Looming aged-care crisis blamed on lack of funding

“Previously, we have been home to a number of care residents from the public health system, but this is becoming less economically viable,” he said. “Future care centres will be smaller and will be targeted primarily at providing a continuum of care to our independent residents.”

Arvida’s Nicoll told Businessdesk: “We still admit residents directly into care from the wider community and we will continue to do so.”

By seeking “premiumisation” of their aged care offering, operators can attract revenues “over and above funding rates”, said Dekker. “If the product is sufficiently differentiated, they can charge a premium.”

Ansell’s survey found that without accommodation premiums, the average financial performance of homes would be considerably worse. If the revenue from premium charges were excluded, the average facility earnings before interest, taxes, depreciation, and amortisation for the financial year would drop from $3.94 to -$16.14 per occupied bed per day.

Oceania, for instance, has made “suites” a larger proportion of its mix. Incoming residents pay extra for larger rooms, amenities, services, and “high-quality clinical staffing”.

However, this is only the preserve of the wealthy. Costs for hospital-level care in a Ryman facility run well north of $5000 a month or more than $160 a day. Unit or room costs are over and above this charge.

Oceania has introduced fully private paying care (with no contribution

from the Government) to New Zealand at its flagship site, The Helier, in St Heliers, Auckland.

CEO Pattison says Oceania is not building any more standard care beds, favouring care suites and the continued premiumisation of their portfolio. In other words, the company no longer supplies standard tgate-only funded facilities.

While the funding shortfall has occasioned operators to change tack, it’s still a “secondary” problem for the sector, says Dekker, and the downturn in housing clouding the outlook for their retirement villages is what is moving share prices.

However, the concern about care funding is far less secondary for the little guy.

As larger providers reweight and offer “accommodation supplements”, smaller organisations that provide standard beds for the masses have fewer tools at their disposal.

“We know how many people will be aged over 85 in 10 years and that we’re going to need 13,000 more [standard] aged care beds. There are none being built. There’s nowhere for people with no money to go.”

Future care centres will be smaller and will be targeted primarily at providing a continuum of care to our independent residents.

Scott Scoullar