Derek Irwin, Director of HealthX would like to share with you his thoughts on the future of aged care. He believes; major reforms are about to cause a shift in the way clients may be cared for when they are too frail and unwell to stay at home. Providers, particularly in the private sector, say it’s good for consumers, but it may also be a boom for investors.
It has recently been reported that some facilities are envisaging something more similar to a large boutique hotel, a place for families to come and celebrate a 90th birthday that is attached to a café and wine bar.
This is a frank assessment, but it illustrates how some in the sector hope to transform their approach to a client driven market.
Derek says, “the fundamentals are solid: an ageing population and demand for beds are outstripping supply; about 74,000 new beds will be needed by 2022.”
Although retirement villages have been on the market before, they were mostly real estate plays. Now investors see aged care as a defensive play on the demographic trends usually associated with healthcare stocks like private hospital operator Ramsay Health Care.
It has been said that the introduction of the private health cover rebate sparked investment in private hospitals and enhanced quality, aged care reforms first proposed by Labor and now backed by the Coalition, will radically change the landscape.
Governments are realising with an ageing population you cannot continue having a mediocre sector, and that’s what some believe it has been.
Also, with fee deregulation coming into effect on July 1, this will allow providers to charge differing rates for the first time.
Residents will pay for accommodation costs (which are in addition to care costs) by a refundable accommodation deposits (RAD), or an equivalent daily payment or combination of both.
The value of the RAD will be at the discretion of the provider, based on what they think the room is worth. RADs over $550,000 will be looked at by a pricing commissioner.
Aged care providers will have to advertise their fees on a government website, allowing consumers to ask questions about variations and ensuring a more transparent market.
These reforms will allow companies to sustainably provide tiered levels of service such as standard, deluxe and premium rooms. Operators will be able to offer wellbeing, allied health and entertainment programs, as well as services such as smart TVs that allow a resident to talk to their family at home through Skype-like software.
Concerns have been dismissed about potential inequality of access, saying means testing took into account capacity to pay care fees and government-mandated concessional places still existed. Providers still need to charge in line with market forces.