One set of shares which have been hammered this year are the aged care providers. The likes of Estia Health Ltd (ASX: EHE) and Japara Healthcare Ltd (ASX: JHC) have had a terrible year and are down 52% and 36% respectively year to date.

Another aged care provider which is doing almost as poorly is Regis Healthcare Ltd (ASX: REG). Year to date its share price is down 26%.

Until recently its decline was far worse, but in the last couple of weeks it has rallied higher by as much as 17%. Is this a sign that the worst is now over for Regis Healthcare?

Maybe it is. AMP Limited (ASX: AMP) certainly appears to think so. This week the international investment management business increased its holding in Regis Healthcare from 6.4% to 7.9% according to a release to the ASX.

With Australia’s ageing population the aged care industry is an attractive part of the market in my eyes. But it is also a very complex one which has relied heavily on government subsidies.

The Department of Health and Ageing recently put out new guidelines stating that extra service fees charged by providers would not be supported by the Aged Care Act if those fees did not result in a direct benefit for the individual.

According to The Australian analysts at Macquarie Group Ltd (ASX: MQG) have estimated these reforms equate to a $20 per resident per day hit to revenue for the aged care operators.

Regis Healthcare’s management has stated that there will be minimal impact resulting from these changes in FY 2017. Whereas it does see the changes negatively impacting results in FY 2018 and FY 2019 as things stand.

Thankfully a range of strategies have been implemented in order to mitigate this, both from a care and revenue perspective.

Ultimately an investment in Regis Healthcare depends on whether or not you believe its mitigation strategies will be enough to offset the decline in revenue. Whilst I have confidence in management being able to pull it off, personally I would hold off investing until there is proof that its strategies are working.

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Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.