How to prepare for RAD pricing changes 

By Andrew Farmer, CEO and Partner

From January 1, 2025, the maximum chargeable Refundable Accommodation Deposit (RAD) without prior approval from the Independent Hospital and Aged Care Pricing Authority (IHACPA) will increase to $750,000—and for the first time, this cap will be indexed 1 July each year. Providers will also be permitted to retain 2% of the RAD annually for up to five years, from 1 July 2025, totalling a maximum of 10% for any given resident. With sector wide increases in occupancy giving less pressure on pricing, this presents a long awaited opportunity to increase non-care revenue in the business. 

What this change means for providers

The RAD changes allow providers to set accommodation prices that reflect the quality and amenities offered, such as private ensuites or room sizes. This adjustment gives providers more flexibility, greater confidence and less red tape. It also means RADs currently above the old maximum price but under the new maximum price, will not have to go through the reapplication process. At the same time, it underscores the need for transparency and competitiveness in pricing, which ultimately means some preparation is required to make changes. The providers’ preparation needs to ensure compliance and having a proactive pricing strategy can make a substantial difference in operations and facility offerings. 

For providers, this is an opportunity to reassess strategies, enhance financial sustainability, and align with future market demands. 

To remain competitive and plan effectively, providers must understand:

1. Market Position:  How does your facility’s pricing compare with others in your region? Verifying your position ensures you’re neither underpricing nor overpricing your accommodation, both of which can affect occupancy and revenue. 
2. Historical and Current Trends: Understanding pricing trends over time can reveal opportunities to adjust your rates in response to market shifts or consumer expectations. 
3. Room Features and Value:  Room size, ensuites, and additional services are key factors in determining pricing. Analysing these elements helps you align offerings with resident preferences while justifying price points. 
4. Market Saturation: Regional supply and demand data are critical for future planning. For example, in some areas, more beds may be needed to meet growing demand, while in others, market saturation could influence pricing strategies. 

Why pricing analysis matters

For providers, having a detailed understanding of accommodation pricing is not just about compliance—it’s about creating value for residents by ensuring the sustainability of your services. A tailored analysis can equip providers with the knowledge needed to make strategic decisions that benefit their facility, staff, and residents. 

Maximise your pricing strategy

In the ideal world, the right tools in your toolkit will help you:

1. Verify and Optimise Pricing: Use market comparisons to ensure your RAD prices are competitive and aligned with the quality of your services.
2. Plan Strategically for Growth: Invest in room upgrades, add features that meet consumer preferences, and prepare for future demand informed by market saturation data.
3. Navigate Policy Changes with Confidence: Get ahead of the 2025 RADs changes with actionable insights and strategies tailored to your facility.
4. Differentiate Your Facility: Highlight additional daily living services, larger room sizes, or enhanced amenities to stand out in a competitive market.

Your ideal tool is here: Request your FREE Accommodation Pricing Report now! (Limited to the first 100 facilities)

Our complimentary Accommodation Pricing Report delivers tailored insights to help you verify your pricing position, plan for growth, and navigate upcoming changes.

For a limited time, the first 100 facilities to request the report will receive it for FREE. After that, providers can subscribe to receive four quarterly reports per facility for a total of $999, or purchase each report individually at the regular rate of $499 per report.

Take the guesswork out of accommodation pricing. Contact us today to request your free report and start making data-informed, confident decisions for your facility.