Shares in companies with exposure to Australia’s aged care sector were pummelled today after the federal government cracked down on extra fees being charged to residents.
Japara Healthcare shares dropped by as much as 25% but at the close were down 14.71% to $1.74. Estia Health fell 11.75% to $2.78 and Regis Healthcare 16.67% to $3.70.
Investors sold the companies down after the federal government clarified what fees can be levied for additional care and services.
The federal government interprets the law as disallowing regular fees charged for capital refurbishment. The market has taken this to mean the aged car providers will have lower revenue as a consequence.
The Department of Health said it was aware of aged care providers charging additional services fees, including capital refurbishment fees and asset replacement contributions.
The department considers these fees not supported by the legislation because the fee does not provide a direct benefit to the individual.
“Extra service fees are for higher standards of food, accommodation and hotel-type services,” the department said.
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