Accommodation for the aged

The aged care industry stands to benefit from the fact that we can expect to live longer. By JASON BAKER of IBISWorld.

By Jason Baker

The aged care industry stands to benefit from the fact that we can expect to live longer.

 

The accommodation for the aged industry in Australia is expected to record strong growth over the five years to 2006-07. Revenue is estimated to grow at an average annual rate of 5.1%.

Revenue growth is expected to slow throughout the next five years to 2011-12 with an annual average revenue growth rate of 2.8% expected.

The demand for residential aged care places will be positively affected by growth in the population aged 70 years, which is expected to increase during the next five years. However, demand will also be constrained by an increase in life expectancy and the later onset of frailty.

Demand for hostel-type residential aged care places will be affected by the emphases placed on home and community care provision by Commonwealth and state governments. Governments have a preference to house aged people in their own homes for as long as possible. Federal funding of community aged care packages (CACPs), which provide personal and nursing care for older people to stay at home, will rise.

The Government decided to cease paying subsidies for residents who primarily have social and housing-related needs and boost subsidies for those with care needs. This will probably motivate more aged care facilities to focus on providing services for residents with personal care needs.

It appears that economies of scale and scope can be reaped in this industry. Larger groups with more than one facility may be able to: arrange more flexible labour arrangements; combine purchases to negotiate lower prices; lower IT costs over the group; reduce regulatory compliance costs; and arrange lower-cost financing.

A lack of beds and a rise in demand has left elderly people without aged care. The rising cost of aged care has prompted some in the industry to recommend that the elderly remain in their homes for as long as possible.

There will be greater concentration of ownership in the residential aged care sector, although this trend will more likely occur in the nursing home sector rather than the hostel sector. Some non-profit organisations will sell facilities, due to difficulties in financing facility upgrades to meet government certification standards by 2008.

So revenue will keep growing at a moderate rate and the industry is expected to continue reaping the benefits of high demand for its services. The future may see a closer watch kept on standards in nursing homes, due to some deaths in a Melbourne nursing home this year, but all other signs point to a long life for the industry.