1. Better Outcomes for Older People in their Communities Indra Arunachalam, CPA Manager Corporate & Financial Services March 2011

2. Research Outline o Mergers in the Not-For-Profit Aged and Community Care Sector: Examination of Critical Success Factors o Masters in Business Research o University of New England o Prof A Sheridan, Dr L Conway & Mr M Goldsworthy o Mixed qualitative and quantitative methods

3. National Profile o National data from Department of Health and Ageing o Financial years ending June 2003 to June 2010 o Number of services/outlets are increasing o Number of approved providers are consolidating

4. 23% increase of Services from 2003 to 2010 (DHA)

5. 10% drop of Approved Providers from 2003 to 2010 (DHA)

6. Profile of the Not-For-Profit Sector in NSW & ACT o Aged & Community Services of NSW & ACT (ACS) o 277 members in 2010 o 53% of the residential places in NSW & ACT o 74% of the aged care packages in NSW & ACT o Generally representing 20% of the Australian approved providers

7. In-depth Interviews o Six Chief Executive Officers – ACS members o Four are based in the city, two in the country o Church and community based providers o Multi-service - residential, community, housing, aged care, disabilities o All provide services state-wide o One is a multi-state provider

8. Merger Reasons Online survey of ACS membersIn-depth CEO interviews Strategic growthStrategic growth & diversification Target provider in financial strifeFinancial viability Strategic diversificationRisk management & compliance Ensure availability of services in local communities Services in rural communities Continuum of care Changing demand and workforce demographics that is driving the coming national health reform

9. Merger Challenges Online survey of ACS membersIn-depth CEO interviews Power politics from key personnel Opposition from governing bodies Leadership to manage conflict Due diligence investigations Merger agreement and plan Accountable against merger plan Cultural differences Employee resistance Manage change for integration Keeping focus on normal business Exit redundant staff with support Poor shared vision Lack of clarity in new structure Alignment to gain confidence New structure for new priorities

10. Definition of a Successful Merger Online survey of ACS membersIn-depth CEO interviews Improved service qualityBetter outcomes for older people Increased diversity of services provided Continuum of care Satisfied customers Local community engagement Positive financial outcomesFinancial improvement Creation of different revenue stream Realisation of merger benefits as per business case Savings from economies of scaleReduced unit cost

11. CEOs’ Components of Better Outcomes o Continuum of care at competitive prices o Social innovation that is client centred o The vulnerable are looked after in their communities o Improved and increased services Mergers or strategic partnerships are one way to deliver these better outcomes

12. Critical Success Factors for Mergers Online survey of ACS membersIn-depth CEO interviews Formalisation of the merger process Formalise the merger with a clear business case and merger plan Management of power, politics and personalities Clear purpose and strategy to manage power and politics Due diligence investigationsDue diligence and risk management Cultural compatibility

13. Congruence in Critical Merger Success Factors o Due diligence investigations – legal, financial, systems and cultural o Plan to realise merger benefits – a business case and merger plan o Change management – culture, people, power and politics

14. Regional Story – integratedliving Australia o Started in 1982 from four Meals-on-Wheels in the Upper Hunter, NSW o Through organic growth, mergers, and a demerger today we are a regional community care provider o Care for over 1,700 clients through 60 programs o Employ 300 staff from 15 offices in NSW & QLD o Engage in strategic partnerships to meet regional community needs

15. Lessons Learnt integratedliving’s lessonsResearch findings Be honest Comprehensive due diligence Due diligence - legal, financial, systems and cultural Good business case Stick to core business Agreement, plan and monitor Plan to realise benefits - Business Case - Merger Plan with regular monitoring Manage change and people Allocate adequate resources Manage people and change - culture, people, power and politics

16. Questions ??? o Contact details: Indra Arunachalam 0437 900 237 indra@integratedliving.org.au