Problem: 50,000 more people turn 85 but just 4,322 beds built

The Productivity Commission’s Report on Government Services has just been released including updated aged care data. Just 4,322 new aged care beds have been added to the market in the past four years. Alarmingly the actual number of beds in NSW and SA declined over the 48 months. If we just look at people aged 85+, being those with the greatest likelihood of entering residential care, their population increases by 12,500 each year, or 50,000 over the past four years. The supply-side is just not working. Then think of the baby boomer bulge that turns 80 commencing next year. $12,500 profit required to build We hear that the banks are looking for a profit per bed of $12,500 before they will lend for new aged care beds, now costing $400,000 each. This level of profit will only occur if Plan B co-contribution by residents is delivered by the Aged Care Task Force recommendations and those recommendations are accepted by the government, combined with responsible pricing by IHACPA. We also hear that the positive benefit of either of these initiatives will take at least 18 months to roll out – meaning we are looking at December 2025. With funding and then construction schedules requiring five years to completion, that takes us to 2030. The number of people aged 85+ will have increased by approximately 100,000. Aged care beds rolled gold With demand skyrocketing relative to supply and new revenue streams opening up, any operator with even a four bed ward facility will be achieving undreamed of profitability. It is indeed the dawn of a silver decade. Does this explain why private operators like Opal and Estia/Bain Capital are buying up whatever they can? The answer is yes. LEADERS SUMMIT 19 & 20 March To understand the Task Force recommendations and the items that the government is looking to accept, plus the impact of the new Aged Care Act on both the retirement village and aged care sectors, please join us at the LEADERS SUMMIT in Sydney. In two intense days you will learn from over 40 CEOs and advisors on their strategies in this challenging landscape.