertise of staff. The imperative was to reduce already overburdened staff further and the adverse consequences were ignored. Some Australian analysts attribute DCA’s success in aged care to similar policies, and the worry is that this information probably came from DCA. The benefits from centralised administration, group buying etc. are limited. Nursing is the main cost. What will DCA do when it can't meet these expectations without culling or deskilling staff? The US experience tells us that this will flow on to others. Those competitors who don't do so go under.

Apr 2004 reducing fixed cxosts ?? nurses
The company can reduce its operating costs of supplying aged care because the fixed costs of running the combined operation is spread over a greater number of revenue generating beds.
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DVC's low comparative cost of supplying aged care services ensure that they will derive the biggest earnings impact (from increased government funding). The DVC share price has increased 58% over the last year and has already factored into account the predicted growth in revenue through the consolidation of the aged care market.
DCA GROUP (DVC) $2.61 Your Money Weekly April 22, 2004

Motivation driven by empathy and dedication is a key factor in retaining staff who could make more money elsewhere. One of the consequences of the efficiencies introduced by corporate nursing home chains has been to reduce the time for interaction between staff and residents. Empathic motivation is lost, staff become alienated and find employment elsewhere. As is well illustrated by the USA, the shortage of dedicated staff throughout the industry is compounded when they cannot give their patients the care they know is needed. Increased reliance is placed on recruiting staff from poorer countries whose need for these trained staff is greater than ours.

Corporate chains legitimately claim that they are victims of the shortage but as reduced staff levels improve profitability there is little incentive for them to find staff or to pay more than lip service to addressing the problem.

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Costs of refurbishment

The government set new physical standards for nursing homes in 1997. The costs of developing or refurbishment facilities to these standards are high. Many smaller not-for-profit and personally owned nursing homes simply could not raise the needed capital. They were forced to sell to groups who could raise that capital from the share market.

It is clear that government’s un-stated policy is to consolidate the sector through corporatisation and market mechanisms. Its regulations are directed towards that end. The Salvation Army owned and managed homes for the less fortunate sections of the population. They elected to sell when faced with the prospect of paying many millions to refurbish these homes. Even DCA backed out of the sale.

Other groups eyeing nursing homes had been holding off and these regulatory and funding constraints were putting pressure on the system. Government used its surplus to come to the rescue in 2004, and give corporatisation a push, with a one off cash injection as well as increased payment.

May 2004 Government to the rescue

The five-year package included a one-off cash injection of $3,500 for every nursing home resident, designed to help operators invest in deteriorating facilities.
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Managing director David Vaux said the one-off payment would contribute about $8 million to DCA, while changes to recurrent funding would net the company $1,000 per bed per year.
DCA Group shares soar after budget gives aged care $2.2b boost Australian Associated Press Financial News Wire May 12, 2004

May 2004 Good news for DCA
DCA managing director David Vaux said the news boded well for DCA's "aggressive" expansion strategy, which aimed for 5000 beds in the next two to five years. With recent acquisitions, the group now has 34 aged care facilities and 2562 beds, with a further 188 under development.
Package puts a spring in the step of aged care providers - Budget Reaction The Australian May 13, 2004

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The dynamics of corporatisation

The funding of nursing home care comes largely from taxpayers. The market recognises this and responds rapidly to any changes in public funding.

May 2004 Shares respond to government largesse
SHARES in aged care provider DCA Group shot up 5.5 per cent yesterday on expectations that programs in the federal budget deliver the group an $8 million one-off grant in addition to higher patient subsidies.
Package puts a spring in the step of aged care providers - Budget Reaction The Australian May 13, 2004

Taxpayers cannot be expected to pay permanently for a gravy train, although governments who control the money frequently do try. It is therefore difficult to rationally and ethically justify investor enthusiasm or pretend that this will be a bottomless pot of gold as some analysts have indicated. This can only happen when corporations can hold citizens to ransom.

Large nursing home chains in the USA have been very profitable but much of this has been accomplished by exploiting the vulnerability of the funding system, fraud, and by short changing care. Additional factors have been the close relationships between businessmen and government, and their influence through political donations and lobbying.

As important has been the leverage secured by size, by the essential nature of the services provided, and by the vulnerability of those who are served. Once a company gains a critical mass, the political costs of acting to close down corporate activities become prohibitive as is well illustrated by the USA. Corporations were and are in a strong position to negotiate favourable settlements. Governments fell over backwards to keep threatened corporations guilty of fraud and neglect of the elderly in business. Governments no longer had the resources to step in and care for the aged citizens.

Problems with care are compounded when governments try to restrict the profitability to which now powerful companies think they are entitled. Companies simply blame the government's unwillingness to pay more.

Marketplace theory indicates that apposing economic forces balance themselves out in the best interests of citizens. The US experience shows us that this is not so in health and aged care.

The market can and does raise the capital needed to build hospitals and nursing homes from the superanuation and other savings of the same citizens who would complain bitterly about increased taxes. While it is a bit of a lottery the lucky winners are ultimately repaid with interest. In Australia the taxes paid by all the people are used to pay this. The consequence of this financial sleight of hand is a complex system built around economic levers which generate forces that continuously put pressure on care.

Corporations of course strongly deny this pattern of reasoning, and justify their activity in other ways. They claim the allegations about the USA are exaggerated. Whether it is intentional or not they ultimately find themselves with political influence, money to donate, and money to lobby with, as well as the leverage need to support their profit agendas when dealing with government. They have a responsibility to their investors to utilise these for economic benefit and can boost their own bonuses by doing so. That is the US system of health and aged care.

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The Consequences of Leverage

Large aged care companies are almost immune from major punitive action by regulators as is well illustrated in the USA. Studies have shown that homes run by for profit chains have consistently provided poorer care than not for profit services.

In the USA regulation did little more than skate around the edges of the problems. Fines for poor care were not punitive. They were whittled away in expensive negotiation and appeals. Fraud settlements were waived or markedly reduced to ensure that the companies were able to continue services and did not go out of business.

The only effective punitive action was through the courts where horrified juries awarded appropriate fines against wealthy companies who had deliberately understaffed and neglected residents to boost profitability. Groups of concerned citizens banded together to encourage and guide relatives in this endeavour. The companies have succeeded in inducing politicians in many states to cap damages for these cases. Companies have vacated those states where litigation costs remained punitive.

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Enthusiasm for aged care

The potential costs of caring for the aging population fuels the drive to privatise aged care and the wild enthusiasm in the marketplace for aged care services. Goverments know that they are unable to fund the infrastructure to meet future needs without raising taxes. They have promised not to do so. This is at a time when the country is booming and so well able to meet the increased costs. The marketplace is only too eager to help them out at a profitable price. This is quite apart from the ideological forces driving privatisation. Thereare a number of studies which suggest that the future impact of an aging population has been exagerated for political and market selfinterest.

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The First Mover Advantage

DCA’s was the first of the market listed groups going into aged care and it grew rapidly clearly intending to dominate the market. When he was a director of Australian Hospital Care (AHC) Vaux learned the importance of size and leverage when negotiating with competitors and with government. Vuax used the advantage gained by being the first into the market to grow very rapidly and strategically. DCA believes that its nursing homes will eventually be very profitable. How it will accomplish this remains to be seen.

Oct 2002 DCA's position
"Our move into aged care is driven by three factors," said Mr Vaux. "Demand for aged care will increase substantially in the next 10 to 20 years; the industry is really fragmented; and we have, I think, the best aged-care management team in Australia. There is an outstanding opportunity to grow a very substantial company."
DCA chief sees big growth in takeover. Australian Financial Review October 2, 2002

Oct 2003 First mover advantage
"Although radiology remains the largest earnings contributor . . . the growth potential offered by [DCA's] first-mover advantage in the Australian aged-care industry is the primary basis for investment," Michell says.
So Many Floats, So Much Choice The Sydney Morning Herald October 10, 2003

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Targeting better paying residents

DCA’s reasons for entering aged care include the expected demand created by an aging population. Recognising the limitations of government funding they have targeted the wealthy sector of the marketplace and are particularly eager to capitalise on the large numbers of baby boomers who have accumulated wealth and are accustomed to buying the best. They will pay for more. This would make DCA less dependant on government funding; a strategy also adopted by US nursing home chains.

The situation in the USA was not dissimilar with three levels of increasingly lucrative funding from Medicaid, through Medicare to Private funding. In the USA companies cherry picked, targeting better paying Medicare and self-paying residents. They were admitted to homes ahead of needy Medicaid citizens. They were often housed better and given better care.

Medicare funding was time limited and personal funds were soon exhausted. Residents were then downgraded to Medicaid level wharehousing and sometimes simply dumped back with relatives. There were disturbing practices and scandals. It remains to be seen what the future will provide for Australians.

The descriptions of luxury nursing homes are reminiscent of the failed luxury health care plazas advocated by Doug Moran who targeted wealthy Asians during the 1990s

Jun 2000 Targeting the wealthy
The group is also planning to launch a series of top-end aged care facilities, aimed at Australia's wealthy. Mr Vaux said the move would attempt to cash in on rich individuals looking for premium care in their later years. He said the company was investigating several possible development sites.
DCA Agedcare Takes Another Step On Acquisition Trail Australian Financial Review June 27, 2000

Jun 2002 Going to wealthy areas
Obviously it is important to build or acquire facilities in areas where large numbers of old people live. Upon completion of this year's acquisitions DVC will have five centres in Sydney's affluent North Shore. These should be particularly profitable acquisitions over time. Anyone with grandparents or elderly parents on Sydney's North Shore will be familiar with the scarcity of quality nursing homes and retirement villages.
DCA GROUP LTD (DVC) $1.93. Your Money Weekly June 27, 2002

Jul 2002 Luxury nursing homes
Healthcare specialist DCA Group is putting the finishing touches to its $15 million aged care facility at Mosman, the first in a chain targeting wealthy people across Sydney.
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A further $120 a day is charged for use of additional services, which include an in-house hairdressing salon, aromatherapy treatment and a fully catered dining room for private family functions. The Federal Government pays a further $50 to $80 depending on a resident's classification. David Vaux, managing director of DCA, is developing another three premium-style facilities in Sydney's affluent north corridor and plans to take the concept further afield.
DCA targets aged who want to go out in style Sydney Morning Herald July 12 2002

Jul 2002 Flagship at Mosman
He added "Amity at Mosman" would set new standards in residential aged healthcare with 60 private rooms featuring dedicated en-suite facilities and "the ambivalence (?ambience) of an exclusive hotel".
DCA settles acquisition of Mosman aged care centre Australian Associated Press Ralph Wragg Equities News July 17, 2002

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Spinning off assets into a trust

Selling all the physical assets into a trust is a common way of raising more capital through the market, reducing debt for the main company and shielding the assets from creditors should the company go under. The banks and some retirement companies have gone this way. By 2006 DCA was planning to go this way too.